A Game-theoretical Incentive Model for Improving Scalability of Permissioned Distributed Ledger Technology Networks: An Investigation of how a Game-theoretical Incentive Mechanism Design can Lead to a Better Network Performance

Abstract

When it comes to distributed ledger technology systems, the lack of proper incentives can lead to various issues and suboptimal network performance, preventing networks from reaching their full potential. This paper introduces a generic game-theoretical scaling incentive model, which aims to improve the performance of poorly functioning permissioned DLT networks by changing their incentive structure. The model is rooted in game theory and has the primary goals of being generic, scalable, energy-aware, fair, and dynamic. It is not a consensus mechanism but rather a complement to a suitable “voting-based” consensus mechanism. Several hypothetical scenarios are carefully crafted to showcase the beneficial properties of the model and then simulated in R. The results confirm the model’s capacity to improve the network’s scalability, energy awareness, fairness in the distribution of rewards, and ability to adjust dynamically to changing network conditions.