Do the Rich Get Richer? Fairness Analysis for Blockchain Incentives

Proof-of-Work (PoW) is the most widely adopted incentive model in current blockchain systems, which unfortunately is energy inefficient. Proof-of-Stake (PoS) is then proposed to tackle the energy issue. The rich-get-richer concern of PoS has been heavily debated in blockchain community. The debate is centered around the argument that whether rich miners possessing more stakes will obtain higher staking rewards and further increase their potential income in the future. In this paper, we define two types of fairness, i.e., expectational fairness and robust fairness, that are useful for answering this question. In particular, expectational fairness illustrates that the expected income of a miner is proportional to her initial investment, which indicates that the expected return on investment is a constant. To better capture the uncertainty of mining outcomes, robust fairness is proposed to characterize that the return on investment concentrates to a constant with high probability as time evolves. Our analysis shows that the classical PoW mechanism can always preserve both types of fairness as long as the mining game maintains a sufficiently long time. Furthermore, we observe that current PoS blockchains implement various incentive models, and discuss three representatives, including ML-PoS, SL-PoS and C-PoS. We find that (i) ML-PoS (e.g., Qtum and Blackcoin) preserves expectational fairness but may not achieve robust fairness, (ii) SL-PoS (e.g., NXT) does not protect any type of fairness, and (iii) C-PoS (e.g., Ethereum 2.0) outperforms ML-PoS in terms of robust fairness while still maintaining expectational fairness. Finally, massive experiments on real blockchain systems and extensive numerical simulations are carried out to validate our analysis.