Temporary Power Adjusting Withholding Attack
This work exposes a structural weakness in pooled mining, showing that small miners can easily become adversaries with immediate non-trivial benefits.
The paper generalizes the Power Adjusting Withholding (PAW) attack to Temporary PAW (T-PAW), where the adversary withholds a found proof-of-work for at most T time. T-PAW yields unbounded extra reward over PAW as adversarial hash fraction, pool size, and adversarial network influence decrease; e.g., 22 times more reward for (α,β,γ)=(0.05,0.05,0). Honest mining is sub-optimal to T-PAW even without difficulty adjustment, with non-trivial revenue increases (e.g., at least 1% within 2 weeks for most parameters in Bitcoin).
We consider the block withholding attacks on pools, more specifically the state-of-the-art Power Adjusting Withholding (PAW) attack. We propose a generalization called Temporary PAW (T-PAW) where the adversary withholds a fPoW from pool mining at most $T$-time even when no other block is mined. We show that PAW attack corresponds to $T\to\infty$ and is not optimal. In fact, the extra reward of T-PAW compared to PAW improves by an unbounded factor as adversarial hash fraction $α$, pool size $β$ and adversarial network influence $γ$ decreases. For example, the extra reward of T-PAW is 22 times that of PAW when an adversary targets a pool with $(α,β,γ)=(0.05,0.05,0)$. We show that honest mining is sub-optimal to T-PAW even when there is no difficulty adjustment and the adversarial revenue increase is non-trivial, e.g., for most $(α,β)$ at least $1\%$ within $2$ weeks in Bitcoin even when $γ=0$ (for PAW it was at most $0.01\%$). Hence, T-PAW exposes a significant structural weakness in pooled mining-its primary participants, small miners, are not only contributors but can easily turn into potential adversaries with immediate non-trivial benefits.