Characterizing relationships between primary miners in Ethereum by\n analyzing on-chain transactions

Abstract

It is widely accepted that Ethereum mining is highly centralized.\nNonetheless, centralization has been mostly characterized by exclusively\nlooking at the influence that independent miners or mining pools can have over\nthe network. Moreover, models of mining behavior assume that miners are either\nunrelated or only relate via mining pools under highly structured and\ntransparent agreements. If these assumptions and the predictions they entail\nwere to be completely accurate, there would not be any evidence of on-chain\ntransactions between miners, other than the ones expected from mining pool\npayouts. By looking at on-chain transactions between miners in the Ethereum\nNetwork we find that aside from the payouts from mining pools to small miners,\nthere are also transactions that define relationships between mining pools,\nindependent miners and between independent miners and mining pools.\nFurthermore, by characterizing the topology of the network of miner\ntransactions, we find the emergence of highly connected clusters that control\nsignificant amounts of hashing power and exhibit relationships in the opposite\ndirection of what theoretical models predict. This more nuanced\ncharacterization of mining centralization can help identify network\nvulnerabilities and inform protocol redesigns.\n