Improving protocols and miner strategies for modern cryptocurrencies
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Date
2024-04-30
Authors
Quinteiro dos Santos, Saulo
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Abstract
Bitcoin, envisioned as a decentralized currency, facilitates secure micro-payments through a distributed consensus and ensures security via its widespread network. However, prioritizing security and decentralization imposes constraints on performance. My thesis explores strategies to boost the blockchain's throughput and performance alongside improving miners' financial incentives.
We analyze the effects of increasing block size on throughput and security and how strategic transaction selection by miners before mining can elevate fee collection. We introduce a novel transaction-selection strategy that produces high-quality blocks more efficiently by avoiding traditional sorting and examining the benefits of regularly updating transaction sets to maximize fees.
Additionally, we assess the Lightning Network's impact on reducing blockchain load and transaction costs and its potential to lower miners' fee revenues and profits. This study balances the Lightning Network's adoption and integration with third-layer applications to mitigate transaction migration from the blockchain.
This thesis contributes to blockchain scalability and efficiency, presenting new transaction selection and block formation strategies that enhance network performance and miners' incentives. It also navigates the economic implications of the Lightning Network, offering a nuanced view of its effects on the blockchain ecosystem.
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Keywords
Bitcoin, Cryptocurrencies, Blockchain, Second Layer Network