A stochastic game framework for analyzing computational investment strategies in distributed computing with application to blockchain mining

Abstract : We study a stochastic game framework with varying number of players, for modeling and analyzing their computational investment strategies in distributed computing, for solving a problem such as in blockchain mining. In particular, we propose a continuous time Markov chain model, where players arrive and depart according to a stochastic process, and determine their investment strategies based on the state of the system. The players obtain a certain reward for being the first to solve the problem, while incur a certain cost based on the time and computational power invested in the attempt to solve it. We consider that the players are Markovian, that is, they determine their strategies which maximize their expected utilities, while ignoring past payoffs. We first study a scenario where the rate of problem getting solved is proportional to the total computational power invested by the players. We show that, in statewise Nash equilibrium, players with costs exceeding a certain threshold do not invest, while players with costs less than this threshold invest maximum power. Further, we show that Markov perfect equilibrium follows a similar threshold policy, and the players do not need to have knowledge of the system state. We then consider a scenario where the rate of problem getting solved is independent of the computational power invested by players. Here, we show that, in statewise Nash equilibrium, only the players with cost parameters in a relatively low range, invest. We also show that, in Markov perfect equilibrium, players invest proportionally to the reward-cost ratio. Using simulations, we quantify the effects of arrival and departure rates on players' expected utilities and provide insights
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https://hal.inria.fr/hal-01870871
Contributor : Swapnil Dhamal <>
Submitted on : Tuesday, November 20, 2018 - 10:04:00 AM
Last modification on : Wednesday, December 11, 2019 - 1:21:12 AM

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  • HAL Id : hal-01870871, version 4
  • ARXIV : 1809.03143

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Swapnil Dhamal, Tijani Chahed, Walid Ben-Ameur, Eitan Altman, Albert Sunny, et al.. A stochastic game framework for analyzing computational investment strategies in distributed computing with application to blockchain mining. 2019. ⟨hal-01870871v4⟩

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