Reward Sharing Schemes for Stake Pools
Lars Br\"unjes, Aggelos Kiayias, Elias Koutsoupias,, Aikaterini-Panagiota Stouka

TL;DR
This paper proposes reward sharing schemes for stake pools in proof-of-stake blockchains that incentivize fair formation, balance security and efficiency, and are resilient against various attacks, with demonstrated fast convergence in dynamic settings.
Contribution
It introduces parameterized reward sharing schemes that ensure desired pool numbers as Nash equilibria and analyzes their security, efficiency, and practical deployment in PoS systems.
Findings
Nash equilibria promote the desired number of pools.
Schemes balance inclusion of low-cost pools and protection against Sybil attacks.
Fast convergence to equilibria demonstrated in dynamic environments.
Abstract
We introduce and study reward sharing schemes (RSS) that promote the fair formation of {\em stake pools}\ in collaborative projects that involve a large number of stakeholders such as the maintenance of a proof-of-stake (PoS) blockchain. Our mechanisms are parameterized by a target value for the desired number of pools. We show that by properly incentivizing participants, the desired number of stake pools is a Nash equilibrium arising from rational play. Our equilibria also exhibit an efficiency / security tradeoff via a parameter that calibrates between including pools with the smallest cost and providing protection against Sybil attacks, the setting where a single stakeholder creates a large number of pools in the hopes to dominate the collaborative project. We then describe how RSS can be deployed in the PoS setting, mitigating a number of potential deployment attacks and protocol…
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