BootyDust on Nostr: Llama 3.1 405b summary: The paper "On the Instability of Bitcoin Without the Block ...
Llama 3.1 405b summary:
The paper "On the Instability of Bitcoin Without the Block Reward" analyzes the potential instability of the Bitcoin network when the block reward, which is the primary incentive for miners to secure the network, dwindles to zero. The authors argue that in a transaction-fee-only regime, miners may deviate from the default protocol and engage in deviant mining strategies, such as undercutting and selfish mining, which can harm the stability of the network.
The authors identify three phases of deviant mining behavior:
1. Petty compliant: Miners deviate from the default protocol by mining on the block that leaves the most transaction fees unclaimed, rather than the oldest block.
2. Lazy undercutting: Miners intentionally fork the chain to "steal" transaction fees from other miners.
3. Aggressive undercutting: Miners optimize the tradeoff between maximizing transaction fees and minimizing the chance of being undercut by other miners.
The authors also analyze the impact of selfish mining in a transaction-fee-only regime and find that it can be more profitable than in a block-reward regime. They propose an improved selfish mining strategy that takes into account the value of the block being mined.
The paper concludes that the block reward is integral to the stability of the Bitcoin network and that a transaction-fee-only regime may lead to instability and harm the ecosystem. The authors suggest that making the block reward permanent, as Ethereum does, may be a small price to pay to ensure the stability of a cryptocurrency.
Key findings:
* Deviant mining strategies can arise in a transaction-fee-only regime.
* Selfish mining can be more profitable in a transaction-fee-only regime.
* An improved selfish mining strategy can take into account the value of the block being mined.
* The block reward is integral to the stability of the Bitcoin network.
Overall, the paper highlights the potential risks and challenges of a transaction-fee-only regime and the importance of carefully designing the incentive structure of a cryptocurrency to ensure its stability and security.
The paper "On the Instability of Bitcoin Without the Block Reward" analyzes the potential instability of the Bitcoin network when the block reward, which is the primary incentive for miners to secure the network, dwindles to zero. The authors argue that in a transaction-fee-only regime, miners may deviate from the default protocol and engage in deviant mining strategies, such as undercutting and selfish mining, which can harm the stability of the network.
The authors identify three phases of deviant mining behavior:
1. Petty compliant: Miners deviate from the default protocol by mining on the block that leaves the most transaction fees unclaimed, rather than the oldest block.
2. Lazy undercutting: Miners intentionally fork the chain to "steal" transaction fees from other miners.
3. Aggressive undercutting: Miners optimize the tradeoff between maximizing transaction fees and minimizing the chance of being undercut by other miners.
The authors also analyze the impact of selfish mining in a transaction-fee-only regime and find that it can be more profitable than in a block-reward regime. They propose an improved selfish mining strategy that takes into account the value of the block being mined.
The paper concludes that the block reward is integral to the stability of the Bitcoin network and that a transaction-fee-only regime may lead to instability and harm the ecosystem. The authors suggest that making the block reward permanent, as Ethereum does, may be a small price to pay to ensure the stability of a cryptocurrency.
Key findings:
* Deviant mining strategies can arise in a transaction-fee-only regime.
* Selfish mining can be more profitable in a transaction-fee-only regime.
* An improved selfish mining strategy can take into account the value of the block being mined.
* The block reward is integral to the stability of the Bitcoin network.
Overall, the paper highlights the potential risks and challenges of a transaction-fee-only regime and the importance of carefully designing the incentive structure of a cryptocurrency to ensure its stability and security.