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Review of Financial Studies Vol. 37 No. 2 2024

Committee-Based Blockchains as Games between Opportunistic Players and Adversaries

Yackolley Amoussou-Guenou1; Bruno Biais2; Maria Potop-Butucaru3; Sara Tucci-Piergiovanni4

1 Université Paris-Saclay, CEA, List and Université Paris-Panthéon-Assas, CRED , France · 2 HEC Paris , France · 3 Sorbonne Université, CNRS , LIP6, France · 4 Université Paris-Saclay, CEA , List, France

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.

DOI
10.1093/rfs/hhad051
Volume
37
Issue
2
Pages
409-443
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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