Blockchain protocols based on proof-of-work induce miners, through monetary rewards, to expend energy in order to add blocks to the chain. I will discuss some vulnerabilities that arise from incentives in this framework and some potential remedies. The best-known vulnerability comes from mining games, a type of stochastic games. Miners are expected to build a chain of blocks by adding new blocks to the end of it, however if they have sufficient computational power they are better off deviating from the expected behaviour. I will discuss a few possible deviations: extending the chain from a past block, hiding newly minted blocks, and varying the energy expended from epoch to epoch. Mining games can be partially alleviated when weak miners expand their strategies to pay other miners, and energy strategic deviations can be prevented by changing the mechanism for deciding the difficulty of producing a block.

Speaker bio:

Elias Koutsoupias is a professor of computer science at the University of Oxford, UK. He previously held faculty positions at the University of California, Los Angeles (UCLA) and the University of Athens. His research interests include algorithmic aspects of game theory, economics and networks, online algorithms, decision-making under uncertainty, design and analysis of algorithms, and computational complexity. He received the Godel Prize of theoretical computer science for his work on the Price of Anarchy, in reference to laying the foundations of algorithmic game theory. He is also the recipient of an ERC Advanced Grant.