Cooperative Mining in Blockchain Networks With Zero-Determinant Strategies

Area of Science:

• Computer Science
• Game Theory
• Blockchain Technology

Background:

• Proof-of-work (PoW) blockchains rely on miners competing to solve cryptographic puzzles for rewards.
• Mining pools are formed to stabilize profits, but malicious miner behavior can waste resources and threaten network efficiency.
• Existing systems lack robust mechanisms to ensure honest participation and maximize collective benefit.

Purpose of the Study:

• To propose a novel game-theoretic framework to incentivize honest mining behavior in PoW blockchain networks.
• To enhance the overall welfare and efficiency of blockchain networks by encouraging cooperative mining.
• To introduce a mechanism that mitigates the negative impact of malicious miners.

Main Methods:

• Formulated the mining process as a noncooperative iterated game.
• Developed a mechanism utilizing zero-determinant (ZD) strategies to promote cooperation.
• Employed optimization methods to theoretically analyze maximum system welfare within mining pools.

Main Results:

• The proposed ZD strategy mechanism effectively encourages cooperative mining.
• The framework demonstrably improves the efficiency of mining operations in PoW blockchains.
• Theoretical analysis and numerical illustrations confirm the potential for increased total system welfare.

Conclusions:

• The game-theoretic framework with ZD strategies offers a viable solution to incentivize honest mining.
• This approach can significantly enhance the efficiency and security of PoW blockchain networks.
• The study provides a theoretical foundation and practical insights for optimizing mining pool operations and network welfare.