Incentive Attacks on DAG-Based Blockchains with Random Transaction Selection
Martin Perešíni, Federico Matteo Benčić, Martin Hrubý, Kamil Malinka, Ivan Homoliak · 2023
Several blockchain consensus protocols proposed to use of Directed Acyclic Graphs (DAGs) to solve the limited processing throughput of traditional single-chain Proof-of-Work (PoW) blockchains. Many such protocols utilize a random transaction selection (RTS) strategy (e.g., PHANTOM, GHOSTDAG, SPECTRE, Inclusive, and Prism) to avoid transaction duplicates across parallel blocks in DAG and thus maximize the network throughput. However, previous research has not rigorously examined incentive-oriented greedy behaviors when transaction selection deviates from the protocol. In this work, we first perform a generic game-theoretic analysis abstracting several DAG-based blockchain protocols that use the RTS strategy, and we prove that such a strategy does not constitute a Nash equilibrium. Next, to validate the conclusions from game theoretic analysis, we perform simulations, confirming that greedy actors who do not follow the RTS strategy can profit more than honest miners and harm the processing throughput of the protocol. Finally, we show that greedy miners are incentivized to form a shared mining pool to increase their profits. This undermines the decentralization and degrades the design of the protocols in question.