Mining is a central operation of all proof-of-work (PoW) based cryptocurrencies. The vast majority of miners today participate in "mining pools" instead of "solo mining" in order to lower risk and achieve a more steady income. However, this rise of participation in mining pools negatively affects the decentralization levels of most cryptocurrencies.In this work, we look into mining pools from the point of view of a miner: We present an analytical model and implement a computational tool that allows miners to optimally distribute their computational power over multiple pools and PoW cryptocurrencies (i.e. build a mining portfolio), taking into account their risk aversion levels. Our tool allows miners to maximize their risk-adjusted earnings by diversifying across multiple mining pools which enhances PoW decentralization. Finally, we run an experiment in Bitcoin historical data and demonstrate that a miner diversifying over multiple pools, as instructed by our model/tool, receives a higher overall Sharpe ratio (i.e. average excess reward over its standard deviation/volatility).
We present gOTzilla, a protocol for interactive zero-knowledge proofs for very large disjunctive statements of the following format: given publicly known circuit C, and set of values Y = {y1 , . . . , yn }, prove knowledge of a witness x such that C(x) = y1 ∨ C(x) = y2 ∨ · · · ∨ C(x) = yn . These type of statements are extremely important for the proof of assets (PoA) problem in cryptocurrencies where a prover wants to prove the knowledge of a secret key sk that associates with the hash of a public key H(pk) posted on the ledger. We note that the size of n in popular cryptocurrencies, such as Bitcoin, is estimated to 80 million. For the construction of gOTzilla, we start by observing that if we restructure the proof statement to an equivalent of proving knowledge of (x, y) such that (C(x) = y) ∧ (y = y1 ∨ · · · ∨ y = yn )), then we can reduce the disjunction of equalities to 1-out-of-N oblivious transfer (OT). Our overall protocol is based on the MPC in the head (MPCitH) paradigm. We additionally provide a concrete, efficient extension of our protocol for the case where C combines algebraic and non-algebraic statements (which is the case in the PoA application). We achieve an asymptotic communication cost of O(log n) plus the proof size of the underlying MPCitH protocol. While related work has similar asymptotic complexity, our approach results in concrete performance improvements. We implement our protocol and provide benchmarks. Concretely, for a set of size 1 million entries, the total run-time of our protocol is 14.89 seconds using 48 threads, with 6.18 MB total communication, which is about 4x faster compared to the state of the art when considering a disjunctive statement with algebraic and non-algebraic elements.
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