Pooled Mining is Driving Blockchains Toward Centralized Systems The decentralization property of blockchains stems from the fact that each miner accepts or refuses transactions and blocks based on its own verification results. However, pooled mining causes blockchains to evolve into centralized systems because pool participants delegate their decisionmaking rights to pool managers. In this paper, we established and validated a model for ProofofWork mining, introduced the concept of equivalent blocks, and quantitatively derived that pooling effectively lowers the income variance of miners. We also analyzed Bitcoin and Ethereum data to prove that pooled mining has become prevalent in the real world. The percentage of poolmined blocks increased from 49.91% to 91.12% within four months in Bitcoin and from 76.9% to 92.2% within five months in Ethereum. In July 2018, Bitcoin and Ethereum mining were dominated by only six and five pools respectively.

Selfish Mining in Ethereum As the second largest cryptocurrency by market capitalization and todayu0027s biggest decentralized platform that runs smart contracts, Ethereum has received much attention from both industry and academia. Nevertheless, there exist very few studies about the security of its mining strategies, especially from the selfish mining perspective. In this paper, we aim to fill this research gap by analyzing selfish mining in Ethereum and understanding its potential threat. First, we introduce a 2dimensional Markov process to model the behavior of a selfish mining strategy inspired by a Bitcoin mining strategy proposed by Eyal and Sirer. Second, we derive the stationary distribution of our Markov model and compute longterm average mining rewards. This allows us to determine the threshold of computational power that makes selfish mining profitable in Ethereum. We find that this threshold is lower than that in Bitcoin mining (which is 25% as discovered by Eyal and Sirer), suggesting that Ethereum is more vulnerable to selfish mining than Bitcoin.