TY - GEN
T1 - Do the Rich Get Richer? Fairness Analysis for Blockchain Incentives
AU - Huang, Yuming
AU - Tang, Jing
AU - Cong, Qianhao
AU - Lim, Andrew
AU - Xu, Jianliang
N1 - Funding Information:
We are grateful to Michel van Kessel from Blackcoin, Wenbin Zhong from Qtum, Prysmatic Labs and NXT community for their technical supports. This research is supported by Singapore National Research Foundation under grant R-252-000-A27-490, and by HK-RGC GRF projects 12201520 and 12200819.
PY - 2021/6
Y1 - 2021/6
N2 - 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.
AB - 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.
KW - blockchain
KW - fairness
KW - incentive
KW - PoS
KW - PoW
UR - http://www.scopus.com/inward/record.url?scp=85108964320&partnerID=8YFLogxK
U2 - 10.1145/3448016.3457285
DO - 10.1145/3448016.3457285
M3 - Conference contribution
AN - SCOPUS:85108964320
SN - 9781450383431
T3 - Proceedings of the ACM SIGMOD International Conference on Management of Data
SP - 790
EP - 803
BT - SIGMOD '21: Proceedings of the 2021 International Conference on Management of Data
PB - Association for Computing Machinery (ACM)
T2 - ACM SIGMOD International Conference on Management of Data, SIGMOD 2021
Y2 - 20 June 2021 through 25 June 2021
ER -