Harnessing Tullock contests and signaling games: a novel weight assignment strategy for Ethereum 2.0

Abstract

In this paper, we address key challenges in Proof-of-Stake (PoS) blockchains, with a particular focus on Ethereum 2.0. We introduce an innovative mechanism that combines Tullock contests and signaling games to optimize weight assignments based on security deposits from heterogeneous nodes. While Tullock contests motivate participants to allocate resources for potential rewards, signaling games enable efficient information transfer, thereby enriching decision-making. This approach enhances network security, efficiency, and resilience by incentivizing resource investment and facilitating effective information exchange. Our framework significantly outperforms existing methods, achieving a 45.43% increase in blockchain utility and a 47.92% rise in node utility. Additionally, it yields marked improvements in user participation rates (26.89 - 32.21%) and service coverage (24 - 29.54%), and also proves to be resilient against attacks from selfish nodes.