The Internet is becoming increasingly popular as an electronic marketplace. As a result of rapid technological progress, the near future will show a wide variety of goods and services being traded over the Internet by huge numbers of buyers and sellers. Such a vast marketplace requires reliable trad- ing mechanisms that are truly efficient and scalable. At the same time, peer-to-peer (P2P) networks are emerging as a new design approach for building scalable and fault-tolerant applications. By means of resource aggregation and replication, P2P-based applications benefit from peer resources that otherwise lie unused, and thus provide much better performance and greater robustness than traditional client/server-based applications. PeerMart Architecture and Design PeerMart is a fully decentralized auc- tion-based marketplace layered on top of a P2P network (see Figure 1). It com- bines the economic efficiency of double auctions with the technical performance and scalability of structured P2P net- works. The solution supersedes the need for a central auctioneer by distrib- uting broker functionality over all peers. Redundancy is used to achieve robustness even in the presence of mali- cious peers. The auction-based pricing mechanism is complemented by a decentralized accounting scheme called PeerMint, which provides accountability for appli- cations in a secure and scalable manner. The scheme uses multiple distributed account holders and session mediation peers to store and update accounting information on individual peers and sessions. It also enables peers to be charged for service usage in an aggre- gated manner. David Hausheer and his advisor Prof. Burkhard Stiller at the Institute TIK at ETH Zurich developed PeerMart’s fully decentralized market approach during Hausheer’s PhD candidacy. The work was completed in 2005. A prototype of the design has been implemented in Java using the FreePastry structured P2P overlay library, and will be made available under an open-source licence. Detailed experiments were performed with the prototype to provide evidence of the mechanisms’ efficiency and reli- ability even in the presence of faulty or malicious peers. Bandwidth Trading on Demand While PeerMart is generally applicable to any distributed trading scenario like P2P file sharing, Grid computing, or decentralized storage systems, the approach is particularly interesting for bandwidth-trading scenarios. Electronic marketplaces for trading bandwidth have emerged since the late 1990s, but were seriously hit by the economic downturn in 2001. However, driven by recent technical advances, especially in the area of optical fibre technology and virtual router infrastructures, the provi- sion of bandwidth services ‘on demand’, being offered just like other commodities, will become a reality. Today, bandwidth services are normally provided under the umbrella of long- term bilateral peering and transit agree- ments between individual Internet serv- ice providers and customers. Appropri- ate mechanisms for trading such serv- ices in an efficient and scalable fashion among multiple providers and cus- tomers are not yet available. A new workshop on bandwidth on demand (BoD) has therefore been established to bring together researchers from both industry and academia. The scope of the workshop includes the technical and economic dimensions of BoD mecha- nisms, legislative and regulatory issues, and the industrial development of new technology that supports these mecha- nisms. To meet the individual requirements of bandwidth services, the generic Peer- Mart design is currently being refined and extended in a follow-up post-doc project at the University of Zurich, IFI. This includes the support of key service ERCIM NEWS 68 January 2007 42 Special Theme: Traffic Planning and Logistics PeerMart: Decentralized Auctions for Bandwidth Trading on Demand by David Hausheer and Burkhard Stiller PeerMart defines a fully decentralized auction-based marketplace layered on top of a peer- to-peer (P2P) network, and makes the trading of services over the Internet technically and economically feasible. While being generally applicable to any service-trading scenario, PeerMart shows great potential as a new method for scalable and reliable bandwidth trading on demand. Figure 1: PeerMart – a fully decentralized P2P-based market- place. Consumer Service Auction-based Pricing Decentralized Marketplace Session-based Accounting P2P Network Provider