Selfish Behavior in the Tezos Proof-of-Stake Protocol

Proof-of-Stake consensus protocols give rise to complex mod- eling challenges. We analyze the Babylon update (October 2019) to the Proof-of-Stake protocol on the Tezos blockchain, and demonstrate that, under certain conditions, rational partic- ipants are incentivized to behave dishonestly. In doing so, we provide a theoretical analysis of the feasibility and profitabil- ity of a block stealing attack that we call selfish endorsing, a concrete instance of an attack previously only theoretically considered. We propose and analyze a simple change to the Tezos protocol which significantly reduces the (already small) profitability of this dishonest behavior, and introduce a new de- lay and reward scheme that is provably secure against length-1 and length-2 selfish endorsing attacks. Our framework pro- vides a template for analyzing other Proof-of-Stake protocols for the possibility of selfish behavior.