Understanding Fairness in Distributed Ledger Technology

Distributed ledger technologies (DLTs) are often evaluated based on performance, security, and decentralization. Another important property—especially for certain classes of applications—is fairness.

This post explains what fairness means in the context of DLTs, why it matters for real-world use cases, and how Hiero provides fairness through its consensus design.

What Is Fairness in a DLT?

In a distributed ledger, transactions are submitted by many participants across a network. Fairness refers to how these transactions are ordered and processed by the system.

A fair DLT ensures that:

• Transactions are ordered based on when they are received by the network, not by who submitted them
• No single participant can consistently influence transaction ordering to their advantage
• Network conditions or node positioning do not unfairly prioritize certain transactions over others

Without fairness, participants with faster network access, greater resources, or strategic positioning could influence transaction ordering. This can result in outcomes that disadvantage other users, even if all parties follow protocol rules.

Why Fairness Matters for Certain Use Cases

Fairness becomes critical in use cases where transaction ordering directly affects outcomes.

Examples include:

• Decentralized exchanges, where transaction order can influence execution price
• Auctions or bidding systems, where earlier submission should not be overridden by network advantage
• Applications where trust depends on predictable and unbiased transaction processing

In these scenarios, unfair ordering can enable behaviors such as front-running or preferential treatment. Even if the ledger remains secure and decentralized, the lack of fairness can undermine confidence in the system.

For developers and maintainers, fairness is therefore not just a theoretical concern—it directly impacts application correctness and user trust.

How Hiero Provides Fairness

Hiero is designed to provide fairness at the consensus level.

Its underlying consensus mechanism is based on a gossip-about-gossip model combined with virtual voting. Instead of relying on a leader or block producer to decide transaction order, nodes share information about transactions and their receipt times across the network.

This approach allows the network to:

• Determine a consistent and agreed-upon transaction order
• Base ordering on the collective view of the network rather than a single authority
• Reduce the influence of network latency advantages held by individual participants

By establishing transaction order through consensus rather than control, Hiero enables fairness as an inherent property of the ledger. This makes it well-suited for applications where unbiased ordering is a requirement rather than an optimization.

Conclusion

Fairness is a foundational property for many distributed applications, especially those where transaction order affects outcomes.

By embedding fairness directly into its consensus design, Hiero enables developers to build applications that rely on predictable, unbiased transaction ordering. For maintainers and contributors, this design choice simplifies reasoning about system behavior and helps support trust-sensitive use cases without requiring additional application-level safeguards.

Understanding how fairness works—and why it matters—helps clarify the kinds of problems Hiero is designed to solve.