Making Blockchain Validators Honest

The importance of honesty among blockchain validators can not be overemphasized, especially as blockchain is used by many as an underlying technology for the development of various Industry 4.0 solutions. In the blockchain consensus process, validators validate the correctness of transactions and propose new blocks for addition to the blockchain. They are rewarded for this task with the blockchain native token (e.g., ETH on the Ethereum blockchain). This reward is often distributed among validators with respect to their staked amount. An increasing number of validators joining the network leads to a decreasing chance of a validator being chosen for the validation task and thus a reduction in the validation reward. This situation results in some form of competition among the validators, leading them to carry out various malicious actions to influence the blockchain validator selection protocol in order to be chosen. In this paper, we examine the competitive interactions between validators in a blockchain consensus process and propose a model using an infinitely repeated game model that ensures that the validators are deterred from behaving maliciously while also encouraging a self-policing notion due to the extra incentive mechanism of an improved reputation score when a validator can verifiably report malicious activities by others. Further, we discuss the factors that can incentivize or disincentivize a validator to either continue to behave honestly or switch to dishonest behavior.