Coin Concentration of Proof-of-Stake Blockchains

Irresberger, Felix

doi:10.2139/ssrn.3293694

Cited by 10 publications

(8 citation statements)

References 32 publications

(2 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…• Centralization concern. Critics have argued that the PoS protocol induces wealth concentration, thus leading to centralization (Afram (2018); Irresberger (2018); Fanti et al (2019)). As one key feature of a permissionless blockchain is decentralization, the problem of centralization may put questions to the necessity of using a permissionless blockchain since it yields concentration in voting mechanism as does a permissioned blockchain.…”

Section: Introductionmentioning

confidence: 99%

Stability of shares in the Proof of Stake Protocol -- Concentration and Phase Transitions

Tang¹

2022

Preprint

View full text Add to dashboard Cite

This paper is concerned with the stability of shares in a cryptocurrency where the new coins are issued according to the Proof of Stake protocol. We identify large, medium and small investors under various rewarding schemes, and show that the limiting behaviors of these investors are different -for large investors their shares are stable, while for medium to small investors their shares may be volatile or even shrink to zero. For instance, with a geometric reward there is chaotic centralization, where all the shares will eventually concentrate on one investor in a random manner. This leads to the phase transition phenomenon, and the thresholds for stability are characterized. In response to the increasing activities in blockchain networks, we also propose and analyze a dynamical population model for the PoS protocol, which allows the number of investors to grow over the time. Numerical experiments are provided to corroborate our theory.

show abstract

Section: Introductionmentioning

confidence: 99%

Stability of shares in the Proof of Stake Protocol -- Concentration and Phase Transitions

Tang¹

2022

Preprint

View full text Add to dashboard Cite

show abstract

“…However, few papers have focused on PoS blockchains. Irresberger (2018) conducts a simulation study of the trade-offs between coin inflation and the degree of decentralisation in PoS blockchains. He does not consider cases in which transaction fees are the only block reward, arguing this may undermine consensus (Carlsten et al, 2016).…”

Section: Centralization Vulnerabilitymentioning

confidence: 99%

“…The critical role of the distribution of decisionmaking power in blockchains prompts us to study how decentralisation, or centralisation, simultaneously emerges from both node behaviour and the consensus mechanism. While previous research has studied the specific trade-off between coin inflation and decentralisation of PoS blockchains (Irresberger, 2018), so far there is no comprehensive study on how changes in a number of different key parameters impact decentralisation in PoS blockchains. We study this issue by adopting a complex adaptive systems (CAS) perspective.…”

Section: Introductionmentioning

confidence: 99%

Understanding decentralization of decision-making power in proof-of-stake blockchains: an agent-based simulation approach

Mueller-Bloch

Andersen

Spasovski³

et al. 2022

European Journal of Information Systems

View full text Add to dashboard Cite

Blockchain systems allow for securely keeping shared records of transactions in a decentralised way. This is enabled by algorithms called consensus mechanisms. Proof-of-work is the most prominent consensus mechanism, but environmentally unsustainable. Here, we focus on proof-of-stake, its best-known alternative. Importantly, decentralised decision-making power is not an inherent feature of blockchain systems, but a technological possibility. Numerous security incidents illustrate that decentralised control cannot be taken for granted. We therefore study how key parameters affect the degree of decentralisation in proof-of-stake blockchain systems. Based on a real-world implementation of a proof-of-stake blockchain system, we conduct agent-based simulations to study how a range of parameters impact decentralisation. The results suggest that high numbers of initial potential validator nodes, large transactions, a high number of transactions, and a very high or very low positive validator network growth rate increase decentralisation. We find weak support for an impact of changes in transaction fees and initial stake distributions. Our study highlights how blockchain challenges our understanding of decentralisation in information systems research, and contributes to understanding the governance mechanisms that lead to decentralisation in proof-of-stake blockchain systems as well as to designing proof-of-stake blockchain systems that are prone to decentralisation and therefore more secure.

show abstract

“…(i) In the randomized block selection method, the next forger is selected based on a combination of the hash value and stake, and the node with a combination of the highest stake and the lowest hash value is selected. But in this case, generally, the nodes can predict the next forger, the reason being that the size of the stake held by network nodes is public [21].…”

Section: Proof Of Stakementioning

confidence: 99%

“…Once a block has been forged by the node, its coin age is again set to zero. And to prevent the blockchain from being dominated by large stake nodes, after forging a block, the node must wait for a particular period before being able to forge another block [21]. When a node gets selected to forge the subsequent block, it checks whether the transactions that are present in the block are valid or not, and if the transactions are valid, the block is signed by the node and finally committed to the blockchain by the node (the same can be visualized, as shown in the 4th and 5th steps of Figure 4).…”

Section: Proof Of Stakementioning

confidence: 99%

A Research Survey on Applications of Consensus Protocols in Blockchain

Kaur

Chaturvedi

Sharma

et al. 2021

Security and Communication Networks

View full text Add to dashboard Cite

The concept of blockchain, widely known as virtual currencies, saw a massive surge in popularity in recent times. As far as the security of the blockchain is concerned, consensus algorithms play a vital role in the blockchain. Research has been done separately, or comparisons between a few of them have been presented previously. In this paper, we have discussed widely used consensus algorithms in the blockchain. The consensus protocols covered in this paper include PoW (Proof of Work), PoS (Proof of Stake), DPoS (Delegated Proof of Stake), PoET (Proof of Elapsed Time), PBFT (Practical Byzantine Fault Tolerance), and PoA (Proof of Authority). For each consensus, we have reviewed the properties, applications, and performance in the blockchain.

show abstract

Coin Concentration of Proof-of-Stake Blockchains

Cited by 10 publications

References 32 publications

Stability of shares in the Proof of Stake Protocol -- Concentration and Phase Transitions

Stability of shares in the Proof of Stake Protocol -- Concentration and Phase Transitions

Understanding decentralization of decision-making power in proof-of-stake blockchains: an agent-based simulation approach

A Research Survey on Applications of Consensus Protocols in Blockchain

Contact Info

Product

Resources

About