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JOURNAL OF L A T E X CLASS FILES, VOL. 14, NO. 8, AUGUST 2015 1 Attract More Miners to Join in Blochchain Construction for Internet of Things Xingjian Ding, Jianxiong Guo, Deying Li, and Weili Wu, Member, IEEE Abstract—The world-changing blockchain technique provides a novel method to establish a secure, trusted and decentralized system for solving the security and personal privacy problems in Industrial Internet of Things (IIoT) applications. The mining process in blockchain requires miners to solve a proof-of-work puzzle, which requires high computational power. However, the lightweight IIoT devices cannot directly participate in the mining process due to the limitation of power and computational resources. The edge computing service makes it possible for IIoT applications to build a blockchain network, in which IIoT devices purchase computational resources from edge servers and thus can offload their computational tasks. The amount of computational resource purchased by IIoT devices depends on how many profits they can get in the mining process, and will directly affect the security of the blockchain network. In this paper, we investigate the incentive mechanism for the blockchain platform to attract IIoT devices to purchase more computational power from edge servers to participate in the mining process, thereby building a more secure blockchain network. We model the interaction between the blockchain platform and IIoT devices as a two- stage Stackelberg game, where the blockchain platform act as the leader, and IIoT devices act as followers. We analyze the existence and uniqueness of the Stackelberg equilibrium, and propose an efficient algorithm to compute the Stackelberg equilibrium point. Furthermore, we evaluate the performance of our algorithm through extensive simulations, and analyze the strategies of blockchain platform and IIoT devices under different situations. Index Terms—Industrial internet of things, blockchain, cloud mining, incentive mechanism, Stackelberg game. I. INTRODUCTION C URRENTLY, Internet of Things (IoT) has attracted more and more attention in many areas, such as smart cities, agricultures, health care, industry, etc. It is estimated that the total number of connected IoT devices will be 50 billion by the end of 2020 [1]. Specifically, the widespread application of the IoT has stimulated the evolution of factories to the fourth industrial revolution (Industry 4.0) [2]. Industrial IoT (IIoT) provides interconnection to smart factories by connect- ing different types of industrial machines and devices, which helps to realize the intelligent manufacturing. To deal with the huge number of IIoT devices, a traditional centralized This work was supported by the National Natural Science Foundation of China (Grant NO.11671400, 61972404, 61672524). (Corresponding author: Deying Li.) X. Ding and D. Li are with School of Information, Renmin Uni- versity of China, Beijing, 100872, China (e-mail: [email protected]; dey- [email protected]). J. Guo and W. Wei are with the Department of Computer Science, Erik Jonsson School of Engineering and Computer Science, University of Texas at Dallas, Richardson, TX, 75080, USA (e-mail: [email protected]; [email protected]). architecture is applied to provide services for IIoT devices, where IIoT devices are connected to a cloud server through the internet. With the rapid growth of the number of IIoT devices and the performance requirement of the IIoT applications, however, the traditional centralized IIoT architecture faces many challenges, such as security, personal privacy, bandwidth constraint, and service delay [3]. To avoid these issues, some works introduce decentralized peer-to-peer (P2P) architectures for IIoT applications [4]–[6], where each device can exchange information or trade directly with other devices without a third-party organization. However, these P2P architectures still face with security and personal privacy issues. In the past few years, blockchain, as a world-changing technology, has shown its excellent properties in many fields [7]–[10]. Blockchain is a decentralized public ledger that stores data in a list of blocks, these blocks are linked using cryptography, each block stores the hash value of the previous block. No centralized server is required for maintaining the blockchain, instead, all the blocks are copied and shared by each user in the blockchain network, and the blockchain is maintained by multiple participants in the P2P network. Blockchain provides a novel technology that helps establish a secure, trusted and decentralized system for solving the security and personal privacy problems in IIoT applications. To generate a new block, the participants (miners) of the blockchain need to solve a proof-of-work (PoW) puzzle [11], which is hard to be solved but easy to be validated. The one who first solve the puzzle has the right to packet a new block (the process is called mining), and will get a reward from the platform. Nevertheless, the lightweight IIoT devices cannot directly participate in the mining process due to the huge computational resources requirement. The edge computing architecture makes it possible for IIoT applications to establish a blockchain network, where IIoT devices can offload the computational tasks to edge servers [12]–[14]. Specifically, incentivized by the reward from the platform for packeting a new block, each IIoT device will purchase a certain amount of computational resources (such as CPU and GPU) from edge servers to participate in the mining process for maximizing its own profit. Some existing works [15], [16] study the pricing problem between resource provider (edge server) and miners (IIoT devices), i.e., the resource provider offer a price to maximize its own profit, and miners decide their demand for computational resource to maximize their payoffs. However, these works didn’t pay attention to the safety of the blockchain network. Generally, the blockchain platform will dynamically adjust the threshold value of the hash puzzle to stabilize the generating speed of arXiv:2003.10560v2 [cs.CR] 2 Apr 2020

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Page 1: JOURNAL OF LA Attract More Miners to Join in …JOURNAL OF LATEX CLASS FILES, VOL. 14, NO. 8, AUGUST 2015 1 Attract More Miners to Join in Blochchain Construction for Internet of Things

JOURNAL OF LATEX CLASS FILES, VOL. 14, NO. 8, AUGUST 2015 1

Attract More Miners to Join in BlochchainConstruction for Internet of Things

Xingjian Ding, Jianxiong Guo, Deying Li, and Weili Wu, Member, IEEE

Abstract—The world-changing blockchain technique providesa novel method to establish a secure, trusted and decentralizedsystem for solving the security and personal privacy problemsin Industrial Internet of Things (IIoT) applications. The miningprocess in blockchain requires miners to solve a proof-of-workpuzzle, which requires high computational power. However,the lightweight IIoT devices cannot directly participate in themining process due to the limitation of power and computationalresources. The edge computing service makes it possible for IIoTapplications to build a blockchain network, in which IIoT devicespurchase computational resources from edge servers and thus canoffload their computational tasks. The amount of computationalresource purchased by IIoT devices depends on how many profitsthey can get in the mining process, and will directly affect thesecurity of the blockchain network. In this paper, we investigatethe incentive mechanism for the blockchain platform to attractIIoT devices to purchase more computational power from edgeservers to participate in the mining process, thereby buildinga more secure blockchain network. We model the interactionbetween the blockchain platform and IIoT devices as a two-stage Stackelberg game, where the blockchain platform act as theleader, and IIoT devices act as followers. We analyze the existenceand uniqueness of the Stackelberg equilibrium, and propose anefficient algorithm to compute the Stackelberg equilibrium point.Furthermore, we evaluate the performance of our algorithmthrough extensive simulations, and analyze the strategies ofblockchain platform and IIoT devices under different situations.

