Permissionless Consensus (2304.14701v5)

Abstract: Blockchain protocols typically aspire to run in the permissionless setting, in which nodes are owned and operated by a large number of diverse and unknown entities, with each node free to start or stop running the protocol at any time. This setting is more challenging than the traditional permissioned setting, in which the set of nodes that will be running the protocol is fixed and known at the time of protocol deployment. The goal of this paper is to provide a framework for reasoning about the rich design space of blockchain protocols and their capabilities and limitations in the permissionless setting. We propose a hierarchy of settings with different "degrees of permissionlessness", specified by the amount of knowledge that a protocol has about the current participants: These are the fully permissionless, dynamically available and quasi-permissionless settings. The paper also proves several results illustrating the utility of our analysis framework for reasoning about blockchain protocols in these settings. For example: (1) In the fully permissionless setting, even with synchronous communication and with severe restrictions on the total size of the Byzantine players, every deterministic protocol for Byzantine agreement has a non-terminating execution. (2) In the dynamically available and partially synchronous setting, no protocol can solve the Byzantine agreement problem with high probability, even if there are no Byzantine players at all. (3) In the quasi-permissionless and partially synchronous setting, by contrast, assuming a bound on the total size of the Byzantine players, there is a deterministic protocol solving state machine replication. (4) In the quasi-permissionless and synchronous setting, every proof-of-stake state machine replication protocol that uses only time-malleable cryptographic primitives is vulnerable to long-range attacks.

• The paper introduces a hierarchical framework that categorizes permissionless settings into fully, dynamically available, and quasi-permissionless, enabling precise protocol analysis.
• The paper proves that deterministic Byzantine agreement is impossible in fully permissionless and synchronous environments while facing challenges under partial synchrony.
• The paper demonstrates that while Bitcoin’s proof-of-work excels in fully permissionless settings, proof-of-stake protocols perform better in dynamically available and quasi-permissionless models.

Overview of "Permissionless Consensus"

The paper "Permissionless Consensus" by Andrew Lewis-Pye and Tim Roughgarden provides a conceptual framework for analyzing blockchain protocols in permissionless settings. These settings enable participation by a potentially vast and anonymous set of nodes, each capable of dynamic entries and exits. The paper outlines different permissionlessness degrees and examines blockchain protocols' capabilities and limitations within these contexts.

Key Contributions

1. Framework for Permissionless Settings:
   • The authors propose a hierarchy of "degrees of permissionlessness," providing a structured approach to analyze blockchain protocols:
     • Fully Permissionless: Protocols have no initial knowledge of participants (e.g., Bitcoin's proof-of-work).
     • Dynamically Available: Protocols are aware of a list of identifiers, with participants as a subset (e.g., proof-of-stake longest-chain protocols).
     • Quasi-Permissionless: All identifiers are participants (e.g., PBFT-style proof-of-stake protocols).
   • Each setting offers distinct challenges concerning node anonymity, inactivity, and sybil attacks.
2. Theoretical Results and Constraints:
   • The authors investigate the complexities inherent to each setting, deriving several critical results:
     • In the fully permissionless and synchronous setting, deterministic Byzantine agreement is proven impossible due to the possibility of infinite non-terminating executions.
     • In the dynamically available setting, Byzantine agreement is not probable in partial synchrony, and it's impossible to ensure accountability and optimistic responsiveness.
     • Conversely, in the quasi-permissionless setting, deterministic protocols can ensure state machine replication given constrained Byzantine influence.
3. Implications for Blockchain Design:
   • The paper highlights that the Bitcoin protocol, while effective in a fully permissionless and synchronous setting, faces inherent limitations when extended to more demanding requirements like accountability.
   • Proof-of-stake protocols generally operate in the dynamically available or quasi-permissionless settings, where more is known about participants, allowing for greater flexibility in ensuring consensus properties.

Implications and Future Directions

• Practical Implications: The framework provides a clear guideline for blockchain developers and researchers to understand the trade-offs between different consensus models, particularly focusing on the balance between decentralization and security.
• Theoretical Advancements: By providing strong impossibility results and exploring the boundaries of current protocols, the authors set the stage for the further development of new consensus mechanisms that might inherently circumvent these constraints.
• Future Research: Exploring advanced cryptographic primitives beyond time-malleable ones, like verifiable delay functions or ephemeral keys, could open new avenues for enhancing protocol security, especially against long-range attacks.

In summary, "Permissionless Consensus" offers significant insights into how blockchain protocols can be designed, analyzed, and improved upon, especially regarding robustness in the face of anonymous and dynamic participation. The paper's methodical approach to permissionlessness layers serves as a cornerstone for future research in distributed consensus within blockchain technology.