VRF-Based Mining Simple Non-outsourceable Cryptocurrency Mining

Abstract

This paper introduces VRF-based mining, a simple and effective way of making pooled mining impossible. Instead of using hash functions, VRF-based mining uses Verifiable Random Functions (VRFs) for Proof-of-work (PoW)-based consensus. As VRF binds an output with a secret key, a pool operator should reveal its secret key to outsource the mining process to miners, and miners can anonymously steal cryptocurrency in the pool operator’s wallet. We revisit the definition of non-outsourceability in existing research, and identify two properties, namely punish-mining-reward and stealing-unlinkability. Punish-mining-reward specifies that if a pool operator outsources mining to a miner, then the miner can steal mining reward. Stealing-unlinkability specifies that the pool operator cannot identify miners stealing mining reward. We show that VRF-based mining satisfies punish-mining-reward, but not stealing-unlinkability. Nevertheless, the pool operator should take extra effort – which makes maintaining mining pools expensive – to identify mining reward stealers and transfer mining reward before being stolen. In addition, we discuss several considerations on instantiating VRFs for VRF-based mining. Moreover, we experimentally show that VRF-based mining is simple to implement and introduces negligible overhead compared to hash-based mining.