Dividend or No Dividend in Delegated Blockchain Governance: A Game Theoretic Analysis

Delegated blockchain governance is the frontier of blockchain design issues that is to improve the scalability of blockchain networks. Delegated proof of stake (DPoS) blockchains such as EOS must select a few super nodes for transaction verification. In particular, the blockchain community has debated recently on whether dividend should be allowed when electing super nodes, which might be considered as unethical or unfair, leading to an open research topic and a new research gap that has theoretical value for both academia and industry. In this paper, we build a theoretical framework to study how dividend affects user decisions and welfare in a DPoS blockchain. Based on game theory, we propose a three-player Hotelling model with two policies to study the behaviors of voters and candidates. We first use a static game analysis to show that the benefits of dividend for voters and for candidates vary with the size of reward and there exists an interval, in which the zero dividend policy would be good for the welfare of both candidates and voters. Then, we use an evolutionary game analysis to examine the process dynamics of super node selection, we find that the campaign strategy of candidates has to do with the size of platform reward given to the candidates by the blockchain platform. Especially in the asymmetric case, we find that higher level of platform reward turns to benefit candidates with large number of votes even more. Our findings are instrumental for designing dividend policies in DPoS blockchains and can stimulate more potential research in blockchain governance.