Solidus: An Incentive-compatible Cryptocurrency Based on Permissionless Byzantine Consensus

The decentralized cryptocurrency Bitcoin has experienced great success but also encountered many challenges. One of the challenges has been the long confirmation time and low transaction throughput. Another challenge is the lack of incentives at certain steps of the protocol, raising concerns for transaction withholding, selfish mining, etc. To address these challenges, we propose Solidus, a decentralized cryptocurrency based on permissionless Byzantine consensus. A core technique in Solidus is to use proof of work for leader election to adapt the Practical Byzantine Fault Tolerance (PBFT) protocol to a permissionless setting. We also design Solidus to be incentive compatible and to mitigate selfish mining. Solidus improves on Bitcoin in confirmation time, and provides safety and liveness assuming Byzantine players and the largest coalition of rational players collectively control less than one-third of the computation power.