How Does Stake Distribution Influence Consensus? Analyzing Blockchain Decentralization

• URL: http://arxiv.org/abs/2312.13938v3
• Date: Mon, 20 May 2024 16:04:08 GMT
• Title: How Does Stake Distribution Influence Consensus? Analyzing Blockchain Decentralization
• Authors: Shashank Motepalli, Hans-Arno Jacobsen,
• Abstract summary: This study first formalizes decentralization metrics for weighted consensus mechanisms. We introduce the Square Root Stake Weight (SRSW) model, which effectively recalibrates staking weight distribution. This research is a pivotal step toward a more fair and equitable distribution of staking weight, advancing the decentralization in blockchain consensus mechanisms.
• Score: 10.679753825744964
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: In the PoS blockchain landscape, the challenge of achieving full decentralization is often hindered by a disproportionate concentration of staked tokens among a few validators. This study analyses this challenge by first formalizing decentralization metrics for weighted consensus mechanisms. An empirical analysis across ten permissionless blockchains uncovers significant weight concentration among validators, underscoring the need for an equitable approach. To counter this, we introduce the Square Root Stake Weight (SRSW) model, which effectively recalibrates staking weight distribution. Our examination of the SRSW model demonstrates notable improvements in the decentralization metrics: the Gini index improves by 37.16% on average, while Nakamoto coefficients for liveness and safety see mean enhancements of 101.04% and 80.09%, respectively. This research is a pivotal step toward a more fair and equitable distribution of staking weight, advancing the decentralization in blockchain consensus mechanisms.

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