In recent years, the designs of many new blockchain applications have been inspired by the Byzantine fault tolerance (BFT) problem. While traditional BFT protocols assume that most system nodes are honest (in that they follow the protocol), we recognize that blockchains are deployed in environments where nodes are subject to strategic incentives. This paper develops an economic framework for analyzing such cases. Specifically, we assume that 1) non-Byzantine nodes are rational, so we explicitly study their incentives when participating in a BFT consensus process; 2) non-Byzantine nodes are ambiguity averse, and specifically, Knightian uncertain about Byzantine actions; and 3) decisions/inferences are all based on local information. We thus obtain a consensus game with preplay communications. We characterize all equilibria, some of which feature rational leaders withholding messages from some nodes in order to achieve consensus. These findings enrich those from traditional BFT algorithms, where an honest leader always sends messages to all nodes. We also study how the progress of communication technology (i.e., potential message losses) affects the equilibrium consensus outcome.
Authors
- Acknowledgements & Disclosure
- We thank Peter Klibanoff, Marciano Siniscalchi, and Leifu Zhang, as well as seminar participants at ABFER and IC3 for helpful comments. Zhiguo He is grateful for support from the John E. Jeuck Endowment at the University of Chicago Booth School of Business. Zhiguo He and Jiasun Li are grateful for research grants from the Paris-Dauphine Partnership Foundation. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w29515
- Published in
- United States of America
