Stake Shift in Major Cryptocurrencies: An Empirical Study.
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Presented at FinancialCryptographyandDataSecurity 2020 by
In the proof-of-stake (PoS) paradigm for maintaining decentralized, permissionless cryptocurrencies, Sybil attacks are prevented bybasing the distribution of roles in the protocol execution on the stake distribution recorded in the ledger itself. However, for various reasons thisdistribution cannot be completely up-to-date, introducing a gap betweenthe present stake distribution, which determines the parties’ current incentives, and the one used by the protocol.In this paper, we investigate this issue, and empirically quantify its effects. We survey existing provably secure PoS proposals to observe thatthe above time gap between the two stake distributions, which we callstake distribution lag, amounts to several days for each of these protocols.Based on this, we investigate the ledgers of four major cryptocurrencies(Bitcoin, Bitcoin Cash, Litecoin and Zcash) and compute the averagestake shift (the statistical distance of the two distributions) for eachvalue of stake distribution lag between 1 and 14 days, as well as relatedstatistics. We also empirically quantify the sublinear growth of stake shiftwith the length of the considered lag interval.Finally, we turn our attention to unusual stake-shift spikes in these currencies: we observe that hard forks trigger major stake shifts and thatsingle real-world actors, mostly exchanges, account for major stake shiftsin established cryptocurrency ecosystems.