Index Terms—Industrial internet of things, blockchain, cloudmining, incentive mechanism, Stackelberg game.

I. INTRODUCTION

CURRENTLY, Internet of Things (IoT) has attracted moreand more attention in many areas, such as smart cities,

agricultures, health care, industry, etc. It is estimated that thetotal number of connected IoT devices will be 50 billion bythe end of 2020 [1]. Specifically, the widespread applicationof the IoT has stimulated the evolution of factories to thefourth industrial revolution (Industry 4.0) [2]. Industrial IoT(IIoT) provides interconnection to smart factories by connect-ing different types of industrial machines and devices, whichhelps to realize the intelligent manufacturing. To deal withthe huge number of IIoT devices, a traditional centralized

This work was supported by the National Natural Science Foundation ofChina (Grant NO.11671400, 61972404, 61672524). (Corresponding author:Deying Li.)

X. Ding and D. Li are with School of Information, Renmin Uni-versity of China, Beijing, 100872, China (e-mail: [email protected]; [email protected]).

J. Guo and W. Wei are with the Department of Computer Science, ErikJonsson School of Engineering and Computer Science, University of Texasat Dallas, Richardson, TX, 75080, USA (e-mail: [email protected];[email protected]).

architecture is applied to provide services for IIoT devices,where IIoT devices are connected to a cloud server through theinternet. With the rapid growth of the number of IIoT devicesand the performance requirement of the IIoT applications,however, the traditional centralized IIoT architecture facesmany challenges, such as security, personal privacy, bandwidthconstraint, and service delay [3]. To avoid these issues, someworks introduce decentralized peer-to-peer (P2P) architecturesfor IIoT applications [4]–[6], where each device can exchangeinformation or trade directly with other devices without athird-party organization. However, these P2P architectures stillface with security and personal privacy issues.

In the past few years, blockchain, as a world-changingtechnology, has shown its excellent properties in many fields[7]–[10]. Blockchain is a decentralized public ledger thatstores data in a list of blocks, these blocks are linked usingcryptography, each block stores the hash value of the previousblock. No centralized server is required for maintaining theblockchain, instead, all the blocks are copied and sharedby each user in the blockchain network, and the blockchainis maintained by multiple participants in the P2P network.Blockchain provides a novel technology that helps establisha secure, trusted and decentralized system for solving thesecurity and personal privacy problems in IIoT applications.To generate a new block, the participants (miners) of theblockchain need to solve a proof-of-work (PoW) puzzle [11],which is hard to be solved but easy to be validated. The onewho first solve the puzzle has the right to packet a new block(the process is called mining), and will get a reward from theplatform. Nevertheless, the lightweight IIoT devices cannotdirectly participate in the mining process due to the hugecomputational resources requirement.

The edge computing architecture makes it possible for IIoTapplications to establish a blockchain network, where IIoTdevices can offload the computational tasks to edge servers[12]–[14]. Specifically, incentivized by the reward from theplatform for packeting a new block, each IIoT device willpurchase a certain amount of computational resources (suchas CPU and GPU) from edge servers to participate in themining process for maximizing its own profit. Some existingworks [15], [16] study the pricing problem between resourceprovider (edge server) and miners (IIoT devices), i.e., theresource provider offer a price to maximize its own profit,and miners decide their demand for computational resourceto maximize their payoffs. However, these works didn’t payattention to the safety of the blockchain network. Generally,the blockchain platform will dynamically adjust the thresholdvalue of the hash puzzle to stabilize the generating speed of

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the new blocks. That is, if the total computational power of allminers is small, the platform will give a large hash thresholdvalue, otherwise, it will give a small hash threshold value. Thetotal computational power of all miners will directly affect thesafety of the blockchain network. An attacker who wants totamper with the context in a block of the blockchain needs tosolve the hash puzzle faster than the current whole network.Thus it’s more harder for the attacker to change the contextof blocks if all miners provide more computational power inthe mining process.

In this paper, therefore, we study the incentive mecha-nism of the blockchain platform to motivate IIoT devices topurchase more computational resources to participate in themining process, thus that a more secure blockchain networkcan be established for IIoT. The main contributions of thispaper are listed as follows.• We design an incentive mechanism for the IIoT

blockchain platform where the blockchain platform pro-vides a certain reward to participating IIoT devices, to at-tract IIoT devices to purchase more computational powerfrom edge servers to participate in the mining process,thereby building a more secure blockchain network.

• We analyze the relationship between the security of theblockchain network and the total computational powerof the entire network, and give the probability that anattacker can successfully tamper with the blockchain.

• We formulate the interaction between blockchain plat-form and miners as a two-stage Stackelberg game. Weanalyze the existence and uniqueness of the Stackelbergequilibrium, and propose an efficient algorithm to com-pute the Stackelberg equilibrium point.

• We conduct extensive simulations to evaluate the perfor-mance of our proposed algorithm, and we analyze thestrategies of platform and miners in different situations.Our work is helpful for the IIoT blockchain platformto set a reasonable reward pricing strategy to maximizeits utility, which is closely related to the security of theblockchain network.

