Understanding decentralization of decision-making power in proof-of-stake blockchains: an agent-based simulation approach

Abstract

Blockchain systems allow for securely keeping shared records of transactions in a decentralised way. This is enabled by algorithms called consensus mechanisms. Proof-of-work is the most prominent consensus mechanism, but environmentally unsustainable. Here, we focus on proof-of-stake, its best-known alternative. Importantly, decentralised decision-making power is not an inherent feature of blockchain systems, but a technological possibility. Numerous security incidents illustrate that decentralised control cannot be taken for granted. We therefore study how key parameters affect the degree of decentralisation in proof-of-stake blockchain systems. Based on a real-world implementation of a proof-of-stake blockchain system, we conduct agent-based simulations to study how a range of parameters impact decentralisation. The results suggest that high numbers of initial potential validator nodes, large transactions, a high number of transactions, and a very high or very low positive validator network growth rate increase decentralisation. We find weak support for an impact of changes in transaction fees and initial stake distributions. Our study highlights how blockchain challenges our understanding of decentralisation in information systems research, and contributes to understanding the governance mechanisms that lead to decentralisation in proof-of-stake blockchain systems as well as to designing proof-of-stake blockchain systems that are prone to decentralisation and therefore more secure.

Decentralized autonomous organization design for the commons and the common good

“…In many cases, financial or practical reasons may still hinder the application of the DAO, but these remained beyond the scope of this paper. Managing the decentralisation is crucial for blockchain integrity and a key factor if blockchain is to fulfil its promise of removing trusted third parties (Mueller-Bloch et al, 2022). We complement the findings of Mueller-Bloch et al who investigated decentralisation of decision-making power by providing a holistic perspective of decentralised governance.…”

“…Success depends on processes that build trust, foster collaboration, and develop relationships among entities and individual participants (Grant and Tan, 2013). Three trends within information systems that touch upon commons are the investigation of using IS for decentralisation (Mueller-Bloch et al, 2022), creating sustainability using information systems (Curto-Millet and Corsín Jiménez, 2022), and the tighter integration of community actors in digital platforms (Maruping and Matook, 2020). All three encourage combining IS with the commons and draw us to the exploration of blockchain governance.…”

Fusion diagnostics based on blockchain technology

“…Establish a multi-node consensus mechanism to ensure the trustworthiness of the reactor internal data. Specifically, consensus algorithms such as PoW (Proof of Work) or PoS (Proof of Stake) can be used to ensure the correctness and consistency of the reactor internal data [12].…”