Ethereum Classic (ETC) uncle blocks deter mining centralization as I will show.

Hypothetical

Imagine network issues cause miners to begin not having updated copies of the ETC blockchain. Wasted resources become more prevalent. Note that the creators of winning blocks are not affected by these network issues. They already have updated copies of the blockchain!

Suppose an ETC miner controls a percentage P of the mining resources. They will be adding to their own blocks about P percent of the time that network issues begin. They can expect to add another block P percent of the time. Therefore, they can expect P percent of P percent (P²/ 100) of the rewards when networking issues begin.

For example, miners controlling 40% of the mining resources can initially avoid wasted resources about 40% of the time. They can therefore add a second block about 40²/ 100 percent or 16% of the time.

Likewise, miners controlling 20% of the mining resources can initially avoid wasted resources about 20% of the time. They can therefore add a second block about 20²/ 100 percent or 4% of the time.

Problem

The 40% miner controls twice as many resources as the 20% miner. However, the 40% miner can expect four times the mining rewards when network issues begin! Network issues cause large mining operations to gain substantially bigger rewards! This encourages mining centralization!

Solution

Uncle blocks mitigate this problem by increasing the rewards of small mining operations in the event of network issues. Therefore, uncle blocks deter mining centralization!

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Acknowledgements

I would like to thank IOHK (Input Output Hong Kong) for funding this effort.

License

This work is licensed under the Creative Commons Attribution ShareAlike 4.0 International License.