Colordag: An Incentive-Compatible Blockchain

TL;DR

Colordag is a blockchain protocol designed to incentivize honest participation by ensuring that following the prescribed strategy is nearly always the best response, even against powerful adversaries, thus improving upon prior protocols like Fruitchain.

Contribution

The paper introduces Colordag, a new blockchain protocol that guarantees an epsilon-sure Nash equilibrium, addressing vulnerabilities in existing protocols under adversarial conditions.

Findings

Colordag achieves high probability of honest behavior as a best response.

It remains correct even against adversaries with knowledge of future actions.

Outperforms Fruitchain by eliminating simple deviations that incentivize dishonesty.

Abstract

We present Colordag, a blockchain protocol where following the prescribed strategy is, with high probability, a best response as long as all miners have less than 1/2 of the mining power. We prove the correctness of Colordag even if there is an extremely powerful adversary who knows future actions of the scheduler: specifically, when agents will generate blocks and when messages will arrive. The state-of-the-art protocol, Fruitchain, is an epsilon-Nash equilibrium as long as all miners have less than 1/2 of the mining power. However, there is a simple deviation that guarantees that deviators are never worse off than they would be by following Fruitchain, and can sometimes do better. Thus, agents are motivated to deviate. Colordag implements a solution concept that we call epsilon-sure Nash equilibrium and does not suffer from this problem. Because it is an epsilon-sure Nash equilibrium, Colordag is an epsilon Nash equilibrium and with probability (1 - epsilon) is a best response.