2024/06/15 by Georgios Birmpas, Philip Lazos, Birmpas, Georgios +5 · 1 citation
Business, Management and Accounting · Economics, Econometrics and Finance · Social Sciences · #Computer Science and Game Theory (cs.GT) #Corporate Taxation and Avoidance #FOS: Computer and information sciences #Law, Economics, and Judicial Systems #Legal principles and applications
paper · pdf · doi:10.48550/arxiv.2406.10525
openalex publication_date 2024/06/15 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
In this paper, we investigate the impact of reward schemes and committee sizes motivated by governance systems over blockchain communities. We introduce a model for elections with a binary outcome space where there is a ground truth (i.e., a "correct" outcome), and where stakeholders can only choose to delegate their voting power to a set of delegation representatives (DReps). Moreover, the effort (cost) invested by each DRep positively influences both (i) her ability to vote correctly and (ii) the total delegation that she attracts, thereby increasing her voting power. This model constitutes the natural counterpart of delegated proof-of-stake (PoS) protocols, where delegated stakes are used to elect the block builders. As a way to motivate the representatives to exert effort, a reward scheme can be used based on the delegation attracted by each DRep. We analyze both the game-theoretic aspects and the optimization counterpart of this model. Our primary focus is on selecting a committee that maximizes the probability of reaching the correct outcome, given a fixed monetary budget allocated for rewarding the delegates. Our findings provide insights into the design of effective reward mechanisms and optimal committee structures (i.e., how many DReps are enough) in these PoS-like governance systems.