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Existing fair exchange protocols usually neglect consideration of cost whenassessing their fairness. However, in an environment with non-negligibletransaction cost, e.g., public blockchains, high or unexpected transaction costmight be an obstacle for wide-spread adoption of fair exchange protocols inbusiness applications. For example, as of 2021-12-17, the initialization of theFairSwap protocol on the Ethereum blockchain requires the selling party to paya fee of approx. 349.20 USD per exchange. We address this issue by definingcost fairness, which can be used to assess two-party exchange protocolsincluding implied transaction cost. We show that in an environment withnon-negligible transaction cost where one party has to initialize the exchangeprotocol and the other party can leave the exchange at any time cost fairnesscannot be achieved.

Formalizing Cost Fairness for Two-Party Exchange Protocols using Game Theory and Applications to Blockchain (Extended Version)