A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> Chaingrowth property <s> Bitcoin is a digital currency that unlike traditional currencies does not rely on a centralized authority. Instead Bitcoin relies on a network of volunteers that collectively implement a replicated ledger and verify transactions. In this paper we analyze how Bitcoin uses a multi-hop broadcast to propagate transactions and blocks through the network to update the ledger replicas. We then use the gathered information to verify the conjecture that the propagation delay in the network is the primary cause for blockchain forks. Blockchain forks should be avoided as they are symptomatic for inconsistencies among the replicas in the network. We then show what can be achieved by pushing the current protocol to its limit with unilateral changes to the client's behavior. <s> BIB001 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> Chaingrowth property <s> Bitcoin is the first and most popular decentralized cryptocurrency to date. In this work, we extract and analyze the core of the Bitcoin protocol, which we term the Bitcoin backbone, and prove two of its fundamental properties which we call common prefix and chain quality in the static setting where the number of players remains fixed. Our proofs hinge on appropriate and novel assumptions on the “hashing power” of the adversary relative to network synchronicity; we show our results to be tight under high synchronization. <s> BIB002 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> Chaingrowth property <s> Motivated by the recent explosion of interest around blockchains, we examine whether they make a good fit for the Internet of Things (IoT) sector. Blockchains allow us to have a distributed peer-to-peer network where non-trusting members can interact with each other without a trusted intermediary, in a verifiable manner. We review how this mechanism works and also look into smart contracts—scripts that reside on the blockchain that allow for the automation of multi-step processes. We then move into the IoT domain, and describe how a blockchain-IoT combination: 1) facilitates the sharing of services and resources leading to the creation of a marketplace of services between devices and 2) allows us to automate in a cryptographically verifiable manner several existing, time-consuming workflows. We also point out certain issues that should be considered before the deployment of a blockchain network in an IoT setting: from transactional privacy to the expected value of the digitized assets traded on the network. Wherever applicable, we identify solutions and workarounds. Our conclusion is that the blockchain-IoT combination is powerful and can cause significant transformations across several industries, paving the way for new business models and novel, distributed applications. <s> BIB003 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> Chaingrowth property <s> The increasing popularity of blockchain-based cryptocurrencies has made scalability a primary and urgent concern. We analyze how fundamental and circumstantial bottlenecks in Bitcoin limit the ability of its current peer-to-peer overlay network to support substantially higher throughputs and lower latencies. Our results suggest that reparameterization of block size and intervals should be viewed only as a first increment toward achieving next-generation, high-load blockchain protocols, and major advances will additionally require a basic rethinking of technical approaches. We offer a structured perspective on the design space for such approaches. Within this perspective, we enumerate and briefly discuss a number of recently proposed protocol ideas and offer several new ideas and open challenges. <s> BIB004 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> Chaingrowth property <s> Orphan risk for large blocks limits Bitcoin’s transactional capacity while the lack of secure instant transactions restricts its usability. Progress on either front would help spur adoption. This paper considers a technique for using fractional-difficulty blocks (weak blocks) to build subchains bridging adjacent pairs of real blocks. Subchains reduce orphan risk by propagating blocks layer-by-layer over the entire block interval, rather than all at once when the proof-of-work is solved. Each new layer of transactions helps to secure the transactions included in lower layers, even though none of the transactions have been con-firmed in a real block. Miners are incentivized to cooperate building subchains in order to process more transactions per second (thereby claiming more fee revenue) without incur-ring additional orphan risk. The use of subchains also diverts fee revenue towards network hash power rather than dripping it out of the system to pay for orphaned blocks. By nesting subchains, weak block verification times approaching the theoretical limits imposed by speed-of-light constraints would become possible with future technology