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Securing Digital Rights for Communities (Game Theory and Governance of Scalable Blockchains for Use in Digital Network States)

Chapter 13: Defending Decentralized DPoS Communities—Attack Vectors, Security Mechanisms, and the Power of Layer Zero

Decentralized ecosystems promise censorship resistance, transparent governance,
and community ownership. Yet these aspirations come under threat the moment someone attempts to gain disproportionate control. Whether through direct purchase of tokens, stealthy accumulation, or coordinated influence, attackers seek to seize the reins of power or, at the very least, disrupt the shared values that hold the community together. As a result, the community must be highly vigilant to monitor its systems for signs of centralisation and be ready to defend itself at all times. This chapter explores the key attack vectors in delegated proof-of-stake (DPoS) blockchains, the defences that resilient communities employ, and how reputation, distribution, and circular economies become powerful shields against hostile takeovers.

13.1. Understanding the Direct 51% Attack

A “51% attack” in the context of many blockchains typically refers to controlling the majority of mining hash power (in proof-of-work) or the majority of total stake (in proof-of-stake). In a delegated proof-of-stake (DPoS) chain, the equivalent is controlling over 51% of the active voting stake, not necessarily 51% of total tokens in existence. A large fraction of tokens may be non voting, dormant or held by long-term investors who choose not to participate in governance, so the threshold to seize decision-making power might be lower (e.g., 30–40% of total tokens) if it translates to half of the actively voted stake.

The goal of gaining 51% of the voting stake in either POW or DPOS governance systems is to control or change the underlying consensus software of the blockchain. The group which controls 51% of the active voting stake has the power to nullify balances, change the rules or carry out any number of wide ranging nefarious actions which may act against the best interests of the wider community. Some of these actions may even be subtle and hard to detect without deep knowledge of the base code.

13.1.1 Calculating the Threshold in Practice

• Dormant or apathetic stake. Many investors do not wish to use their governance rights. Some have lost access to keys; others simply hold tokens passively, others are ill informed as to the importance of maintaining activity of their tokens in governance decisions.
• Voting delays. DPoS platforms often include powering-up requirements and waiting periods (also known as staking). For example, once tokens are staked (“powered up”), an attacker must wait (e.g., 30 days) before being able to vote for witnesses (the block producers).
• Community “immune response.” During peaceful times, only 30–40% of total supply might be actively voting. Under attack, additional dormant stake frequently awakens, pushing the actively voted stake higher. An attacker who has purchased 30–40% of the total tokens might suddenly face 50–60% of active stakeholders voting against them, when these voters were apathetic before their attack.

13.1.2 Over-the-Counter (OTC) Acquisitions

Attackers sometimes attempt shock acquisitions: buying large stakes through private Over the Counter (OTC) deals with major token holders to avoid moving markets. Even so, a month-long lock or similar delay feature grants the broader community critical time to observe the build-up, approach the new party about their intentions and organize a defence if necessary.

13.2. Indirect or Slow Accumulation Attacks

An alternative method is the slow, stealthy approach, gradually buying tokens over a long period so that no sudden price surges draw suspicion. The attacker attempts to outpace inflation and avoid spooking community members. This is often described as a “Red Queen Race or Game,” where the attacker has to keep running, constantly purchasing stake to maintain or grow their position because:

1. Inflation issues new tokens to existing stakers, continuously diluting outsiders attempting to accumulate stake over the long term for an attack.
2. Community awareness can lead to counter-buys. If accumulation becomes obvious, others may accumulate too, driving up price and making the attack prohibitively expensive.

In practice, truly stealthy long-term accumulation on a healthy DPoS network proves extremely difficult. Because continuous buying raises a token’s profile, it can also raise the price, creating a negative feedback loop that the attacker has to outpace.

13.3. Distribution as Security

Well-distributed token ownership is the most fundamental defence against takeover attempts in DPoS. If a small group of large holders controls the majority of tokens, an attacker may simply collude or purchase those stakes. Conversely, if significant token supply rests in the hands of numerous mid-level stakeholders (“dolphins” or “orcas” in some ecosystems), no single OTC deal can guarantee majority control.

1. Healthy Middle Class. A broad “middle class” of token holders ensures that a handful of whales cannot single-handedly decide governance.
2. Ongoing Community Allocation. Continuous reward mechanisms (e.g., content creation rewards, infrastructure rewards, gaming, or curation) spread tokens widely among active participants, reinforcing decentralization.
3. Fair Launch or Post-Launch Distribution. Token systems with large pre-mines or concentrated early investors may face outsized risk of governance capture. Over time, these chains must actively work on distributing tokens to genuine, productive community members, otherwise they undermine their own security model.

For more information on Pre-Mines and ICO’s see Chapter 15. “Censorship and the Morality of Pre-Mines”.

13.4. How to Defend Against Attacks

13.4.1 The Immune Response

In the event of an attempted 51% attack, a DPoS community often springs into action much like a biological immune system. Dormant stakeholders rally to vote; whales who had previously been indifferent secure the network to protect their own investment. This sudden rise in active voting power can defeat or mitigate the attacker’s advantage. The lower the level of dormant or apathetic voting stake during times of normal operation, the more of a deterrence it is to an attacker.

13.4.2 Forking: The Ultimate Escape Hatch

Even if an attacker somehow takes control of the main chain, forking remains a final check on malicious power.

• Copying State and Excluding Attackers. Communities can duplicate the blockchain’s history but exclude or freeze the attacker’s stake. Everyone else’s balances are preserved on the new fork where the community will to move in order to isolate an attacker (on the old fork).
• Migrating to a New Brand. Though the original chain may keep its name under the attacker’s control, the “real” community can move to a new chain, complete with code and state continuity. In this case, the community should do everything it can to communicate what the new brand is, where to find the new chain and what changes the new chain has made in order to mitigate the attack on the previous fork. Failure to do this is often as bad as not forking away from a hostile attacker.
• Winner Takes All. In most scenarios involving DPoS chains which are being attacked, the community-led fork becomes the de facto chain. The attacker, holding no tokens on the new fork, discovers that “you cannot buy a community.” Without people to give the token utility, the original chain withers.

Forking therefore holds large token holders accountable, compelling them to act benevolently towards the community. If whales push too hard or threaten the ecosystem’s values, the rest of the network can simply leave. This “veto power” ensures that smaller stakeholders, though individually less wealthy, collectively hold enormous influence which far outweighs that of any of the whales (large stakeholders) in the ecosystem.

13.5. You Can’t Buy a Community

Centralized startups or traditional corporations may be acquired by buying out a single entity or board of directors. In a community-governed ecosystem, no single gatekeeper can sell the “heart” or values of the community. If an attacker attempts a hostile takeover:

• Rebellion. The moment members sense motives detrimental to the network, they organize resistance.
• Fork Off. Communities fork away if necessary, taking the developer talent, user engagement, and brand loyalty with them.
• Moral Imperative. Decentralized communities often coalesce around values like censorship resistance or autonomy. Members who have already “tasted digital freedom” are notoriously unwilling to forfeit control or make a deal with the hostile attacker, especially when the new "overlord’s" intentions are questionable.

13.6. The Community Is the Layer Zero

In blockchain architecture, we often hear about Layer 1 (the core protocol, consensus, and data availability) and Layer 2 (applications, smart contracts, Dapps). Missing from many discussions is Layer 0: the community of people who participate, build, and govern.

• Ultimate Source of Value. DApps, transactions, and social engagement bestow real-world relevance and demand upon a token. Without active users and developers, the network is merely code.
• Immune Response. Layer 0 unifies in times of crisis, bringing otherwise dormant stakeholders to defend the chain.
• Collective Veto. When whales or outside attackers threaten the ecosystem, it is the community, Layer 0, who can coordinate a new fork, rendering any hostile stakes worthless.

In proof-of-stake systems which usually lack engaged community members due to the typical nature of the passive earning for staking model in PoS systems, a wealthy minority can capture governance outright with no recourse for remediation for the majority individual members of the community. By contrast, well-distributed DPoS networks rely on their engaged, vigilant user base; the crucial layer zero to monitor, maintain control decentralized, and fight for it digitally when necessary.

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