Rethinking Collaborative Trust for Verifiably Decentralized Blockchain Systems
Preprint available on arXiv: [2606.29826] Rethinking Collaborative Trust for Verifiably Decentralized Blockchain Systems
Abstract / TL;DR
Measurement studies have identified a conspicuous lack of decentralization in blockchains. In this paper, we develop a general framework for building verifiably decentralized blockchain systems. Our framework is motivated by the core observation that the richness and diversity of collaborative interactions between users – rather than resource uniformity – captures the essence and extent of decentralization in a blockchain system.
Summary
In this paper we present a novel blockchain incentive paradigm that enables new types of decentralized applications while improving existing applications. At the heart of our proposal is a fundamental redefinition of what “decentralization” means in blockchains. Collusions are at the core of why blockchains become centralized. We focus on a particularly important type of a collusion in which a coalition of nodes—over time—pool their resources, actively collaborate, improve service efficiency, and slowly dominate the marketplace (e.g., the block proposal market) making it difficult for smaller players with fewer resources to compete. We claim that this commonplace phenomenon—which we term ossification—is a dominant factor in determining how decentralized a blockchain is. Ossification is rampant in today’s blockchains. A familiar example is the emergence of mining pools, wherein nodes have an incentive to join a pool and lower reward variance rather than operate alone.
Ossification is beneficial for an economy outside of blockchains. It is the process by which centralized organizations form partnerships, invest in the partnerships, and over time grow to become industry behemoths. To ossify is the natural driving force in an economy. It leads to streamlining of processes, improving efficiency, leveraging the economy of scale and network effects to provide services (or, goods) at a lower cost. However, in blockchains ossification is a centralizing force that must be resisted. Unfortunately, today’s blockchains have no mechanisms to resist ossification and have largely succumbed to the ossifying forces across the protocol stack.
We define a decentralized system as a system where there is no incentive for any subset of nodes to ossify. To make a blockchain system ossification-resistant requires new incentive mechanisms beyond what is available in existing blockchains. We propose a novel reward mechanism in which nodes are rewarded for collaboratively performing tasks (such as mining a block, or providing an application’s service) with a diverse set of users. The reward mechanism is Sybil resistant: a party cannot pretend to collaborate with others when it is really just collaborating with itself. Importantly, our mechanism encourages collaboration with diverse entities over time while penalizing static collusion sets. By defining collaborations as a rooted directed acyclic graph (DAG), we compute rewards as an asymmetric Shapley value with carefully chosen DAG-dependent weights to provide Sybil resistance. Unlike existing blockchains where collaborations (e.g., committee assignments) are algorithmically computed, we leave the choice of collaboration and collaborators as a subjective decision made solely by the users. Any faults in the provided service leads to the slashing of only the collaboration initiator and not the individual collaborators.
The implications of our mechanism design are many. It is naturally ossification resistant as a group of nodes that consistently collaborate only with each other and not with other nodes will be penalized. Without ossification, even small players (e.g., nodes with a relatively low stake) can compete by forming collaborations with other nodes. Moreover, it is in the interest of the nodes to be as inclusive as possible in their collaborations. Instead of an economy of competition which leads to centralization, we can have an economy of inclusiveness, collaboration, and community.
Forbidding ossification does not mean innovation and efficiency within the system would stagnate. Nodes still compete with each other which encourages innovation, except now all the other nodes are also involved in the competition via collaborations. However, we highlight that there are important differences in the type of services suitable for an unossified economy compared to an ossified one. In a successful ossified coalition, participants have deep-rooted trust relationships with each other, lower communication barriers, and highly optimized service methods developed from years of experience in the domain. Conversely, services where efficiency, quality or cost is important may even require ossification. Such services, we claim, are therefore unsuitable for implementation on blockchains. E.g., a cloud service implemented on a blockchain will not be able to match the efficiency of centralized cloud providers, unless there is some ossification in the blockchain itself (e.g., in a layer-2 used by the service). A caveat is such services can still be suitable for blockchains if the primary value comes not from the efficiency of the service but from transparency, security, and decentralization of the service. That is to say, e.g., if a less efficient but transparent, secure, and decentralized cloud is valuable for certain use cases it may well be implemented on a blockchain.
