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Mining pools decrease the variance in the income of cryptocurrency miners (compared to solo mining) by distributing rewards to participating miners according to the shares submitted over a period of time. The most common definition of a “share” is a proof-of-work for a difficulty level lower than that required for block authorization—for example, a hash with at least 65 leading zeroes (in binary) rather than at least 75. The first contribution of this paper is to investigate more sophisticated approaches to pool reward distribution that use multiple classes of shares—for example, corresponding to differing numbers of leading zeroes—and assign different rewards to shares from different classes. What’s the best way to use such finer-grained information, and how much can it help? We prove that the answer is not at all: using the additional information can only increase the variance in rewards experienced by every miner. Our second contribution is to identify variance-optimal reward-sharing schemes. Here, we first prove that pay-per-share rewards simultaneously minimize the variance of all miners over all reward-sharing schemes with long-run rewards proportional to miners’ hash rates. We then show that, if we impose natural restrictions including a no-deficit condition on reward-sharing schemes, then the pay-per-last-N-shares method is optimal.
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How to get-toilet-paper.com? Provision of Information as a Public Good
In this paper, we describe the implementation of an information sharing platform, got-toilet-paper.com. We create this web page in response to the COVID-19 pandemic to help the Pittsburgh, PA community share information about congestion and product shortages in supermarkets. We show that the public good problem of the platform makes it difficult for the platform to operate. In particular, there is sizable demand for the information, but supply satis es only a small fraction of demand. We provide a theoretical model and show that the first best outcomes cannot be obtained in a free market and the best symmetric equilibrium outcome decreases as the number of participant increases. Also, the best symmetric equilibrium has two problems, cost inefficiency and positive probability of termination. We discuss two potential solutions. The first is a uniform random sharing mechanism, which implies randomly selecting one person every period who will be responsible for information sharing. It is ex-post individually rational but hard to implement. The second solution is the one that we began implementing. It implies selecting a person at the beginning and make her responsible to share information every period, while reimbursing her cost. We discuss the reasons for high demand and low supply both qualitatively and quantitatively.
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- Award ID(s):
- 1739413
- PAR ID:
- 10298454
- Date Published:
- Journal Name:
- 4th Workshop on Mechanism Design for Social Good
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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Accepted Manuscript1.0
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