Incentive Compatibility of Pay Per Last N Shares in Bitcoin Mining Pools

Zolotavkin, Yevhen; García, Julián; Rudolph, Carsten

doi:10.1007/978-3-319-68711-7_2

Cited by 18 publications

(14 citation statements)

References 6 publications

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“…In this paper, we analyzed miner-driven redistribution of mining power between the pools supporting PoW cryptocurrencies. We looked at competition between two PPLNS pools with the same parameter N. This is explained by the fact that PPLNS pools constitute significant part of mining power in PoW blockchains [4], [8]. This redistribution has a direct effect on centralization, which in turn leads to severe and harmful attacks [20], [21].…”

Section: Discussionmentioning

confidence: 99%

“…In particular, a number of identified attacks directly concern centralization of mining power. These include double spending [1], [18]- [20], block withholding [8], [21], [22], selfish mining [7], [23] among others [4], [24], [25]. A number of desirable blockchain properties can be hampered due to incompatible mining incentives.…”

Section: A Related Workmentioning

confidence: 99%

“…A variety of cryptocurrencies rely on the Proof-of-Work (PoW) principle, whereby consensus is reached solving costly computation puzzles [1]- [3]. Miners exchange computation for the chance to earn newly minted currency [4]. Solo mining entails a very large variance in expected monetary payoffs.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Time-Dependent Decision-Making and Decentralization in Proof-of-Work Cryptocurrencies

Zolotavkin

García

Liu

2019

2019 IEEE 32nd Computer Security Foundations Symposium (CSF)

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Pool mining is a common way to reduce income variance for miners in Proof of Work Cryptocurrencies. A vast majority of mining does happen in pools, where a popular scheme to distribute rewards is Pay per last N Shares (PPLNS). In PPLNS and related schemes, miners are frequently making decisions whose rewards are not immediate and will only manifest in the future. This implies that models of inter-temporal utility are relevant when considering the incentives of miners. We show that when including these features of human behaviour in models of rational pool miners, the conditions that lead to decentralisation are hampered because larger pools may be more attractive to miners. We present a new game theoretical model of PPLNS where rational miners have time preferences. In this setup, the incentives of miners to work for a pool depend on the initial distribution of power between mining pools, as well as the specific details of how time is discounted. Agents jumping to larger pools face a trade-off between reducing the expected payoff from their shares in their current pool, or getting faster rewards in the future by joining a larger pool. We consider a case where pools of different mining power have the same size of reward window N. According to our study, in equilibrium larger pools have a tendency to accumulate a disproportionate share of the network power at the expense of smaller pools. This outcome is prevalent over a large range of realistic model parameters. Our model shows that PPLNS may be harmful to the decentralised governance of cryptocurrencies. A way to ameliorate these negative effects, is to encourage pools to have diverse window sizes, or use different reward mechanisms. Doing this in a decentralised fashion is an open challenge.

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Section: Discussionmentioning

confidence: 99%

Section: A Related Workmentioning

confidence: 99%

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Time-Dependent Decision-Making and Decentralization in Proof-of-Work Cryptocurrencies

Zolotavkin

García

Liu

2019

2019 IEEE 32nd Computer Security Foundations Symposium (CSF)

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“…Bu saldırıya savunma tekniği olarak; havuz içinde hisse paylaşım yöntemlerinden PPLNS [33,47] yani "N hisse başına ödeme" yöntemi seçilirse önlenmiş olur. Havuzdaki i. bloğu bulma ile (i+1).…”

Section: Havuz Sıçrama Saldırısı (Pool Hoping Attack)unclassified

A Survey of Attacks on Blockchain Technology

Taş¹,

Kiani²

2018

Bilişim Teknolojileri Dergisi

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Son zamanlarda; blok zinciri tabanlı kripto para ödeme sistemleri(bitcoin, ethereum) oldukça popüler olmuştur. Merkezi olmayan eşler arası(P2P: Peer to Peer) ağ yapısına sahip olan bu sistemde tüm işlemler, sadece ekleme yapılabilen bir ana defterde(ledger) tutulmaktadır. Madenciler ise bu ağ yapısındaki düğümleri oluşturmaktadır, her madenci defterin yerel kopyasına sahiptir. Blok zincirinde, Çalışma İspatı(PoW: Proof of Work) uzlaşma algoritması işlemi onaylamakta ve zincire yeni blok eklenmesine izin vermektedir. Ödülü almak için, madenciler eşler arası ağda işlemi tamamlamak için birbirleriyle yarışırlar. Ödül sistemi, blok zinciri kullanan bitcoin'i popülerleştirmiş, fakat aynı zamanda saldırganların blok zincirine ilgisini artırmıştır. Saldırganlar tarafından blok zincirinin madenci havuzuna ve ağ yapısının güvenliğine farklı saldırılar yapılmıştır. Bu makalede, blok zinciri alt yapısına karşı mevcut saldırılar sunulmuştur. İlk bölümlerde, P2P mimarisine, uzlaşma protokolüne ve işlemlere yönelik saldırı tipleri araştırılmıştır.

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“…Schrijvers et al proved that PPLNS mechanism is incentive compatible when a proper value of N is selected [37]. Recent work proposed by Zolotavkin et al used a game theory model to derive the specific conditions when PPLNS method is incentive compatible [50].…”

Section: 2mentioning

confidence: 99%

A survey: Reward distribution mechanisms and withholding attacks in Bitcoin pool mining

Zhu¹,

Li²,

Li³

et al. 2018

Mathematical Foundations of Computing

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The past three years have seen the rapid increase of Bitcoin difficulty, which has led to a substantial variance in solo mining. As a result, miners tend to join a large open pool to get a more stable reward. Nowadays, mining pools take up over 98% of Bitcoins total computation power. In a sense, this is a manifestation of Bitcoin that tends to be centralized. Thus, researchers have shown an increased interest in pool mining payoff and security. The purpose of this paper is to review and summarize recent research in Bitcoin pool mining system. We first introduce several common reward distribution schemes, and analyze their advantages and disadvantages with some improvement mechanisms; In the second section, to address pool security problems, we examined the practical utility of some existing and potential attack strategies. To study those malicious attack in details, several defense methods are collected. Finally, we make an outlook on Bitcoin future.

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Incentive Compatibility of Pay Per Last N Shares in Bitcoin Mining Pools

Cited by 18 publications

References 6 publications

Time-Dependent Decision-Making and Decentralization in Proof-of-Work Cryptocurrencies

Time-Dependent Decision-Making and Decentralization in Proof-of-Work Cryptocurrencies

A Survey of Attacks on Blockchain Technology

A survey: Reward distribution mechanisms and withholding attacks in Bitcoin pool mining

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