An Excess-Based Economic Model for Resource Allocation in Peer-to-Peer Networks Christian Grothoff Department of Computer Sciences, Purdue University christian@grothoff.org http://www.gnu.org/software/GNUnet/ Abstract. This paper describes economic aspects of gnunet, a peer-to- peer framework for anonymous distributed file-sharing. gnunet is decen- tralized; all nodes are equal peers. In particular, there are no trusted entities in the network. This paper describes an economic model to per- form resource allocation and defend against malicious participants in this context. The approach presented does not use credentials or payments; rather, it is based on trust. The design is much like that of a cooperative game in which peers take the role of players. Nodes must cooperate to achieve individual goals. In such a scenario, it is important to be able to distinguish between nodes exhibiting friendly behavior and those ex- hibiting malicious behavior. gnunet aims to provide anonymity for its users. Its design makes it hard to link a transaction to the node where it originated from. While anonymity requirements make a global view of the end-points of a trans- action infeasible, the local link-to-link messages can be fully authenti- cated. Our economic model is based entirely on this local view of the network and takes only local decisions. 1 Introduction Resource allocation in collaborative peer-to-peer networks with untrusted hosts is a significant problem, since it is difficult to establish which nodes are worth spending resources on. Collaborative distributed systems are exposed to the In- ternet and are therefore subject to a wide range of attacks and abuse [AH00]. Most currently used systems do not monitor host behavior. This allows nodes to use the collaborative network without contributing back to it. These networks then become susceptible to denial-of-service attacks because the number of con- tributing peers is small. The possibility of using the network without contribu- tion also discourages commercial use of these systems, as there is no incentive to invest. This paper presents a new approach to resource allocation in gnunet, an anonymous, decentralized peer-to-peer network. The main requirement for the gnunet economic system is to prevent abuse of the network. This economic system is supposed to detect nodes that use the network without contribution and limit their impact by giving preferential treatment to nodes that do contribute. While trust (the currency in the gnunet