A Provable Softmax Reputation-Based Protocol for Permissioned Blockchains

We consider a hierarchical structure of a permissioned blockchain with three types of participant: providers, collectors, and governors. Providers forward transactions to collectors; collectors upload received transactions to governors after verifying and labeling them; and governors validate a portion of the labeled transactions they receive, pack valid transactions into a block, and append the block to the ledger. This model has various fields of application including data collection from the Internet-of-Things and second-hand markets. Our main contribution is to propose a reputation-based protocol to help governors evaluate the reliability of collectors. Specifically, given a transaction, each governor runs a softmax-based function to calculate a probability for each collector that sent and labeled this transaction. The probabilities, calculated using collectors' reputations as inputs, represent the likelihood of the lead governor selecting the labeled transaction from collectors to consider for further validation. After the lead governor verifies a transaction, all collectors' reputations are updated in line with the agreement of their labeling and the validity of the transaction as found by the lead governor. We show, both theoretically and empirically, that our protocol can significantly reduce governors' verification workloads while maintaining firm liveness and high incentives.