Strategic Mining in Proof-of-Stake with Practical Random Election

Abstract

The security of blockchain systems relies on the honest majority assumption. However, strategic mining threatens this assumption, because selfish miners can gain more block rewards than honest miners by attacks such as withholding blocks. Due to its significant implication, blockchain mining games have been studied in PoW and PoS under various settings using different methods. Nonetheless, this paper argues that the practical limitation of random beacons has not been exploited in strategic mining in PoS blockchains. Current PoS blockchains use random beacons to randomly select validators for each slot. However, the randomness is usually fixed for multiple slots, due to the latency of distributed random beacon protocols. This indicates that validators actually know some information about the election result in the future, which contrasts with the Markov process models in previous analysis. Using this information, this paper presents a close to optimal mining strategy based on an optimal interval scheduling algorithm for each epoch. For proof-of-stake protocols with no propagation delay, we show that a validator with arbitrary proportion of stake can strictly benefit from strategic mining and get significantly higher block rewards than the previous strategies.