Dynamic Evolutionary Game-Based Staking Pool Selection Modeling and Decentralization Enhancement for Blockchain System

Abstract

The proof-of-stake (PoS) mechanism is a consensus protocol within blockchain technology that determines the validation of transactions and the minting of new blocks based on the participant's stake in the cryptocurrency network. In contrast to proof-of-work (PoW), which relies on computational power to validate transactions, PoS employs a deterministic and resource-efficient approach to elect validators. Whereas, an inherent risk of PoS is the potential for centralization among a small cohort of network participants possessing substantial stakes, jeopardizing system decentralization and posing security threats. To mitigate centralization issues within PoS, this study introduces an incentive-aligned mechanism named decentralized proof-of-stake (DePoS), wherein the second-largest stakeholder is chosen as the final validator with a higher probability. Integrated with the verifiable random function (VRF), DePoS rewards the largest stake-holder with uncertainty, thus disincentivizing stakeholders from accumulating the largest stake. Additionally, a dynamic evolutionary game model is innovatively developed to simulate the evolution of staking pools, thus facilitating the investigation of staking pool selection dynamics and equilibrium stability across PoS and DePoS systems. The findings demonstrate that DePoS generally fosters wealth decentralization by discouraging the accumulation of significant cryptocurrency holdings. Through theoretical analysis of stakeholder predilection in staking pool selection and the simulation of the evolutionary tendency in pool scale, this research demonstrates the comparative advantage in decentralization offered by DePoS over the conventional PoS.