Tullock Contests in the Wild: Applications in Blockchains

Abstract

This letter shows how Tullock contests—a class of all-pay auctions with proportional allocation rules—can be used to model and reason about several blockchain settings. We review the fundamentals of Tullock contests and their connections to potential games. We discuss why certain properties of Tullock contests, such as sybil-proofness and compatibility with "decentralization," have made them common in blockchain applications. We illustrate how Tullock contests naturally arise in proof-of-work and proof-of-stake blockchain protocols, and are an attractive design for emerging marketplaces for blockspace and succinct proofs.