The remainder of this paper is structured as follows. InSection II, we introduce the related works of this paper. InSection III, we describe the system model and analyze theblockchain security that motivated our problem, and then weformulate our problem as a two-stage Stackelberg game. InSection IV, we analyze the existence and uniqueness of theStackelberg equilibrium, and give the best strategies for minersand blockchain platform. We conduct extensive performanceevaluations in Section V. And finally, we conclude this paperin Section VI.

II. RELATED WORKS

Recently, there are numerous works concentrate on the IoTblockchain networks. Huang et al. [17] build a redactableconsortium blockchain based on the first threshold chameleonhash and accountable and sanitizable chameleon signatureschemes, which is efficient for lightweight IIoT devices tooperate. Fu et al. [18] propose an integrated architecture ofcooperative computing to support the demand of computing

P2P blockchain network

Trading

Ledger Ledger

Ledger Ledger

Ledger Ledger

Fig. 1. The P2P blockchain network structure [27].

power in IoT blockchain networks, their goal is to maxi-mize the system energy efficiency. Xu et al. [19] propose ablockchain-enabled computation offloading method to ensuredata integrity for IoT in mobile edge computing. To overcomethe huge operational overhead in energy trading market in theindustrial IoT, which is resulted by the frequent transactions,Hou et al. [20] investigate the local electricity storage for theblockchain-based energy trading in the IIoT. Their solutionscan achieve a good tradeoff between credit utility and oper-ational overhead. The authors in [21] integrate technologiessuch as service-oriented architecture, public key infrastructureand enablers for Service Selection with blockchain technol-ogy, and propose a new blockchain-based architecture forservice interoperation in IoT, which ensures data validityand guarantees the trust of quality of service attributes forservice selection. Xu et al. [22] propose a blockchain-basedfair nonrepudiation network computing service provisioningscheme for IIoT, in which the blockchain is used as a servicepublication proxy and an evidence recorder. Their solutionsovercome the drawbacks of traditional IIoT systems, wheremalicious services or clients may cheat others due to theirown interests.

Moreover, there are a series of works study the blockchainfrom the aspect of auction or game theory. Yao et al. [16]model the resource management and pricing problem as aStackelberg game, and they design a multiagent reinforce-ment learning algorithm to search the near-optimal policy.Li et al. [23] propose a secure energy trading system forindustrial IoT, in which they use Stackelberg game theorydesign an optimal pricing strategy scheme for energy-coinloans to maximize the profits of credit banks. Jiao et al.[24] propose an auction-based market model for the tradingbetween the cloud computing service provider and miners.Their purpose is to efficiently allocate computing resourcesto maximize the social welfare. Wang et al. [25] propose ablockchain and double auction mechanism-based decentralizedelectricity transaction mode for microgrids, to achieve secureand quick electricity transactions. Xiong et al. [26] formulatethe interaction between the cloud providers and miners as aStackelberg game, and apply backward induction to analyzethe equilibria in each sub-game.

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Cloud ServerEdge Server Edge Server

Edge Server Edge Server

Offloading Offloading

OffloadingOffloading

Fig. 2. The architecture of edge computing [28].

III. SYSTEM MODEL AND PROBLEM FORMULATION

In this section, we first introduce the edge computing systemof the IIoT about blockchain network, we then analyze the se-curity of the blockchain network, and finally, we formulate theincentive problem between blockchain platform and miners.

A. System Model

In the blockchain network, the core problem is to achievedistributed consensus. Satoshi Nakamoto proposed the PoWconsensus protocol in 2008 which is used for Bitcoin [11].In the PoW consensus, the users who want generate a newblock need to solve a hash puzzle, which is very costly to beaddressed but easy for others to verify. This process is calledmining, and these users are termed as miners. These minerscompete with each other to solve a hash puzzle, the one whofirst solve the hash puzzle has the right to generate a newblock and will get a reward from the blockchain platform.

For the IIoT blockchain network, the lightweight IIoT de-vices cannot directly participate the mining process due to thelimited computational capability. Incentivized by the rewardfrom the blockchain platform, IIoT devices will purchasecomputation resource from edge servers, each edge serveroffers its own unit price for computational resource. As shownin Fig. 1, the blockchain network is maintained by all ofthe IIoT devices. As for the mining process, each miner willoffload its computational task to the edge server to competewith others, as shown in Fig. 2. The probability of eachminer winning the competition depends on the amount ofcomputational resource it purchased. All the miners purchasecomputational resource with the goal of maximizing their ownprofits.

B. Blockchain Security

Blockchain is a list of blocks that are linked by blockhash value, each block record a set of transactions. Morespecifically, a block contains two parts: block content andblock header. The block content is the details of transactionsinformation, which records all the inputs and outputs of eachtransaction. The block header consists of the previous block

Attacker

Genesis Block Genesis Block

Blockchain at t1 Blockchain at t2

Fig. 3. Attackers tamper with the blockchain by winning the block miningrace.

hash value, which is used as a cryptographic link that createsthe chain, a version number that used for tracking for softwareor protocol updates, a timestamp that records the time atwhich the block is generated, a Merkle tree root of all thetransactions, a hash threshold value that records the currentmining difficulty, and a nonce, which is used for solving thePoW puzzle.

The blockchain starts with a genesis block which is givenby the blockchain platform, all subsequent blocks will putsome previously generated block’s hash value into their blockheader. Miners compete with each other to solve a hash puzzle,the one who first solve the puzzle has the right to generate anew block, and new blocks will be added behind the genesisblock. Forks may happen when multiple miners solve the hashpuzzle at the same time, thus each user maintains the blocks inthe form of a block tree [29]. According to the longest chainprinciple [11], each user will choose the longest branch in theblock tree as the current blockchain, as shown in the left partof Fig. 3.

