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2022-01-26 / Conference paper
Decentralisation conscious players and system reliability
Financial Cryptography and Data Security 2022 (to appear) / 2022.05.02 / St. George's, Grenada
Sarah Azouvi , Alexander Hicks

Abstract

We propose a game-theoretic model of the reliability of de- centralised systems based on Varian’s model of system reliability [27], to which we add a new normalized total effort case that models decentrali- sation conscious players that prioritize decentralisation. We derive the Nash equilibria in the normalized total effort game. In these equilibria, either one or two values are played by players that do not free ride. The speed at which players can adjust their contributions can determine how an equilibrium is reached and equilibrium values. The behaviour of decentralisation conscious players is robust to deviations by other players. Our results highlight the role that decentralisation conscious players can play in maintaining decentralisation. They also highlight, however, that by supporting an equilibrium that requires an important contribution they cannot be expected to increase decentralisation as contributing the equilibrium value may still imply a loss for many players. We also discuss practical constraints on decentralisation in the context of our model.