Betting on Blockchain Consensus with Fantomette

Abstract: Blockchain-based consensus protocols present the opportunity to develop new protocols, due to their novel requirements of open participation and explicit incentivization of participants. To address the first requirement, it is necessary to consider the leader election inherent in consensus protocols, which can be difficult to scale to a large and untrusted set of participants. To address the second, it is important to consider ways to provide incentivization without relying on the resource-intensive proofs-of-work used in Bitcoin. In this paper, we propose a secure leader election protocol, Caucus; we next fit this protocol into a broader blockchain-based consensus protocol, Fantomette, that provides game-theoretic guarantees in addition to traditional blockchain security properties. Fantomette is the first proof-of-stake protocol to give formal game-theoretic proofs of security in the presence of non-rational players.