Incentive-Compatibility in Blockchains and Mining Pools
summary
Two formal results: an axiomatic, budget‑balanced characterization shows the only rule that is Sybil‑proof, collusion‑proof and anonymous is the proportional split of rewards by hash rate (proof by induction, integer hash rates, uses many-sample estimators to implement near‑deterministic payouts). In mining pools the proportional payout is not incentive‑compatible (withholding full solutions can raise utility); a practical fix is a hybrid PPS→proportional scheme (pay‑per‑share until D samples, then switch) that restores IC while keeping only weak budget balance.
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chapters (16)
- 0:00Intro
- 1:28Game Theory and Its Inverse
- 2:31Goals
- 6:02The Setup: A Single Block
- 11:40Implementing Non-Proportional Rules
- 15:00The Axiomatic Approach
- 17:02Axiom #1: Sybil-Proofness
- 23:51Axiom #2: Collusion-Proofness
- 31:32Proof of Uniqueness Theorem
- 38:25Uniqueness Theorem: Variations
- 39:17Risk-Averse Miners
- 48:28Rewards in Mining Pools
- 49:57Incentive-Compatible Reward Functions
- 52:30The Proportional Reward Function
- 58:00The Pay-per-Share Reward Function
- 58:48A Hybrid Reward Function
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