Proof-of-work blockchains reward each miner for one completed block by an amount that is, in expectation, proportional to the number of hashes the miner contributed to the mining of the block. Is this proportional allocation rule optimal? And in what sense? And what other rules are possible? In particular, what are the desirable properties that any good allocation rule should satisfy? To answer these questions, we embark on an axiomatic theory of incentives in proof-of-work blockchains at the time scale of a single block. We consider desirable properties of allocation rules including: symmetry; budget balance (weak or strong); sybil-proofness; and various grades of collusion-proofness. We show that Bitcoins proportional allocation rule is the unique allocation rule satisfying a certain system of properties, but this does not hold for slightly weaker sets of properties, or when the miners are not risk-neutral. We also point out that a rich class of allocation rules can be approximately implemented in a proof-of-work blockchain.
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