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Rewarding miners: bankruptcy situations and pooling strategies

Abstract : In Proof-of-Work (PoW) based blockchains (e.g., Bitcoin), mining is the procedure through which miners can gain money on regular basis by finding solutions to mathematical crypto puzzles (i.e., full solutions) which validate blockchain transactions. In order to reduce the uncertainty of the remuneration over time, miners cooperate and form pools. Each pool receives rewards which have to be split among pool’s participants. The objective of this paper is to find an allocation method, for a mining pool, aimed at redistributing the rewards among cooperating miners and, at the same time, preventing some malicious behaviours of the miners. Recently, Schrijvers et al. (2017) have proposed a rewarding mechanism that is incentive compatible, ensuring that miners have an advantage to immediately report full solutions to the pool. However, such a mechanism encourages a harmful inter-pool behaviour (i.e., pool hopping) when the reward results insufficient to remunerate pool miners, determining a loss in terms of pool’s computational power. By reinterpreting the allocation rules as outcomes of bankruptcy situations, we define a new rewarding system based on the well-studied Constrained Equal Losses (CEL) rule that maintains the incentive compatible property while making pool hopping less advantageous.
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Contributor : Marianna Belotti <>
Submitted on : Monday, April 27, 2020 - 4:02:32 PM
Last modification on : Friday, January 8, 2021 - 5:42:03 PM


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  • HAL Id : hal-02481155, version 2


Marianna Belotti, Stefano Moretti, Paolo Zappalà. Rewarding miners: bankruptcy situations and pooling strategies. 2020. ⟨hal-02481155v2⟩



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