Do the Rich Get Richer? Fairness Analysis for Blockchain Incentives

Yuming Huang, Jing Tang, Qianhao Cong, Andrew Lim, Jianliang Xu

Research output: Chapter in book/report/conference proceedingConference contributionpeer-review

1 Citation (Scopus)

Abstract

Proof-of-Work (PoW) is the most widely adopted incentive model in current blockchain systems, which unfortunately is energy inefficient. Proof-of-Stake (PoS) is then proposed to tackle the energy issue. The rich-get-richer concern of PoS has been heavily debated in the blockchain community. The debate is centered around the argument that whether rich miners possessing more stakes will obtain higher staking rewards and further increase their potential income in the future. In this paper, we define two types of fairness, i.e., expectational fairness and robust fairness, that are useful for answering this question. In particular, expectational fairness illustrates that the expected income of a miner is proportional to her initial investment, indicating that the expected return on investment is a constant. To better capture the uncertainty of mining outcomes, robust fairness is proposed to characterize whether the return on investment concentrates to a constant with high probability as time evolves. Our analysis shows that the classical PoW mechanism can always preserve both types of fairness as long as the mining game runs for a sufficiently long time. Furthermore, we observe that current PoS blockchains implement various incentive models and discuss three representatives, namely ML-PoS, SL-PoS and C-PoS. We find that (i) ML-PoS (e.g., Qtum and Blackcoin) preserves expectational fairness but may not achieve robust fairness, (ii) SL-PoS (e.g., NXT) does not protect any type of fairness, and (iii) C-PoS (e.g., Ethereum 2.0) outperforms ML-PoS in terms of robust fairness while still maintaining expectational fairness. Finally, massive experiments on real blockchain systems and extensive numerical simulations are performed to validate our analysis.

Original languageEnglish
Title of host publicationSIGMOD '21: Proceedings of the 2021 International Conference on Management of Data
PublisherAssociation for Computing Machinery (ACM)
Pages790-803
Number of pages14
ISBN (Print)9781450383431
DOIs
Publication statusPublished - Jun 2021
EventACM SIGMOD International Conference on Management of Data, SIGMOD 2021 - Virtual, Online, China
Duration: 20 Jun 202125 Jun 2021

Publication series

NameProceedings of the ACM SIGMOD International Conference on Management of Data
ISSN (Print)0730-8078

Conference

ConferenceACM SIGMOD International Conference on Management of Data, SIGMOD 2021
Country/TerritoryChina
CityVirtual, Online
Period20/06/2125/06/21

Scopus Subject Areas

  • Software
  • Information Systems

User-Defined Keywords

  • blockchain
  • fairness
  • incentive
  • PoS
  • PoW

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