Game-Theoretic Randomness for Proof-of-Stake

Zhuo Cai () and Amir Goharshady ()
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Zhuo Cai: Hong Kong University of Science and Technology (HKUST)
Amir Goharshady: Hong Kong University of Science and Technology (HKUST)

A chapter in Mathematical Research for Blockchain Economy, 2023, pp 28-47 from Springer

Abstract: Abstract Many protocols in distributed computing rely on a source of randomness, usually called a random beacon, both for their applicability and security. This is especially true for proof-of-stake blockchain protocols in which the next miner or set of miners have to be chosen randomly and each party’s likelihood to be selected is in proportion to their stake in the cryptocurrency. The chosen miner is then allowed to add a block to the chain. Current random beacons used in proof-of-stake protocols, such as Ouroboros and Algorand, have two fundamental limitations: Either (i) they rely on pseudorandomness, e.g. assuming that the output of a hash function is uniform, which is a widely used but unproven assumption, or (ii) they generate their randomness using a distributed protocol in which several participants are required to submit random numbers which are then used in the generation of a final random result. However, in this case, there is no guarantee that the numbers provided by the parties are uniformly random and there is no incentive for the parties to honestly generate uniform randomness. Most random beacons have both limitations. In this work, we provide a protocol for distributed generation of randomness. Our protocol does not rely on pseudorandomness at all. Similar to some of the previous approaches, it uses random inputs by different participants to generate a final random result. However, the crucial difference is that we provide a game-theoretic guarantee showing that it is in everyone’s best interest to submit uniform random numbers. Hence, our approach is the first to incentivize honest behavior instead of just assuming it. Moreover, the approach is trustless and generates unbiased random numbers. It is also tamper-proof and no party can change the output or affect its distribution. Finally, it is designed with modularity in mind and can be easily plugged into existing distributed protocols such as proof-of-stake blockchains.

Keywords: Distributed randomness; Proof-of-stake; Mechanism design (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/978-3-031-48731-6_2

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