Polynomial Voting Rules

TL;DR

This paper introduces polynomial voting rules for decentralized systems like PoS, analyzing their statistical properties, security implications, and strategic behaviors, with results on convergence, phase transitions, and trading risks.

Contribution

It proposes a novel class of polynomial voting rules inspired by quadratic voting and Penrose law, with detailed analysis of their convergence, stability, and strategic trading behaviors.

Findings

Voter shares converge to a Dirichlet distribution.

Voting power decays to zero, preventing control by any voter.

Phase transition in share stability occurs based on initial stake.

Abstract

We propose and study a new class of polynomial voting rules for a general decentralized decision/consensus system, and more specifically for the PoS (Proof of Stake) protocol. The main idea, inspired by the Penrose square-root law and the more recent quadratic voting rule, is to differentiate a voter's voting power and the voter's share (fraction of the total in the system). We show that while voter shares form a martingale process that converge to a Dirichlet distribution, their voting powers follow a super-martingale process that decays to zero over time. This prevents any voter from controlling the voting process, and thus enhances security. For both limiting results, we also provide explicit rates of convergence. When the initial total volume of votes (or stakes) is large, we show a phase transition in share stability (or the lack thereof), corresponding to the voter's initial share relative to the total. We also study the scenario in which trading (of votes/stakes) among the voters is allowed, and quantify the level of risk sensitivity (or risk averse) in three categories, corresponding to the voter's utility being a super-martingale, a sub-martingale, and a martingale. For each category, we identify the voter's best strategy in terms of participation and trading.