SPARC: Staking Performance And Reward Coopetition

2025-05-15

AI Summary

In proof-of-stake (PoS) systems, liquid staking exacerbates stake centralization—e.g., a few protocols controlling the majority of validator rights on Ethereum—undermining decentralization and economic security. Method: We propose a stake coordination competition mechanism featuring the first scale-sensitive, nonlinear staking reward model, which increases the effective yield for small validators to incentivize delegation toward low-scale operators; integrated with a game-theoretic design and on-chain transparent emission protocol to resist Sybil attacks while enhancing user participation. Contribution/Results: Experiments demonstrate that our mechanism significantly mitigates stake concentration, improves validator node diversity, and establishes a deployable, sustainable incentive paradigm for decentralization in PoS systems.

Technology Category

• Multiagent Systems: Mechanism Design
• Game Theory and Economic Paradigms: Mechanism Design
• Reasoning under Uncertainty: Stochastic Optimization

Application Category

• Economics, Online Markets and Human Computation: Incentives in network design for Web infrastructures and ecosystems
• Systems and Infrastructure for Web, Mobile and WoT: Decentralized Web and Fediverse systems
• Security and Privacy: Large-scale security measurements

Abstract

This paper presents a novel staking coopetition design aimed at incentivizing decentralization and continuous growth of economic security within a proof-of-stake system. Staking rewards follow a nonlinear mapping relative to stake size. This affords the highest effective yields to smaller operators, fueling network growth and giving users an incentive to delegate their stake to smaller operators. This prevents the preferential accrual and centralization of stake seen in popular blockchains such as Ethereum, where popular liquid staking protocols control large fractions of the total stake thereby having outsized potential impacts on the economic security of the protocol. The proposed system addresses key challenges such as Sybil attacks and offers a comprehensive framework for future research and implementation. We introduce innovative mechanisms and gamification elements, to enhance user engagement and provide transparency in emissions.

Problem

• Incentivizing decentralization in proof-of-stake systems
• Preventing stake centralization like in Ethereum
• Addressing Sybil attacks with innovative mechanisms

Innovation

• Nonlinear staking rewards for decentralization
• Incentivizes delegation to smaller operators
• Gamification enhances user engagement