For a blockchain miner, to get the right to attach a new blockto the chain, it needs to solve a hash function (PoW puzzle),that is, it needs to find a nonce and record it in the block headersuch that the hash value of the block header is less than thehash threshold. As the hash function has no back door, the onlyway to find such a nonce is to run many hash operations. Thedifficulty of the PoW puzzle is determined by the given hashthreshold value, which is a 256-bit binary number that startswith a certain number of consecutive zeros (difficulty). Forexample, if the hash threshold starts with 60 consecutive zeros,the probability of finding the correct nonce by performing ahash operation is 2−60, which means that it takes an average of260 hash operations to solve the PoW puzzle. To stabilize thegrowth rate of the blockchain, the platform will dynamicallyadjust the difficulty of the PoW puzzle based on the totalcomputational power of the whole blockchain network. Take

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●●

●●

10 12 14 16 18 20

0.0

0.1

0.2

0.3

0.4

H (TH/s)

P(4

) (%

)

Fig. 4. The probability that an attacker will ever win the race from 4 blocksbehind.

the bitcoin blockchain as an example, the difficulty of PoWpuzzle will be updated every 2 weeks to ensure that it takes10 minutes (on average) to add a new block to the blockchain[30].

Assume that an attacker wants to tamper with the context ofa block, the change of the context will change the hash valueof the block, so the attacker needs to find a new nonce tosolve the PoW puzzle of this block. Moreover, as each blockcontains the hash value of the previous block, the change ofa block context will change all the subsequent blocks, so theattacker should find the nonce for every subsequent block. Infact, the attacker needs to fork a new branch, and start a blockmining race against other miners of the network. The attackersuccessfully tamper with the blockchain once the attacker winsthe race, as the new branch forked by the attacker becomesthe longest one in the block tree. As shown in Fig. 3.

Now we analyze the probability of success of an attacker.Assume that the total computational power of the blockchainnetwork is H by the hash rate, and the attacker’s computationpower is h. Then the probability an honest miner finds thenext block can be denoted by p = H−h

H , and the probabilitythat the attacker finds the next block is q = h

H . According to[31], the probability that the attacker will ever win the racefrom z blocks behind can be calculated by

P (z) =

{1, if q ≥ 1

2 ,

I4pq(z, 12

), otherwise,

(1)

where Ix(u, v) is the regularized incomplete beta function:

Ix(u, v) =Γ(u+ v)

Γ(u)Γ(v)

∫ x

0

tu−1(1− t)v−1 dt, (2)

and Γ(·) is the gamma function.Consider that an attacker’s computational power is h =

1 TH/s, and he wants to tamper with the context of the 4thblock from the blockchain tip. Fig. 4 shows the probability ofsuccess of the attacker against the total computational powerof the network. It can be seen that as the total computationalpower of the network increases, the probability that the at-tacker successfully tamper with the blockchain significantly

decreases. Specifically, when H = 10 TH/s, P (4) = 0.387%;when H = 20 TH/s, P (4) = 0.033%. The probability ofsuccess of the attacker reduced by more than 10 times if wedouble the computational power of the entire network. Theresult suggests that the larger the computational power of thewhole blockchain network, the harder it is for the attackerto tamper with the blockchain, and thus the more secure theblockchain network will be.

C. Problem Description

As described before, the blockchain platform provides cer-tain rewards to incentivize miners to participate in the miningprocess, and each miner purchase computational resource fromits nearby edge server for getting more profits.

For the blockchain platform, the revenue is mainly derivedfrom the transaction fees, assume that the average transactionfees in a block is B. The platform will give a reward R to theminer who packaging a new block. Note that the reward Rshould be no larger than B, otherwise the blockchain cannotmaintain perpetual operation. As discussed in Section III-B,the total computational power will significantly affect theblockchain security, so the blockchain platform will get benefitfrom the huge computational power provided by the miners.As shown in Fig .4, the decrease speed of the probabilitythat an attacker successfully tamper with the blockchain slowsdown as the total computational power of the entire networkincreases. Thus we use the sigmoid function to describe thebenefits of the total computational power of the entire network.We define the utility of the blockchain platform as

U = α ·[σ(β ·∑

si∈Sµi

)− 1

2

]−R, (3)

where S is the miners set, µi is the computational powerprovided by the i-th miner, σ(·) is the sigmoid function thatdefined as σ(x) = 1

1+e−x , α > 1 is a constant parameterthat controls the importance of the total computational power,and 0 < β < 1 is a constant parameter that controls theconvergence rate of the sigmoid function.

For the miners, consider there are a set S of IIoT devicesthat are interested in participating in the mining process, whereS = {s1, s2, . . . , sn}. Each miner si ∈ S will purchaseµi computational power from edge servers to compete withothers in pursuit of a maximum financial profit. According tothe principle of the PoW consensus protocol, the speed of aminer for solving the hash puzzle depends on the number ofhash operations it can perform per unit of time, that is, itscomputational power. Therefore, the miner who purchases themost computational power is most likely to solve the PoWpuzzle first. We use pi to denote the probability that miner siwinning the competition among all miners in solving the PoWpuzzle, pi can be defined as

pi =µi∑

sj∈S µj. (4)

The unit price of the computational power purchased byminers may be different, as they purchase computational powerfrom different edge servers. Assume that the unit price of thecomputational power purchased by si is λi per day. We also

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assume that the blockchain will generate an average of N newblocks per day. Then the expected reward of miner si in a dayis piRN , and its cost is λiµi. We use Pi to represent theexpected profit of miner si in one day, Pi can be calculatedas follows,

Pi = piRN − λiµi. (5)

Both blockchain platform and miners will dynamicallyadjust their strategies to get the maximum profit. We modelthe interaction between blockchain platform and miners as atwo-stage Stackelberg game. In the upper stage, the blockchainplatform sets the reward to incentivize miners participate themining process. In the lower stage, miners decide the optimalamount of computational power they purchase. We formulatethe optimization problems for the blockchain platform andminers as follows.

