FAIRNESS AND SECURITY ON BLOCKCHAIN INCENTIVES

Abstract

Blockchain is a decentralized public ledger storing all historical data and current updates inside a group of peer-to-peer nodes. Since blockchain can achieve community trust without trusted third parties, it can be used in numerous real-world applications, such as cryptocurrency, smart contract, online fundraising and bidding system. Mining incentive, which motivates profit-driven network miners to maintain the network honestly, plays a key role in blockchain security. In this thesis, we conduct an in-depth analysis of the fairness and security of incentive design for real-world permission-less blockchain systems. Firstly, we thoroughly analyze the fairness of the most popular blockchain incentive mechanisms, including Proof of Work (PoW) and variants of Proof of Stake (PoS). Secondly, we study an incentive attack, the block withhold attack, where malicious PoS staker may damage the incentive compatibility in exchange for personal profit. Thirdly, we thoroughly study the existing incentive attacks and propose a benchmark to evaluate the risk of blockchain. Our analysis is confirmed with extensive experiments on real blockchain systems and numerical simulations. The theoretical findings and system analysis shed light on the future development of fair and secure blockchain incentive protocols.