Incentive Compatibility of Pay Per Last N Shares in Bitcoin Mining Pools

    Research output: Chapter in Book/Report/Conference proceedingConference PaperResearchpeer-review

    Abstract

    Pay per last N shares (PPLNS) is a popular pool mining reward mechanism on a number of cryptocurrencies, including Bitcoin. In PPLNS pools, miners may stand to benefit by delaying reports of found shares. This attack may entail unfair or inefficient outcomes. We propose a simple but general game theoretical model of delays in PPLNS. We derive conditions for incentive compatible rewards, showing that the power of the most powerful miner determines whether incentives are compatible or not. An efficient algorithm to find Nash equilibria is put forward, and used to show how fairness and efficiency deteriorate with inside-pool inequality. In pools where all players have comparable computational power incentives to deviate from protocol are minor, but gains may be considerable in pools where miner’s resources are unequal. We explore how our findings can be applied to ameliorate delay attacks by fitting real-world parameters to our model.

    LanguageEnglish
    Title of host publicationDecision and Game Theory for Security - 8th International Conference, GameSec 2017, Proceedings
    Subtitle of host publication8th International Conference, GameSec 2017, Vienna, Austria, October 23–25, 2017, Proceedings
    EditorsStefan Rass, Bo An, Christopher Kiekintveld, Fei Fang, Stefan Schauer
    Place of PublicationCham, Switzerland
    PublisherSpringer
    Pages21-39
    Number of pages19
    Volume10575 LNCS
    ISBN (Electronic)9783319687117
    ISBN (Print)9783319687100
    DOIs
    Publication statusPublished - 2017
    Event8th International Conference on Decision and Game Theory for Security, GameSec 2017 - Vienna, Austria
    Duration: 23 Oct 201725 Oct 2017

    Publication series

    NameLecture Notes in Computer Science
    PublisherSpringer
    Volume10575
    ISSN (Print)0302-9743
    ISSN (Electronic)1611-3349

    Conference

    Conference8th International Conference on Decision and Game Theory for Security, GameSec 2017
    CountryAustria
    CityVienna
    Period23/10/1725/10/17

    Cite this

    Zolotavkin, Y., Garcia, J., & Rudolph, C. (2017). Incentive Compatibility of Pay Per Last N Shares in Bitcoin Mining Pools. In S. Rass, B. An, C. Kiekintveld, F. Fang, & S. Schauer (Eds.), Decision and Game Theory for Security - 8th International Conference, GameSec 2017, Proceedings: 8th International Conference, GameSec 2017, Vienna, Austria, October 23–25, 2017, Proceedings (Vol. 10575 LNCS, pp. 21-39). (Lecture Notes in Computer Science; Vol. 10575). Cham, Switzerland: Springer. https://doi.org/10.1007/978-3-319-68711-7_2, https://doi.org/10.1007/978-3-319-68711-7_2
    Zolotavkin, Yevhen ; Garcia, Julian ; Rudolph, Carsten. / Incentive Compatibility of Pay Per Last N Shares in Bitcoin Mining Pools. Decision and Game Theory for Security - 8th International Conference, GameSec 2017, Proceedings: 8th International Conference, GameSec 2017, Vienna, Austria, October 23–25, 2017, Proceedings. editor / Stefan Rass ; Bo An ; Christopher Kiekintveld ; Fei Fang ; Stefan Schauer. Vol. 10575 LNCS Cham, Switzerland : Springer, 2017. pp. 21-39 (Lecture Notes in Computer Science).
    @inproceedings{8b4f8f01752d4a149cf5bd26b1ea5294,
    title = "Incentive Compatibility of Pay Per Last N Shares in Bitcoin Mining Pools",
    abstract = "Pay per last N shares (PPLNS) is a popular pool mining reward mechanism on a number of cryptocurrencies, including Bitcoin. In PPLNS pools, miners may stand to benefit by delaying reports of found shares. This attack may entail unfair or inefficient outcomes. We propose a simple but general game theoretical model of delays in PPLNS. We derive conditions for incentive compatible rewards, showing that the power of the most powerful miner determines whether incentives are compatible or not. An efficient algorithm to find Nash equilibria is put forward, and used to show how fairness and efficiency deteriorate with inside-pool inequality. In pools where all players have comparable computational power incentives to deviate from protocol are minor, but gains may be considerable in pools where miner’s resources are unequal. We explore how our findings can be applied to ameliorate delay attacks by fitting real-world parameters to our model.",
    author = "Yevhen Zolotavkin and Julian Garcia and Carsten Rudolph",
    year = "2017",
    doi = "10.1007/978-3-319-68711-7_2",
    language = "English",
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    volume = "10575 LNCS",
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    editor = "Stefan Rass and Bo An and Christopher Kiekintveld and Fei Fang and Stefan Schauer",
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    }