We first introduce the lower stage of the game. Given thereward R of the blockchain platform and other miners’ strate-gies µ−i, where µ−i = {µ1, µ2, . . . , µi−1, µi+1, . . . , µn}.The miner si decides the amount of computational power µi itpurchased to maximize its own profit. This sub-game problemcan be written as follows.

Problem 1. miners’ sub-game.

maxµi

Pi(µi|µ−i, R)

s.t. µi ≥ 0

For the upper stage of the game, the blockchain platformwill dynamically adjust the reward R to maximize its utility.As defined in equation (3), the utility of the blockchainplatform is directly related to the strategies µ of miners, whereµ = {µ1, µ2, . . . , µn}, and the reward R. This sub-game canbe formulated as follows.

Problem 2. blockchain platform’s sub-game.

maxR

U(R,µ)

s.t. 0 ≤ R ≤ B

Problem 1 and Problem 2 together form a Stackelberg game.The object of the game is to find a Stackelberg equilibriumpoint where neither the leader (blockchain platform) nor thefollowers (miners) want to change their strategies. In thispaper, the Stackelberg equilibrium can be defined as follows.

Definition 1. Let µ∗ and R∗ be the optimal strategies ofminers and blockchain platform, respectively, where µ∗ ={µ∗1, µ∗2, . . . , µ∗n}. Then, the point (µ∗, R∗) is the Stackelbergequilibrium point if it satisfies the following two conditions,

U(R∗,µ∗) ≥ U(R,µ∗),∀ 0 ≤ R ≤ B, (6)

and

Pi(µ∗i |µ∗

−i, R∗) ≥ Pi(µi|µ∗

−i, R∗),∀i,∀µi ≥ 0, (7)

where µ∗−i = µ∗\{µ∗i }.

IV. GAME ANALYSIS FOR THE INCENTIVE MECHANISM

In this section, we analyze the existence and the uniquenessof the Stackelberg equilibrium of our proposed Stackelberggame. We first analyze the lower stage of the game, in whichwe aim to find the Nash equilibrium for the miners’ sub-game.Based on the analysis of the lower stage, we then analyze theutility maximization of the blockchain platforms sub-game inthe upper stage.

A. Analysis of the miners’s sub-game

After the blockchain platform set the reward R for miners,all of the miner will dynamically adjust their strategies to getthe maximum profits until reach a Nash equilibrium. In thefollowing, we will prove that the Nash equilibrium point existsin the miners’ sub-game through a theorem.

Theorem 1. The Nash equilibrium point exists in the miners’sub-game.

Proof. For the miners’ sub-game, the object function Pi(·)is defined in [0,∞). From equation (5), we can know thatµi ≤ RN

λi, otherwise, the profit of miner si will be negative.

Thus µi is continuously chosen in [0, RNλi ], which is a non-empty, convex and compact subset of the Euclidean space.Next, we calculate the first order and second order derivativesof function Pi(·).

∂Pi∂µi

= RN

∑sj∈S µj − µi

(∑sj∈S µj)

2− λi, (8)

∂2Pi∂µ2

i

=∂(∂Pi∂µi

)

∂µi= −2RN

∑sj∈S µj − µi

(∑sj∈S µj)

3≤ 0. (9)

Therefore, Pi(·) is a strictly concave function, and we thenconclude that the Nash equilibrium point exists in the miners’sub-game.

As Pi(·) is a strictly concave function with µi, giventhe reward R of the blockchain platform and other miners’strategies µ−i, miner si has a unique best strategy ui, and itcan be achieved when the first order derivative of Pi(·) equalsto 0, i.e.,

∂Pi∂µi

= RN

∑sj∈S µj − µi

(∑sj∈S µj)

2− λi = 0. (10)

Solving equation (10), we have µi =

√RN

∑sj∈S\{si}

µj

λi−∑

sj∈S\{si}µj . As each strategy µi for si is an nonnegative

number, the best strategy µ∗i for si is given as follows.

µ∗i =

0, if

RN∑sj∈S\{si} µj

≤ λi,√RN ·

∑sj∈S\{si}

µj

λi−

∑sj∈S\{si}

µj , otherwise(11)

Corollary 1. Given the optimal strategies of miners µ∗ ={µ∗1, µ∗2, . . . , µ∗n}, for any µ∗i , µ

∗j ∈ µ∗, if λi ≤ λj , then µ∗i ≥

µ∗j .

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Proof. We prove this corollary by contradiction. Suppose thatthere exist two miners’ strategies µ∗i , µ

∗j ∈ µ∗, where λi ≤ λj

and µ∗j > µ∗i ≥ 0. As µ∗j > 0, according to equations (10)and (11), we can easily know that ∂Pj

∂µj(µ∗j |µ∗

−j) = 0.Similarly, If µ∗i > 0, we have ∂Pi

∂µi(µ∗i |µ∗

−i) = 0. If µ∗i =

0, according to equation (11), we have RN∑sj∈S\{si}

µj≤ λi,

substituting it in to equation (10), we have ∂Pi∂µi

(µ∗i |µ∗−i) ≤ 0.

In summary, we know that ∂Pi∂µi

(µ∗i |µ∗−i) ≤ 0.

As λi ≤ λj and µ∗j > µ∗i ≥ 0, we have

∂Pj∂µj

(µ∗j |µ∗−j) = RN

∑sk∈S µ

∗k − µ∗j

(∑sk∈S µ

∗k)2

− λj

< RN

∑sk∈S µ

∗k − µ∗i

(∑sk∈S µ

∗k)2

− λi

=∂Pi∂µi

(µ∗i |µ∗−i) ≤ 0,

(12)

which contradicts ∂Pj∂µj

(µ∗j |µ∗−i) = 0. Therefore, the corollary

holds.

Sort the miners in ascending order of λi, for clarity, minersare renumbered and still denoted by S = {s1, s2, · · · , sn}.According to Corollary 1, we have µ1 ≥ µ2 ≥ · · · ≥ µn ≥ 0.