improvements. As subchains are built on top of the existing Bitcoin protocol, their implementation does not require any changes to Bitcoin’s consensus rules. <s> BIB005 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> Chaingrowth property <s> Bitcoin’s innovative and distributedly maintained blockchain data structure hinges on the adequate degree of difficulty of so-called “proofs of work,” which miners have to produce in order for transactions to be inserted. Importantly, these proofs of work have to be hard enough so that miners have an opportunity to unify their views in the presence of an adversary who interferes but has bounded computational power, but easy enough to be solvable regularly and enable the miners to make progress. As such, as the miners’ population evolves over time, so should the difficulty of these proofs. Bitcoin provides this adjustment mechanism, with empirical evidence of a constant block generation rate against such population changes. <s> BIB006 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> Chaingrowth property <s> We present “Ouroboros”, the first blockchain protocol based on proof of stake with rigorous security guarantees. We establish security properties for the protocol comparable to those achieved by the bitcoin blockchain protocol. As the protocol provides a “proof of stake” blockchain discipline, it offers qualitative efficiency advantages over blockchains based on proof of physical resources (e.g., proof of work). We also present a novel reward mechanism for incentivizing Proof of Stake protocols and we prove that, given this mechanism, honest behavior is an approximate Nash equilibrium, thus neutralizing attacks such as selfish mining. <s> BIB007 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> Chaingrowth property <s> Nakamoto’s famous blockchain protocol enables achieving consensus in a so-called permissionless setting—anyone can join (or leave) the protocol execution, and the protocol instructions do not depend on the identities of the players. His ingenious protocol prevents “sybil attacks” (where an adversary spawns any number of new players) by relying on computational puzzles (a.k.a. “moderately hard functions”) introduced by Dwork and Naor (Crypto’92). <s> BIB008 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> Chaingrowth property <s> In proof-of-work-based blockchain networks, the block miners participate in a crypto-puzzle solving competition to win the reward of publishing (i.e., mining) new blocks. Due to the remarkable difficulty of the crypto-puzzle, individual miners tend to join mining pools to secure stable profits. We study the dynamics of mining pool selection in a blockchain network, where mining pools may choose arbitrary block mining strategies. We identify the hash rate for puzzle-solving and the block propagation delay as two major factors determining the mining competition results. We then model the strategy evolution of individual miners as an evolutionary game. We provide the theoretical analysis of evolutionary stability in the pool selection dynamics for a two-pool case. Numerical simulations support our theoretical findings as well as demonstrate the stability in the evolution of miners’ strategies in a general case. <s> BIB009
Liveness For any given rounds of block proposals, the number of blocks appended to the local view of any honest node is lower-bounded. are satisfied by the Nakamoto protocol with overwhelming probability. Furthermore, the common-prefix property and the chain-growth property formalize the presumption in [1] that a transaction is secured when a sufficient length of subsequent blocks is appended to the chain. In other words, when a block is a certain number of blocks deep from the end of the chain, or equivalently, the repeated block-proposal competition has passed sufficiently many rounds, the transaction data in that block is non-reversible/persistent and thus guaranteed to be double-spending proof. It is worth noting that the studies in BIB002 , BIB006 provide a generalizable approach for evaluating the security and the efficiency of the PoX-based Nakamoto protocols in permissionless blockchains. Based on the quantitative analysis of the properties in Table II , the same framework of security evaluation has been adopted by the studies in consensus protocols using other types of puzzle design such as Proof of Stakes (PoS) BIB007 ,  . Due to the open access nature of permissionless blockchains, the hashrate presented in a practical blockchain network is generally unstable. As indicated by Figure 7 , since the introduction of the Application Specific Integrated Circuit (ASIC) for hash acceleration in 2013, the practical PoWbased blockchain networks, e.g., Bitcoin, have experienced an explosive increase of the total hashrate with huge fluctuation  . Practically, blockchain networks adopt a heuristic, periodic difficulty-adjustment policy to maintain a roughly fixed time interval, i.e., λ −1 in (4), between two neighbor blocks. However, the expected value of λ −1 is usually chosen in an arbitrary manner and is frequently reduced in favor of a higher transaction throughput (see Litecoin [93] and ZCash  for example). Following the assumption of partial synchronization BIB002 , the roughly fixed time interval indeed implies an upper bound for the information dissemination latency in the P2P network  . With such a consideration in mind, a theoretical study is provided in BIB008 between the upper bound of the information latency and the persistence of the block data in a node's local view of the blockchain. Consider a flat network of N nodes with a maximum block propagation delay of T . It is found in BIB008 that for a given fraction of adversary node ρ (0 ≤ ρ < 0.5), the block generation probability for each node should satisfy the following condition in order to ensure the property of data persistence (Theorem 1.1 in BIB008 ): where Pr g i can be calculated based on (3) and a given hashrate. Furthermore, the block interval rules the trade-off between security and efficiency. The formal refers to the degree of fulfillment (i.e., the probabilistic consistency) of the Byzantine agreement properties, whereas the latter refers to the transaction throughput, which can be measured in the number of confirmed transactions per second. In BIB001 ,  , examination on the block propagation delay T in BIB003 shows that a safe upper bound on T is jointly determined by the block size, the network scale measured in hop counts, and the average roundtrip time of the links. The empirical study in BIB001 reveals that for small-size blocks, e.g., less than 20kB for Bitcoin, the round-trip delay is the dominant factor of the block propagation delay. Otherwise, transaction validation time becomes the major factor of the block propagation delay, which grows linearly with respect to the size of a block, e.g., 80ms/kB for Bitcoin. In BIB004 , an implicit metric to capture the impact of network scale on the block propagation delay is adopted. Therein, the ratio between the block size and the propagation time required to reach a certain percentage of the nodes in the network is measured for the Bitcoin network. The experiments show that in the Bitcoin network with 55kb/s propagation rate for 90% of the nodes, the block interval should not be smaller than 12s, which leads to a peak transaction throughput of 26TX/s for 250Byte transactions. Furthermore, the studies in BIB005 , BIB009 also consider the impact of the propagation delay on the incidence of abandoning a proposed block with valid PoW solution. More specifically, finding a valid puzzle solution does not necessarily mean that the proposed block will be finally accepted by the network. Due to the propagation delay, a blockchain fork (see Figure 5 ) can only be adopted as the canonical blockchain state when it is first disseminated across the network. By considering both the round-trip delay and the block verification delay, the average block propagation delay across a P2P network is modeled as a function of the block size s in BIB009 : where a is a network scale-related parameter, C is the average effective channel capacity of each link  and b is a coefficient determined by both the network scale and the average verification speed of each node (cf. BIB001 ). Based on (6), the probability for the network to abandon/orphan a valid block proposal of size s due to the delay of block diffusion is modeled as follows BIB005 , BIB009 : where λ is the expected block arrival rate. From a user's perspective, it is insufficient to know only the network-level probability of block orphaning due to the latency. Alternatively, it is of more interest to determine the safe time interval between locally observing on the chain a transaction and confirming it. With this in mind, the study in BIB008 considers a scenario where the adversary gets additional computation time by delaying the block propagation with a certain number of rounds ∆. Based on the analysis of the common-prefix property BIB002 , a new metric, i.e., Kconsistency is proposed in BIB008 to examine whether any two honest nodes are able to agree on the blockchain state that is at least K blocks deep from the end of the chain. Let α and β denote the probabilities that an honest node and the attackers can propose a valid block within a round, respectively. The analytical study in BIB008 (cf.  Lemma 8] ) shows that the required waiting time T is jointly determined by α, β, ∆ and the parameter determining the searching space of the hash function, i.e., L in Definition 1. More specifically, as long as the following condition is satisfied with an arbitrarily small constant δ > 0 (see [  and K > K 0 (L) = c log(L) for some constant c, the Nakamoto protocol satisfies the property of K-consistency (except with negligible probability in K). However, the closed-form threshold K 0 (L) for K-consistency is not provided in BIB008 .