Stabilizing Congestion in Decentralized Record-Keepers

Assimakis Kattis and Fabian Trottner

Papers from arXiv.org

Abstract: We argue that recent developments in proof-of-work consensus mechanisms can be used in accordance with advancements in formal verification techniques to build a distributed payment protocol that addresses important economic drawbacks from cost efficiency, scalability and adaptablity common to current decentralized record-keeping systems. We enable the protocol to autonomously adjust system throughput according to a feasibly computable statistic - system difficulty. We then provide a formal economic analysis of a decentralized market place for record-keeping that is consistent with our protocol design and show that, when block rewards are zero, the system admits stable, self-regulating levels of transaction fees and wait-times across varying levels of demand. We also provide an analysis of the various technological requirements needed to instantiate such a system in a commercially viable setting, and identify relevant research directions.

Date: 2020-05
New Economics Papers: this item is included in nep-des and nep-pay
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