Blockchain Participation Games

Abstract: We study game-theoretic models for capturing participation in blockchain systems. Permissionless blockchains can be naturally viewed as games, where a set of potentially interested users is faced with the dilemma of whether to engage with the protocol or not. Engagement here implies that the user will be asked to complete certain tasks, whenever they are selected to contribute (typically according to some stochastic process) and be rewarded if they choose to do so. Apart from the basic dilemma of engaging or not, even more strategic considerations arise in settings where users may be able to declare participation and then retract before completing their tasks (but are still able to receive rewards) or are rewarded independently of whether they contribute. Such variations occur naturally in the blockchain setting due to the complexity of tracking ``on-chain'' the behavior of the participants. We capture these participation considerations offering a series of models that enable us to reason about the basic dilemma, the case where retraction effects influence the outcome and the case when payments are given universally irrespective of the stochastic process. In all cases we provide characterization results or necessary conditions on the structure of Nash equilibria. Our findings reveal that appropriate reward mechanisms can be used to stimulate participation and avoid negative effects of free riding, results that are in line but also can inform real world blockchain system deployments.