    Zolotavkin, Y, Garcia, J & Rudolph, C 2017, Incentive Compatibility of Pay Per Last N Shares in Bitcoin Mining Pools. in S Rass, B An, C Kiekintveld, F Fang & S Schauer (eds), Decision and Game Theory for Security - 8th International Conference, GameSec 2017, Proceedings: 8th International Conference, GameSec 2017, Vienna, Austria, October 23–25, 2017, Proceedings. vol. 10575 LNCS, Lecture Notes in Computer Science, vol. 10575, Springer, Cham, Switzerland, pp. 21-39, 8th International Conference on Decision and Game Theory for Security, GameSec 2017, Vienna, Austria, 23/10/17. https://doi.org/10.1007/978-3-319-68711-7_2, https://doi.org/10.1007/978-3-319-68711-7_2

    Incentive Compatibility of Pay Per Last N Shares in Bitcoin Mining Pools. / Zolotavkin, Yevhen; Garcia, Julian; Rudolph, Carsten.

    Decision and Game Theory for Security - 8th International Conference, GameSec 2017, Proceedings: 8th International Conference, GameSec 2017, Vienna, Austria, October 23–25, 2017, Proceedings. ed. / Stefan Rass; Bo An; Christopher Kiekintveld; Fei Fang; Stefan Schauer. Vol. 10575 LNCS Cham, Switzerland : Springer, 2017. p. 21-39 (Lecture Notes in Computer Science; Vol. 10575).

    Research output: Chapter in Book/Report/Conference proceedingConference PaperResearchpeer-review

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    N2 - Pay per last N shares (PPLNS) is a popular pool mining reward mechanism on a number of cryptocurrencies, including Bitcoin. In PPLNS pools, miners may stand to benefit by delaying reports of found shares. This attack may entail unfair or inefficient outcomes. We propose a simple but general game theoretical model of delays in PPLNS. We derive conditions for incentive compatible rewards, showing that the power of the most powerful miner determines whether incentives are compatible or not. An efficient algorithm to find Nash equilibria is put forward, and used to show how fairness and efficiency deteriorate with inside-pool inequality. In pools where all players have comparable computational power incentives to deviate from protocol are minor, but gains may be considerable in pools where miner’s resources are unequal. We explore how our findings can be applied to ameliorate delay attacks by fitting real-world parameters to our model.

    AB - Pay per last N shares (PPLNS) is a popular pool mining reward mechanism on a number of cryptocurrencies, including Bitcoin. In PPLNS pools, miners may stand to benefit by delaying reports of found shares. This attack may entail unfair or inefficient outcomes. We propose a simple but general game theoretical model of delays in PPLNS. We derive conditions for incentive compatible rewards, showing that the power of the most powerful miner determines whether incentives are compatible or not. An efficient algorithm to find Nash equilibria is put forward, and used to show how fairness and efficiency deteriorate with inside-pool inequality. In pools where all players have comparable computational power incentives to deviate from protocol are minor, but gains may be considerable in pools where miner’s resources are unequal. We explore how our findings can be applied to ameliorate delay attacks by fitting real-world parameters to our model.

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    Zolotavkin Y, Garcia J, Rudolph C. Incentive Compatibility of Pay Per Last N Shares in Bitcoin Mining Pools. In Rass S, An B, Kiekintveld C, Fang F, Schauer S, editors, Decision and Game Theory for Security - 8th International Conference, GameSec 2017, Proceedings: 8th International Conference, GameSec 2017, Vienna, Austria, October 23–25, 2017, Proceedings. Vol. 10575 LNCS. Cham, Switzerland: Springer. 2017. p. 21-39. (Lecture Notes in Computer Science). https://doi.org/10.1007/978-3-319-68711-7_2, https://doi.org/10.1007/978-3-319-68711-7_2