Decentralized Reward Allocation Mechanism with Sybil Resilience: The Case of Stake Pools

Abstract

Proof-of-Stake (PoS) is an energy-efficient consensus where proposer election based on validator stakes causes centralization, especially in stake pools. However, existing reward allocation mechanisms aim to address centralization but increase the risk of Sybil attacks. Therefore, designing a reward allocation mechanism for stake pools that reconciles decentralization and Sybil resilience remains a key challenge. In this paper, we propose Dream-SR, a reward allocation mechanism established with formal function properties. Dream-SR enhances decentralization by imposing reward constraints to limit the dominance of large stake pools. Sybil resilience is ensured by aligning reward allocation with both the economic incentives and the influence, effectively addressing utility-maximizing and influence-maximizing Sybil attacks. Furthermore, we leverage a multi-leader-multi-follower (MLMF) Stackelberg game model to capture the interactions between validators and users regarding commission pricing and stake delegation within stake pools. The game model is used to analyze the impact of the reward allocation mechanism on the strategies of participants and the system equilibrium. Compared with other relevant mechanisms, numerical results reveal that Dream-SR effectively improves decentralization and resilience to Sybil attacks at equilibrium.