We assume that the the first q miners have a non-zerostrategy, i.e., µq > 0, µq+1 = 0. We let Sq = {s1, s2, . . . , sq}.It’s obvious that

∑sj∈S µj =

∑sj∈Sq µj , and we have the

following corollary.

Corollary 2. Let q be the number of miners that have a non-zero strategy in a Nash equilibrium, then we have q ≥ 2.

Proof. Firstly, it’s clear that q > 0, otherwise, according toequation (5), any miner si who purchase computational powerwith the amount in (0, RNλi ) can get more profit. Then weconsider the case that q = 1. Let s1 be the miner who has apositive strategy, and its current best strategy is to purchaseµ1 amount of computational power. According to equation (5),s1’s current profit is RN−λ1µ1. However, s1 can increase itsprofit by continuously reducing µ1 to 0, which indicates thatminers didn’t reach a Nash equilibrium point. Therefore, thecorollary holds.

Summing up equation (10) with i = 1, 2, . . . , q, we have

RN(q − 1)∑sj∈Sq µj

−∑

si∈Sqλi = 0. (13)

Thus we have ∑sj∈Sq

µj =RN(q − 1)∑

si∈Sq λi. (14)

Substituting equation (14) into equation (10), we obtain

µi =RN(q − 1)∑

sj∈Sq λj

(1− (q − 1)λi∑

sj∈Sq λj

). (15)

As µq > 0, and we have proven that q ≥ 2, we then have

1− (q−1)λq∑sj∈Sq

λj> 0, i.e., λq <

∑sj∈Sq−1

λj

q−2 .

Algorithm 1 Calculate Nash equilibrium for miners.1: Sort miners in ascending order of λi and renumber miners,

i.e., λ1 ≤ λ2 ≤ · · · ≤ λn.2: S′ = {s1, s2}, q = 23: while q < n and λq+1 <

∑si∈S′

λi

|S′|−1 do4: S′ ← S′ ∪ {sq+1} ;5: q ← q + 1;6: end while7: for i = 1; i ≤ n; i+ + do8: if si ∈ S′ then9: µ∗i = RN(q−1)∑

sj∈S′λj

(1− (q−1)λi∑

sj∈S′λj

);

10: else11: µ∗i = 0;12: end if13: end for14: return µ∗ = {µ∗1, µ∗2, . . . , µ∗n}

Based on the above analysis, we design the followingalgorithm to find the Nash equilibrium point for the miners’sub-game.

In the following, we first prove the strategies produced byAlgorithm 1 is a Nash equilibrium for the miners’ sub-game,then we prove that the Nash equilibrium is unique.

Theorem 2. The strategies produced by Algorithm 1 is a Nashequilibrium for the miners’ sub-game.

Proof. For miners in S′, their strategies are calculated byequation (15), it’s clear that these miners get the current beststrategies as the first order of Pi(·) equals to 0 for si ∈ S′. Toprove the theorem, we only need to prove that for any minersj ∈ S\S′, its current best strategy is 0. According to thedescription of Algorithm 1, we have

λj ≥∑si∈S′ λi

|S′| − 1,∀sj ∈ S\S′. (16)

From equation (14), we know that∑si∈S′ λi = RN(|S′|−1)∑

si∈S′µi

,

substituting it into equation (16), we obtain that RN∑si∈S′

µi≤

λj for any sj ∈ S\S′. As sj /∈ S′, we have∑si∈S′ µi =∑

si∈S\{sj} µi. Therefore, RN∑si∈S\{sj}

µi≤ λj for any sj ∈

S\S′. According to equation (11), we know that the currentbest strategy for any miner sj ∈ S\S′ is 0. Thus the theoremholds.

The following corollary helps us to prove the uniqueness ofthe Nash equilibrium for the miners’ sub-game.

Corollary 3. Given any Nash equilibrium µne ={µne1 , µne2 , . . . , µnen } for the miners’ sub-game, let Sh be theset of miners with a non-zero strategy, then we have Sh = S′,where S′ is got by Algorithm 1, and |S′| = p.

Proof. Assume that miners have been sorted in ascendingorder of λi. According to Corollary 1, we know that µne1 ≥µne2 ≥ · · · ≥ µnen ≥ 0. Suppose that Sh = {s1, s2, . . . , sh},i.e. |Sh| = h. To prove Sh = S′, we only need to provethat h = p. If h > p, then sp+1 ∈ Sh, from description

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of Algorithm 1, we have λp+1 ≥∑si∈S′

λi

|S′|−1 ≥∑si∈Sh

λi

|Sh|−1 ,substituting this into equation (15), we obtain that µnep+1 ≤ 0,which contradicts sp+1 ∈ Sh. If h < p, then we have

µneh+1 = 0 and λh+1 <∑si∈Sh

λi

|Sh|−1 , according to equation (10),the first order derivative of Ph+1(·) with respect to µh+1 whenµh+1 = µneh+1 = 0 is

∂Ph+1

∂µh+1(0|µne

−(h+1)) = RN

∑sj∈S µj − 0

(∑sj∈S µ

nej )2

− λh+1

=RN∑sj∈S µ

nej

− λh+1 =RN∑

sj∈Sh µnej

− λh+1,

(17)

where µne−(h+1) = µne\{µneh+1}.

According to equation (14), we have∑sj∈Sh µ

nej =

RN(h−1)∑sj∈Sh

λj, substituting it into equation (17), we have that

∂Ph+1

∂µh+1(0|µne

−(h+1)) =

∑sj∈Sh λj

h− 1− λh+1. (18)

As λh+1 <∑si∈Sh

λi

|Sh|−1 =∑si∈Sh

λi

h−1 , we know that∂Ph+1

∂µh+1(0|µne

−(h+1)) > 0, which implies that miner sh+1

can improve its profit by increasing its strategy µneh+1. Thiscontradicts that µne is an Nash equilibrium. Therefore, wehave h = p, and thus the corollary holds.

