International Joint Conference On Theoretical Computer Science – Frontier of Algorithmic Wisdom

August 15-19, 2022, City University of Hong Kong, Hong Kong


Invited Speakers

Track B

Markets for Crypto Tokens, and Security under Proof of Stake

Ravi Jagadeesan

Stanford University

Cryptocurrency systems based on proof of stake (PoS) grant governance rights to the holders of currency tokens and therefore are vulnerable to attack by adversaries who buy tokens in order to gain control. To evaluate the robustness of PoS cryptocurrencies to such attacks, we model the market for tokens and determine how the cost of attacking the system depends on the level and shape of token supply and demand. We show that, contrary to popular belief, the appreciation of tokens in response to demand by attackers plays a small role in securing the system. In particular, stablecoins can be less vulnerable to attack than cryptocurrencies that are freely floating. Moreover, PoS cryptocurrencies that primarily function as mediums of exchange are vulnerable to attack if the velocity of money is high.

Ravi Jagadeesan is an Assistant Professor of Economics at Stanford University. His research interests are in market design, economic theory, and public economics. He received a Ph.D. in Business Economics from Harvard University in 2020.