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We introduce and study reward sharing schemes that promote the fair formation of 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 parameterised by a target value for the desired number of pools. We show that by properly incentivising participants, the desired number of stake pools is a non-myopic Nash equilibrium arising from rational play. Our equilibria also exhibit an efficiency / security tradeoff via a parameter that allows them to be calibrated and include only the pools with the smallest possible cost or provide 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 also experimentally demonstrate the reachability of such equilibria in dynamic environments where players react to each others strategic moves over an indefinite period of interactive play, while showing how simple reward sharing schemes, such that inspired by Bitcoin, converge to centralisation.

Consider a set of participants invited to execute a protocol Π. The protocol will incur some cost to run while in the end (or at regular intervals), it will populate and update local bookkeeping tables that assign virtual rewards to participants. Each participant aspires

Proof-of-stake blockchain protocols have emerged as a compelling paradigm for organizing distributed ledger systems. In proof-of-stake (PoS), a subset of stakeholders participate in validating a growing ledger of transactions. For the safety and liveness of the underlying system, it is desirable for the set of validators to include multiple independent entities as well as represent a non-negligible percentage of the total stake issued. In this paper, we study a secondary form of participation in the transaction validation process, which takes the form of stake delegation, whereby an agent delegates their stake to an active validator who acts as a stake pool operator. We study reward sharing schemes that reward agents as a function of their collective actions regarding stake pool operation and delegation. Such payment schemes serve as a mechanism to incentivize participation in the validation process while maintaining decentralization. We observe natural trade-offs between these objectives and the total expenditure required to run the relevant reward schemes. Ultimately, we provide a family of reward schemes which can strike different balances between these competing objectives at equilibrium in a Bayesian game theoretic framework. ACM Subject ClassificationComputer systems organization → Dependable and fault-tolerant systems and networks; Theory of computation → Quality of equilibria; Security and privacy → Network security