Princeton study: "On the Instability of Bitcoin Without the Block Reward"

ABSTRACT
Bitcoin provides two incentives for miners: block rewards and transaction fees. The former accounts for the vast majority of miner revenues at the beginning of the system, but it is expected to transition to the latter as the block rewards dwindle. There has been an implicit belief that whether miners are paid by block rewards or transaction fees does not affect the security of the block chain. We show that this is not the case. Our key insight is that with only transaction fees, the variance of the block reward is very high due to the exponentially distributed block arrival time, and it becomes attractive to fork a “wealthy” block to “steal” the rewards therein. We show that this results in an equilibrium with undesirable properties for Bitcoin’s security and performance, and even non-equilibria in some circumstances. We also revisit selfish mining and show that it can be made profitable for a miner with an arbitrarily low hash power share, and who is arbitrarily poorly connected within the network. Our results are derived from theoretical analysis and confirmed by a new Bitcoin mining simulator that may be of independent interest. We discuss the troubling implications of our results for Bitcoin’s future security and draw lessons for the design of new cryptocurrencies.

https://www.cs.princeton.edu/~arvindn/publications/mining_CCS.pdf

My personal opinion is that we should look at implementing Avalanche, so we can keep the 21M coin limit and avoid the scenarios described in this paper.

Upstream page;

Notice the publishing date, which you omitted, I think it is quite relevant: 24 October 2016

I don’t see how that’s relevant for the content in the paper.

It’s also worth mentioning that this paper is peer reviewed as we can see here:

https://www.cs.princeton.edu/~arvindn/publications/

you seem really adamant on Avalanche, have you ever considered drafting a CHIP?

you have a better understanding of it than I do, but simply linking out to other people talking about it isn’t really going to motivate me to learn more. I’d love if I could read a CHIP that would be a single place that spells out the pros, cons, risks, and rewards so that I can have a more informed opinion about it.

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Avalanche and tail emission are the only two solutions to the issue of blocks with zero block reward as far as I know. That’s why I’m adamant, in addition to MEV prevention also of course. You can see the technical implementation in:

https://github.com/Bitcoin-ABC/bitcoin-abc/tree/master/src/avalanche

It’s not a large amount of code, so if you know C++ it should not be too hard to understand.

well, C++ isn’t exactly my strongest language, nor do I have the time or concern to read through this codebase. so if you wanna convince me, I’d really love to just be able to read a CHIP.

you are the only person adamant about implementing Avalanche on BCH, so it seems very appropriate for you to be the one to CHIP it.

I’m open to being convinced, please seriously CHIP it if you really want it to happen. I doubt anyone will take the proposal seriously otherwise.

I don’t have time to write a CHIP. I can happily wait in ETH while MEV chaos ensues in BCH. People need to understand the urgency, and XEC already did the hard implementation work.

If you don’t even have the time to DRAFT a CHIP… you can’t even give me a few bulletpoints on pros/cons, risks/rewards, rationale/motivation? You’re gonna make me read the princeton study and the XEC codebase myself, when you’ve presumably already done so?

Doesn’t sound that urgent to me. That’s all I have to say on the matter.

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My knowledge of C++ is very limited, so I have not red and understood the code. But I do understand how Avalanche works on a conceptual level. You are correct that it’s not urgent to fix the issue this thread is describing, but MEV prevention is very urgent. Unfortunately nobody seems to realize this, so I guess MEV chaos is needed to educate people. I would love if we could be pro-active on this issue, since that would stop MEV tools from being developed at all. You can learn more about Avalanche by reading the whitepaper: https://ipfs.io/ipfs/QmUy4jh5mGNZvLkjies1RWM4YuvJh5o2FYopNPVYwrRVGV

The only solutions I have found so far for the instability of Bitcoin without the block reward, are Avalanche and tail emission.

If people have other solutions I’m more than happy to hear about them.