A dynamic block reward approach to improve the performance of blockchain systems

In Ethereum, miners are responsible for expanding the blockchain ledger by appending new blocks of transactions in exchange for incentives. Within the current Ethereum incentive mechanism, miners can still receive a significant amount of reward when creating non-full or even empty blocks, despite their negative impact on the system performance. We provide an extensive data-driven analysis of the impact of non-full blocks on the system performance, with the help of the BlockSim simulation tool. We collect the data for 500,000 Ethereum blocks and fit the appropriate probability distributions to the data to provide input suitable for the simulator. We show that the performance of Ethereum can be improved by over 50% if all blocks were filled with transactions. We propose an adjustment to the current Ethereum incentive model to assure the received incentive is always proportional to the block utilization level. Using our proposed approach, the incentive for non-full blocks is significantly reduced, making this behavior less attractive for miners. This implies that miners would be enforced to fill their blocks with transactions, and thus the performance is pushed to its optimal level. We show that our approach can work in practice without any crucial security issues.