Game Theoretic Model for an Efficient and Secure Consensus Algorithm for Ethereum Blockchain

Abstract

Blockchain networks rely on consensus mechanisms to maintain security and efficiency. Delegated Proof of Stake (DPoS) is a widely adopted alternative to traditional Proof of Work (PoW) and Proof of Stake (PoS) due to its scalability. However, DPoS suffers from centralization risks, collusion, and the presence of unreliable validators, compromising network integrity. One approach to mitigating these issues is the downgrade method, which reduces the influence of dishonest validators over time by penalizing their stake or voting power. While this approach improves security, it still faces challenges related to manipulation and inefficiency. To address these limitations more effectively, we introduce Game Theory-based Delegated Proof of Stake (GT-DPoS), an advanced consensus framework that integrates strategic decision-making through game theory to optimize node selection and incentivization. GT-DPoS utilizes a two-stage evaluation mechanism based on Reputation Score (RS) and Trust Score (TS) to regulate node behavior, penalize malicious actors, and reward honest participation. In Stage 1, nodes are assessed based on RS, incorporating factors like stake, transaction efficiency, block contribution, and past misconduct. Nodes failing to meet the threshold are penalized, while eligible ones advance to second stage. Stage 2 evaluates TS, considering rewards, penalties, and community votes, refining the selection through a payoff-based model that ensures rational decision-making. Unlike the downgrade method, GT-DPoS provides a more dynamic and adaptive approach, ensuring continuous security enhancement without long-term inefficiencies. Experimental results demonstrate that GT-DPoS achieves faster block creation times compared to conventional DPoS, with up to 4.6% improvement at lower transaction loads and 1.2% at higher loads. By leveraging game-theoretic principles, GT-DPoS enhances decentralization, reduces transaction latency, and strengthens network security, making it a more effective and performance-optimized alternative to both traditional DPoS and downgrade-based approaches