Trade-off of Security, Latency, and Throughput of the Nakamoto Consensus

• URL: http://arxiv.org/abs/2312.05506v4
• Date: Sun, 4 Aug 2024 20:06:21 GMT
• Title: Trade-off of Security, Latency, and Throughput of the Nakamoto Consensus
• Authors: Shu-Jie Cao, Dongning Guo,
• Abstract summary: This paper delves into the fundamental trade-off between security, latency, and throughput in proof-of-work (PoW) longest-chain-latency-choice protocols, also known as the PoW Nakamoto consensus. New upper and lower bounds on the probability of violating transaction safety are derived as a function of honest and adversarial mining rates, an upper bound on block propagation delays, and transaction confirmation latency, both in time and in block depth. The paper reveals a fundamental trade-off between transaction throughput and confirmation latency, ultimately determined by the desired fault tolerance and the growth of block propagation delay as block size increases.
• Score: 4.738177482027387
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: This paper delves into the fundamental trade-off between security, latency, and throughput in proof-of-work (PoW) longest-chain-fork-choice protocols, also known as the PoW Nakamoto consensus. New upper and lower bounds on the probability of violating transaction safety are derived as a function of honest and adversarial mining rates, an upper bound on block propagation delays, and transaction confirmation latency, both in time and in block depth. The results include a first non-trivial closed-form finite-latency bound applicable to all delays and mining rates up to the ultimate fault tolerance. Notably, the gap between the upper and lower bounds is narrower than the best gaps previously established for a wide range of parameters relevant to Bitcoin and its derivatives such as Litecoin and Dogecoin, as well as for Ethereum Classic. Furthermore, the paper reveals a fundamental trade-off between transaction throughput and confirmation latency, ultimately determined by the desired fault tolerance and the growth of block propagation delay as block size increases.

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