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Committee-Based Blockchains as Games between Opportunistic Players and Adversaries

Author

Listed:
  • Yackolley Amoussou-Guenou
  • Bruno Biais
  • Maria Potop-Butucaru
  • Sara Tucci-Piergiovanni

Abstract

We study consensus in a protocol capturing in a simplified manner the major features of the majority of Proof of Stake blockchains. A committee is formed; one member proposes a block; and the others can check its validity and vote for it. Blocks with a majority of votes are produced. When an invalid block is produced, the stakes of the members who voted for it are “slashed.” Profit-maximizing members interact with adversaries seeking to disrupt consensus. When slashing is limited, free-riding and moral-hazard lead to invalid blocks in equilibrium. We propose a protocol modification producing only valid blocks in equilibrium.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Yackolley Amoussou-Guenou & Bruno Biais & Maria Potop-Butucaru & Sara Tucci-Piergiovanni, 2024. "Committee-Based Blockchains as Games between Opportunistic Players and Adversaries," Review of Finance, European Finance Association, vol. 37(2), pages 409-443.
    • Handle: RePEc:oup:revfin:v:37:y:2024:i:2:p:409-443.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhad051
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • G2 - Financial Economics - - Financial Institutions and Services
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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