Scalable Blockchain Framework for Decentralized Energy Trading in Smart Grids Using Auction-Based Algorithms

This paper introduces a scalable blockchain-based framework for decentralized energy trading within smart grids, in order to improve energy allocation among participants, which promotes auction-based algorithms. To ensure safe, open, and effective transactions, the system uses a combinatorial auction mechanism that is implemented via smart contracts on a private blockchain. To address scalability concerns, second-layer solutions such as sharding and payment channels are incorporated, enhancing transaction throughput and minimizing latency and costs. A mathematical model is used to improve the utility of participants while complying with the constraints of energy balance, fairness, and grid capacity constraints. The system is implemented using smart contracts on a private blockchain, with second-layer solution such as sharding and payment channels in order to address scalability issues. The test results demonstrate notable improvements in the system’s growth potential, transaction processing speed. The proposed framework uses blockchain and auction-based algorithms to create a decentralized system for energy trading, in which the participants can trade energy directly without relying on centralized entities. The findings of this research suggest that the proposed framework could transform energy trading, encouraging the adoption of sustainable and decentralized energy systems. Future directions include the integration of IoT-enabled predictive analytics and deployment in real-world smart grids.