Incentives in Ethereum's Hybrid Casper Protocol
This addresses blockchain consensus security for Ethereum users, though it appears incremental as an overlay on existing infrastructure.
The paper analyzes Ethereum's hybrid Casper protocol, which overlays Proof-of-Stake checkpointing on Proof-of-Work, finding that its incentive mechanism ensures liveness and provides improved safety guarantees over standard Proof-of-Work.
We present an overview of hybrid Casper the Friendly Finality Gadget (FFG): a Proof-of-Stake checkpointing protocol overlaid onto Ethereum's Proof-of-Work blockchain. We describe its core functionalities and reward scheme, and explore its properties. Our findings indicate that Casper's implemented incentives mechanism ensures liveness, while providing safety guarantees that improve over standard Proof-of-Work protocols. Based on a minimal-impact implementation of the protocol as a smart contract on the blockchain, we discuss additional issues related to parametrisation, funding, throughput and network overhead and detect potential limitations.