Theorem 3. The miners’ sub-game has a unique Nash equi-librium point.

Proof. According to Corollary 3, the miners’ sub-game canbe seen as a game among miners in S′, as for any minersi ∈ S\S′ we always have µi = 0 in a Nash equilibrium.Therefore, we only need to prove that the sub-game of minersin S′ has a unique Nash equilibrium point.

As the strategy of each miner in S′ is positive, and theprofit Pi(·) for any si ∈ S′ is a concave function according toequation (9), each miner will get its best strategy when the firstorder derivate of Pi(·) equals to 0. As shown in equations (13)-(15), we get unique solutions by solving the set of functionsthat the first order derivate of Pi(·) equals to 0 for each si ∈S′. Therefore, the miners’ sub-game among miners in S′ hasa unique Nash equilibrium, and thus we can conclude thatTheorem 3 holds.

B. Analysis of the blockchain platform’s sub-gameAccording to the analysis in Section IV-A, for any value

of reward R given by the blockchain platform, there alwaysexists a unique Nash equilibrium for the miners. Therefore,given an value of R, the blockchain platform has a uniqueutility, and it can maximize its utility by setting an optimal R.Substituting the result of Algorithm 1 into equation (3) andcombining equation (14), we have

U = α ·[σ(β ·∑

si∈S′µ∗i

)− 1

2

]−R

= α ·

(β · RN(q − 1)∑

si∈S′ λi

)− 1

2

]−R

= α ·[σ (βXR)− 1

2

]−R,

(19)

where X = N(q−1)∑si∈S′

λi.

Theorem 4. There exists a unique Stackelberg equilibrium(µ∗, R∗) in our proposed Stackelberg game, where µ∗ andR∗ are optimal strategies for miners and blockchain platform.

Proof. As the definition of the blockchain platform’s sub-game, the utility function U(·) is defined with R ∈ [0, B].We then calculate the first order and second order derivativesof U(·) with respect to R,

∂U

∂R= αβXσ(βXR) (1− σ(βXR))− 1, (20)

∂2U

∂R2= αβ2X2σ(βXR)(1− σ(βXR))(1− 2σ(βXR)).

(21)

As βXR ≥ 0, the range of the sigmoid function σ(βXR) is[ 12 , 1), and then we have 1−σ(βXR) > 0 and 1−2σ(βXR) ≤0. Thus ∂2U

∂R2 ≤ 0 holds. Therefore the utility function U(·)is strictly concave with R for R ∈ [0, B]. It means that aunique R∗ can be found to maximize U(·). Combined withTheorem 3, we conclude that there exists a unique Stackelbergequilibrium in our proposed Stackelberg game.

The maximization of U(·) is achieved either at the extremepoint where the first order derivative of U(·) equals to 0,or at the boundary of domain area (i.e., R = 0 or B). IfαβX < 4, we have ∂U

∂R < 0, ∀R ∈ [0, B], then U(·) isa decreasing function in [0, B], and the best strategy of theblockchain platform is R∗ = 0. If αβX ≥ 4, by solvingthe equation ∂U

∂R = 0, we have σ(βXR) =√

14 −

1αβX + 1

2 ,and thus the best strategy of the blockchain platform is

R∗ = min

{1βX log

(12+

√14−

1αβX

12−

√14−

1αβX

), B

}. In summary, we

have

R∗ =

0, if αβX < 4,

min

{1βX log

(12+

√14−

1αβX

12−

√14−

1αβX

), B

}, otherwise.

(22)

V. PERFORMANCE EVALUATION

In this section, we conduct extensive simulations to evaluatethe performance of our proposed incentive mechanism forblockchain-based internet of things.

A. Experimental settings

In our experiments, we set the basic parameters of ourproblem as follows. We assume there are totally 1000 IIoTdevices that are interested in participating in the blockchainmining process, i.e., |S| = 1000. The unit price λi of eachminer purchasing computational power from edge servers isuniformly range from 100 to 105. For the blockchain platformutility model, α is set to be 10000, β is set to be 0.001, andB is set to be 2000. We assume that it takes an average of 10minutes for the blockchain platform to generate a new block,and thus it will generate an average of 144 new blocks per

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●●

●● ● ● ● ●

020

040

060

080

010

00

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

Difference of unit price

|S'|

Fig. 5. Impact of the difference of unit price on |S′|.

010

020

030

040

050

0

500 1000 2000 3000 4000 5000

Number of IIoT devices (|S|)

|S'|

Fig. 6. Impact of number of IIoT devices on |S′|.

day, i.e., N is set to be 144. Unless otherwise stated, the aboveparameters will be set as default settings. Each value in figuresin this section is the average of 100 runs.

B. Results and Analyses

1) Number of participating miners (|S′|): As described inAlgorithm 1, only the miners in S′ will purchase computa-tional power to participate in the mining process, then westudy the impact of unit price of computational power andnumber of IIoT devices on |S′|.

In Fig. 5, the minimum unit price of computational power isset to be 100, and |S| is set to be 1000. The difference of unitprice represents the range of λi for each miner. For example,when the difference of unit price is set to be 2%, then λiis randomly chosen in [100, 102] for each miner. From Fig.5 we can see that |S′| decreases when the difference of unitprice of computational power increases. This is because whenthe difference of unit price is large, λi of each miner willbecome diverse, and thus there will be more miners violatethe condition of Algorithm 1. We can also see that the effect

●●

● ● ● ● ● ● ● ●

80 100 120 140 160 180 200

050

010

0015

0020

00

Lowest unit price of computational power

R*

050

010

0015

0020

0025

0030

00To

tal p

ower

Fig. 7. Impact of the λi on strategies.

●●

80 100 120 140 160 180 200

050

010

0015

0020

0025

0030

00

Lowest unit price of computational power

Pla

tform

util

ity

02

46

810

Min

ers'

ave

rage

pro

fit

Fig. 8. Impact of λi on platform utility and miners profits.

of the difference of the unit price of computational power isvery significant, even when the difference of unit price is assmall as 1%, there are only about 44.8% miners participatethe blockchain mining process.

