A Game-Theoretic Analysis of Shard-Based Permissionless Blockchains

Mohammad Hossein Manshaei, Murtuza Jadliwala, Anindya Maiti, Mahdi Fooladgar

Research output: Contribution to journalArticlepeer-review

36 Scopus citations


Low transaction throughput and poor scalability are significant issues in public blockchain consensus protocols, such as Bitcoins. Recent research efforts in this direction have proposed shard-based consensus protocols where the key idea is to split the transactions among multiple committees (or shards), which then process these shards or set of transactions in parallel. Such a parallel processing of disjoint sets of transactions or shards by multiple committees significantly improves the overall scalability and transaction throughout of the system. However, one significant research gap is a lack of understanding of the strategic behavior of rational processors within committees in such shard-based consensus protocols. Such an understanding is critical for designing appropriate incentives that will foster cooperation within committees and prevent free-riding. In this paper, we address this research gap by analyzing the behavior of processors using a game-theoretic model, where each processor aims at maximizing its reward at a minimum cost of participating in the protocol. We first analyze the Nash equilibria in an N-player static game model of the sharding protocol. We show that depending on the reward sharing approach employed, processors can potentially increase their payoff by unilaterally behaving in a defective fashion, thus resulting in a social dilemma. In order to overcome this social dilemma, we propose a novel incentive-compatible reward sharing mechanism to promote cooperation among processors. Our numerical results show that achieving a majority of cooperating processors (required to ensure a healthy state of the blockchain network) is easier to achieve with the proposed incentive-compatible reward sharing mechanism than with other reward sharing mechanisms.

Original languageEnglish (US)
Article number8558531
Pages (from-to)78100-78112
Number of pages13
JournalIEEE Access
StatePublished - 2018
Externally publishedYes


  • Sharding
  • and incentive design
  • blockchain
  • cooperation
  • game theory

ASJC Scopus subject areas

  • Computer Science(all)
  • Materials Science(all)
  • Engineering(all)


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