Abstract

Traditionally, an application or protocol is deemed "secure'' if it realizes its task against any adversarial strategy, however mischievous. While this approach yields strong security guarantees, in many cases it is overpessimistic since it neglects the incentives that lead participants to deviate from their prescribed behavior, which results in potentially less applicable solutions and/or solutions trying to defend against highly unlikely attacks.

In this tutorial we will discuss how incentives can be incorporated in the design and analysis of distributed protocols, in particular of consensus protocols.

We will give a brief introduction of the basic concepts game theory and mechanism design use to capture and analyze rational behavior, and their connection to the cryptography/distributed-computing methodology. We will discuss approaches to bridge these two disciplines and their limitations/challenges. We will then demonstrate how incorporating natural incentives can improve the performance and resilience of both classical and modern solutions, such as the ones based on blockchain-technology.

Finally, we will  discuss how incorporating incentives in the analysis of modern blockchains and cryptocurrencies can improve our understanding of their quality, offer fall-back guarantees against common attacks, and point to design choices that can improve both their basic properties and their applicability to more real-world applications.

Video Recording