In Fig. 6, we fix the difference of unit price of computationalpower at 5%, and study how the number of IIoT devices affect|S′|. It can be seen that the growth of |S′| does not have alinear relationship with the number of IIoT devices. When|S| = 500, there are about 28.5% miners participate in theblockchain mining process, and when |S| increased to 5000,there are only about 9% miners participate the blockchainmining process.

2) Effect of unit price λi on utilities and strategies: Wefix the difference of the unit price of computational power at5%, and study how λi of each miner affect the utilities andstrategies of blockchain platform and miners.

Fig. 7 shows that when the unit price of computation powerincreases, the blockchain platform needs to improve the rewardto achieve maximum utility until the maximum value of thereward is reached. And miners tend to purchase less computa-

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● ● ● ● ● ● ● ● ● ●

1000 2000 3000 4000 5000

050

010

0015

0020

0025

0030

00

|S|

Pla

tform

util

ity

05

1015

20M

iner

s' a

vera

ge p

rofit

Fig. 9. Impact of |S| on platform utility and miners’ profits.

●●

●● ● ●

1000 2000 3000 4000 5000

010

2030

4050

|S|

Min

er P

rofit

● P1P50P100

Fig. 10. Impact of |S| on the 1st, 50th and 100th miners’ profits.

tional power as it will cost more money. Combining Fig. 7 andFig. 8, we can observe that the platform utility decreases asthe unit price of computational power increases, this is becausethe platform improves the reward but the total computationalpower provided by miners decreases. We can also see thatthe average profit of miners has increased, although they haveto pay more money to afford unit computational power. Thereason is that miners reduce the amount of computationalpower they purchased, and the platform gives more rewardsto them.

3) Effect of |S| on platform utility and miners’ profits: Wefix the range of the unit price of computational power at[100, 105], and study the effect of |S|.

As shown in Fig. 9, no matter how many IIoT devices arein the blockchain network, the platform always has a stableutility. However, miners’ average profit will decrease as moreminers will participate in the mining process and intensifiedthe competition.

Fig. 10 shows the profits of miners s1, s50 and s100, notethat all miners have been sorted in ascending order of λi and

renumbered. We can see that the profits of miners s1 ands50 decrease with the increases of |S|, the result is similarto that in Fig. 9. However, for miner s100, its profit increaseswhen |S| increases from 500 to 1000, then slowly decreasesas |S| increases. The reason is that when |S| increases from500 to 1000, λi of each miner becomes more tight, and thenthe difference between its unit price of computational powerand that of other miners in front of it decreases. So miners100 become more competitive and thus can get more profits.In detail, when |S| = 500, λ1 = 100.011, λ50 = 100.504and λ100 = 100.992; when |S| = 1000, λ1 = 100.004,λ50 = 100.247 and λ100 = 100.496. We can also see that theunit price of computational power will significantly affect theprofits of miners, especially when the number of participatingminers is small. For example, when |S| = 500, the profit ofminer s1 is 2.5 times the profit of the miner s50 and 10.6times the profit of miner s100, while the unit price of thecomputational power of the miners s50 and s100 is 0.49% and0.98% larger than that of s1, respectively.

VI. CONCLUSION

In this paper, we design an incentive mechanism for IIoTblockchain network that can be used to motivate IIoT devicesto purchase more computational resources form edge servers toparticipate in the blockchain mining process, thus that a secureblockchain network can be estabilished. We analyze the rela-tionship between the security of the blockchain network andthe total computational power of the entire network, and givethe probability that an attacker can successfully tamper withthe blockchain. We model the interaction between blockchainplatform and IIoT devices as a two-stage Stackelberg game,in which the leader, i.e., the blockchain platform, first set thevalue of the reward to maximize its utility, and miners actas followers, adjust their strategies to maximize their profits.We prove the existence and uniqueness of the Stackelbergequilibrium and design an efficient algorithm to computethe Stackelberg equilibrium point. We also conduct extensivesimulations to evaluate the performance of our designs. Ourwork is helpful for the IIoT blockchain platform to set areasonable reward to build a secure blockchain network.

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Xingjian Ding Xingjian Ding received the BEdegree in electronic information engineering fromSichuan University, Sichuan, China, in 2012. He re-ceived the M.S. degree in software engineering fromBeijing Forestry University, Beijing, China, in 2017.Currently, he is working toward the PhD degree inthe School of Information, Renmin University ofChina, Beijing, China. His research interests includewireless rechargeable sensor networks, algorithmdesign and analysis, and blockchain.

Jianxiong Guo Jianxiong Guo is a Ph.D candi-date in the Department of Computer Science at theUniversity of Texas at Dallas. He received his BSdegree in Energy Engineering and Automation fromSouth China University of Technology in 2015 andMS degree in Chemical Engineering from Universityof Pittsburgh in 2016. His research interests in-clude social networks, data mining, IoT application,blockchain, and combinatorial optimization.

Deying Li Deying Liis a professor of Renmin Uni-versity of China. She received the B.S. degree andM.S. degree in Mathematics from Huazhong NormalUniversity, China, in 1985 and 1988 respectively.She obtained the PhD degree in Computer Sciencefrom City University of Hong Kong in 2004. Herresearch interests include wireless networks, ad hoc& sensor networks mobile computing, distributednetwork system, Social Networks, and AlgorithmDesign etc.

Weili Wu Weili Wu received the Ph.D. and M.S.degrees from the Department of Computer Science,University of Minnesota, Minneapolis, MN, USA, in2002 and 1998, respectively. She is currently a FullProfessor with the Department of Computer Science,The University of Texas at Dallas, Richardson, TX,USA. Her research mainly deals in the generalresearch area of data communication and data man-agement. Her research focuses on the design andanalysis of algorithms for optimization problemsthat occur in wireless networking environments and

various database systems.