The Last Survivor of PoS Pools: Staker's Dilemma

In PoW blockchains, the pooling approach has been criticized to be vulnerable to the block withholding (BWH) attack. BWH attackers can unfairly claim rewards from victim pools by submitting proofs of work while secretly withholding any valid blocks they discover. It is well known that BWH attackers against PoW face the miner's dilemma. Interestingly, our findings reveal that this vulnerability manifests more severely in Proof-of-Stake (PoS) systems. For a network only consisting of one attacker pool and one victim pool, the attacker will eventually manipulate the network while the victim will vanish by losing the stake ratio gradually. Moreover, in a more realistic scenario with multiple BWH attacker pools and one solo staker who does not join any pools, we show that only one lucky attacker and the solo staker will survive, whereas all the other pools will vanish gradually, revealing the staker's dilemma. Our analysis is supported by experiments on massive real blockchain systems and numerical simulations.