Impacts of Consensus Protocols and Trade Network Topologies on Blockchain System Performance
Xianhua Wei (),
Aiya Li () and
Zhou He ()
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Zhou He: http://agentlab.cn/en/
Journal of Artificial Societies and Social Simulation, 2020, vol. 23, issue 3, 2
Blockchain can be viewed as a public ledger maintained collectively by a large number of participators based on consensus protocol. We are interested in how difference consensus protocols and trade network topologies affect the performance of a blockchain system, which has not been studied in the literature yet. In this paper, we proposed an agent-based model consisting of multiple trader and miner agents, and one system agent. We investigated three consensus protocols, namely proof-of-work (PoW), proof-of-stake (PoS), and delegated proof-of-stake (DPoS). We also examined three common trade network topologies: random, small-world, and scale-free. We find that both consensus protocol and trade network topology can impact the performance of blockchain system. PoS and DPoS are generally better than PoW in terms of increasing trade efficiency and equalizing wealth. Besides, scale-free trade network is not favorable because its trade efficiency is quite low, which moderates the price fluctuation and wealth inequality. Since connectivity inequality determines wealth inequality, it is crucial to increase the connectivity among participants when designing a sustainable blockchain system. We suggest that our findings could be useful to the designers, practitioner and researchers of blockchain system and token economy.
Keywords: Blockchain; Consensus Protocol; Trade Network Topology; Agent-Based Model (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:jas:jasssj:2019-119-3
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