Anti-Withholding Reward System to Secure Blockchain Mining Pools

In decentralized blockchain systems such as Bitcoin, the miners are rewarded for generating new blocks and processing the transactions. In order to reduce the reward variance, the miners join mining pools where the miners aggregate their computational resources and divide the reward according to their contributions, measured by shares. The miner-based attacks such as Block Withholding (BWH) and Fork After Withholding (FAW) yield unfair reward advantages to the attackers at the expense of the other honest miners by having the attackers withhold blocks while still submitting the shares and pretending to contribute to the victim pool. This paper introduces Anti-Withholding Reward System (AWRS) to prevent FAW and BWH attacks. Implemented at the pool manager (reducing the adoption overhead and supporting backward-compatibility), AWRS deprives the incentive for FAW and BWH attacks by providing greater rewards to the block submissions. AWRS completely disincentivizes the FAW attack and reduces the optimal attacker's behavior to honest mining, making the withholding-based threats irrelevant for rational miners.