However, this only works if the two clouds cannot make credible commitments. What convinces a rational player is by showing that lying will make you worse off.
If lying is not in your interest, you will not lie. The one who initiates the collusion can also give a slice of his own profit to the other as an additional incentive.
The contract again is based on deposit:. As you can see, now the equilibrium bold path for the two clouds is to collude and both follow the collusion strategy. This is bad. After trying to prevent collusion using smart contracts, we found smart contracts actually can be used to enable collusion.
And if the client tries to counter that by another contract, the clouds can have another contract to counter back. This is an endless loop. What can we do then, if we cannot counter directly back?
In the end, we came up with the idea that uses a smart contract to incentivize secret betrayal and reporting. However, if someone tries to report a non-existent collusion case, it will have to bear the consequence and suffer a loss there is a motivation not to abuse the system.
