Template-Type: ReDIF-Paper 1.0
Author-Name: Burak Can
Author-Name-First: Burak
Author-Name-Last: Can
Author-Email: b.can@maastrichtuniversity.nl
Author-Workplace-Name: Department of Data Analytics and Digitalisation, Maastricht University
Author-Name: Jens Leth Hougaard
Author-Name-First: Jens Leth
Author-Name-Last: Hougaard
Author-Email: jlh@ifro.ku.dk
Author-Workplace-Name: Department of Food and Resource Economics, University of Copenhagen
Author-Workplace-Name: Economics, NYU-Shanghai
Author-Name: Mohsen Pourpouneh
Author-Name-First: Mohsen
Author-Name-Last: Pourpouneh
Author-Email: mohsen@ifro.ku.dk
Author-Workplace-Name: Department of Food and Resource Economics, University of Copenhagen
Title: On Reward Sharing in Blockchain Mining Pools
Abstract: This paper proposes a conceptual framework for the analysis of reward sharing schemes in mining pools, such as those associated with Bitcoin. The framework is centered around the reported shares in a pool instead of agents and results in two new fairness criteria, absolute and relative redistribution. These criteria impose that the addition of a share to the pool affects all previous shares in the same way, either in absolute amount or in relative ratio. We characterize two large classes of economically viable reward sharing schemes corresponding to each of these fairness criteria in turn. We further show that the intersection of these classes brings about a generalization of the the well-known proportional scheme, which also leads to a new characterization of the proportional scheme as a corollary.
Length: 39 pages
Creation-Date: 2020-08
File-URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2020/IFRO_WP_2020_09.pdf
File-Format: Application/pdf
Number: 2020/09
Classification-JEL: D63, G20, L86, D31
Keywords: blockchain, bitcoin, fairness, mining pools, resource allocation, mechanism design
Handle: RePEc:foi:wpaper:2020_09