On the other hand, services where the human qualities of trust, creativity, relationship and connection, common sense, intelligence, morality and ethics, empathy etc.—to name a few—are important can benefit from implementation on an unossified blockchain. E.g., a service where users can query, interact, or obtain services from coalitions of experts around the world in a certain domain can benefit as a blockchain application. As a simple example, we can have a service where patients interact with and obtain wholistic advice from a collaborative group of doctors from various specialties, rather than having to interact with one doctor at a time through time-consuming referrals. As before, such services can be implemented in an ossified manner as well. But an unossified service offers unique properties such as lower subjective bias, a higher trust and radical creativity, which are hard to achieve in an entrenched centralized organization. For instance, many Web-2 platforms exist today that allow end users to connect with and obtain services from domain experts.2 But such interactions are often with individual experts or an ossified team of experts, and seldom with a “random sample” of experts. This is because a centralized platform provides no incentives for experts to collaborate with a diverse set of other experts. We note that the type of services we claim as being suitable for blockchains are not necessarily new—many social network blockchains already exist today; trusted execution services have been the hallmark of blockchains since the beginning; many blockchains and dapps exist for purchasing creative digital media or art. However, even if the application is not new, our anti-ossification incentives can create a fundamentally different incentive structure for collaborating service providers and consequently a rich, human service experience for its end-users.
A secondary benefit of our proposed design is that it naturally solves the scalability problem of blockchains. By collaboratively creating a block, a group of miners can process a much greater number of transactions compared to publishing the blocks solo. The design that emerges is different from existing scaling solutions like sharding, or DAG-consensus methods. In sharding too a group of miners (from different shards) process transactions in parallel to increase throughput. However, a miner is algorithmically assigned to a shard which creates a forced collaboration. E.g., a miner that has previously misbehaved (and, perhaps slashed as a result) can continue to be assigned to shards if it has sufficient stake. This creates a situation where honest miners are forced to collaborate with a known miscreant. In contrast, miners subjectively choose their collaborators in our proposed design. A known miscreant node is unlikely to be voluntarily chosen for a collaboration by an honest node. Changing identity by adopting a fresh public key and transferring stake does not help the miscreant. Our proposed method assigns an importance score to each public key. The importance is a measure of how much a node has collaborated with a diverse set of nodes in the past. Unlike tokens, importance is algorithmically earned over time and cannot be transferred between accounts easily. A miner can, among other factors, consider the importance of a node while choosing collaborators to avoid miscreants. Similar to sharding, in our proposed method a resource constrained node can verify the full blockchain only with the help of other collaborators or more capable nodes. It is also possible to reduce the confirmation latency of transactions. By letting nodes work in coalition groups, we can effectively reduce the number of votes necessary to confirm transactions, thus improving latency.
Blockchains are trustless—it is sufficient for a user to have trust that the majority of users are honest without requiring to individually trust any user. This core principle has informed blockchain design and innovation over the years. Even in layer-2 methods where users are required to trust an individual provider (e.g., the sequencer in a rollup), mechanisms are provided through which the provider is slashed for misbehavior. Our proposed method is a marked departure from this status quo. Not only do we ask nodes to individually trust (a small number of) other nodes to form collaborations, we explicitly slash only the publisher even if it a collaborating node that provably deviated from protocol. From the various examples highlighted in the paper, despite being a trustless system, trust relationships in the form of ossified coalitions almost invariably occur because it is the rational action for users seeking to maximize their payoffs. These trust relationships are hard to detect, disincentivize, or ban. It is, therefore, natural to try to have mechanisms that encourage the trust relationships to be in a way that is beneficial for the overall system.
Key Contributions
1. We propose a fundamental redefinition of decentralization in blockchains as the extent of collaborative interaction that happens between diverse sets of users in the network, regardless of how skewed resources are distributed across the users.
2. Using block proposal as a concrete example, we provide an incentive mechanism that encourages decentralization. Under this scheme, we show that nodes do not have an incentive to form coalitions.
3. We show how blockchain scalability can be improved naturally using our proposed framework.
4. We provide discussions on extending our framework to other applications, such as decentralized autonomous organizations and smart contracts.
Open Questions & Discussion
1. A key property of blockchains is pseudonymity. In our proposed method, users need a platform through which they can discover, interact, and form partnerships with other users. Even if the platform supports anonymous interaction, the process of collaboration can reveal private information about a user. How to enable users to collaborate while keeping their identities anonymous is an important question. Sybil users can flood the communication platform with spam. Filtering out the spam is necessary to allow for meaningful trust relationships to form between honest nodes.
2. Historically, human societies and organizations have been structured to have a small (relative to the size of the organization), centralized leadership. This is true even in the ossified coalitions occurring on blockchains. When users are asked to collaboratively perform tasks, it is likely that a similar leadership-worker segregation structure emerges in the system. That is, some users may prefer to lead while others prefer to be led. This is particularly important in applications where collaborations require significant human-to-human interaction. The impact of such a segregation on the decentralization and value provided by the network is an important aspect that needs to be studied.