Supernode
Proof of Stake Consensus Complete Guide
1. Basic introduction
Supernode Proof of Stake (SPoS)
is a blockchain consensus mechanism designed by Sunny King, the creator of
Proof of Stake (PoS) consensus, in June 2018. It is an extension to many core
concepts of PoS, including Stake as Power, decentralization, high scalability
and more. Compared to the new generation of mechanisms inspired by PoS, such as
Casper, hybrid PoS, and DPoS, which is sometimes not considered as PoS, SPoS is
a true and faithful continuation to the original PoS fundamentals.
Released in 2013, PoS was
designed to resolve several key issues associated with Bitcoin’s Proof of Work
(PoW) consensus mechanism, including energy inefficiency, centralization of
mining pools and lack of scalability. Since its creation, many cryptocurrencies
have been inspired by PoS and adopted the algorithm, such as Dash, Cardano, and
Sunny King’s own creation Peercoin.
However, PoS consensus mechanism
carries certain shortcomings, and is unable to meet the requirements of the
current blockchain field for the development and application of a single public
chain platform. On December 31th 2016, therefore, Sunny King started a new
thing, this thing will change the history again.
In November 2018, Sunny King
launched the first native blockchain platform V SYSTEMS based on his SPoS
consensus mechanism. The project aims to deliver a blockchain database and
cloud platform, with the vision to bring forward a new economic era consisting
of hundreds of millions of blockchain applications.
2. Summary of PoS
Since SPoS is an extension to
PoS’ original ideologies, it is crucial to learn the key technical features of
PoS before fully understanding the concept of SPoS.
1. Almost no energy
consumption
PoS does not rely on electricity
nor computational power as the basis for block validation, thereby consuming
almost no energy.
2. Unlimited level of
scalability
As the validation process is not
restricted by hardware or electricity constraints, in theory, the blockchain
carries an unlimited level of scalability. This paves the way for large scale
blockchain technology applications.
3. Coin utility determines
coin value
The coin value is not reliant on
the intrinsic value nor the equivalence of other types of goods (e.g. the cost
of mining). Instead, the coin value is determined by the coin utility.
4. Stake is power
Block validation and rewards are
both based upon stake.
5. Decentralization
Without mining pools, there will
be no giant and centralized institutions to dominate the blockchain.
6. Random block production
PoS uses the design of random
block production, and only the average block interval can be observed.
3. Criticisms for PoS
SPoS is designed to tackle the
issues of PoS. It is therefore also important to learn the key criticisms faced
by PoS in order to fully understand the rationale behind SPoS.
1. Nothing-at-stake
Nothing-at-stake is one of the
major concerns on PoS. The argument suggests that because block validation does
not involve computational power or energy consumption, coin minters will try to
mint on all block trees in order to prevent himself from not minting on the
winning chain, therefore avoiding any potential loss and maximizing the gain.
2. Stake liquidity limited
by coin age
PoS imposes many restrictions on
the movement of stake after participating in coin minting. On a technical
level, this design prevents frequent attacks (i.e. the holder of the coin can
“vote more than once” and one stake gains multiple benefits).
From the perspective of PoS, one
stake should not be allowed to claim multiple minting rights. However, one
might be able to take advantage of stake liquidity and attempt to quickly move
the stake around to claim more minting rights than it should. This type of
attack is referred to as “busy contention attack”.
Even though the restrictions on
movement may be of good reasons from a technical point of view, economically it
is a barrier of entry for users to participate in minting. Coin holders are
often concerned on how long their coins will be locked for the minting process.
Under SPoS, however, the number
of stakes participating in minting is directly related to the level of security
for the mechanism, similar to how computing power determines bitcoin security
level. In this sense, not putting any restrictions on movement of stake is in
fact beneficial to network security.
3. Coin age cannot
accurately reflect contribution
As a proof of the stake value in
minting opportunity, coin age shows a high level of stability and a wide range
of advantages.
However, since it is a
transaction-based measurement, the computational complexity is correlated with
the number of transactions executed in a given time. Also, coin age is not an
accurate indicator of the stake owner’s contribution to the community.
4. Minting security
Since PoS requires minter to
sign the block, the private key must remain online, which poses a potential
huge risk to the minter.
5. Inability to support
large scale adoption
Under PoS, not all nodes receive
enough incentives to undergo hardware upgrade. Moreover, if a random block
production is adopted like in Bitcoin or other PoS blockchain, the actual
production interval may sometimes far exceed the average time.
These issues create a huge
concern for the efficiency of the blockchain, as systems usually prefer a
constant response time over a random one.
4. Evolution from PoS to
SPoS
1. Nothing-at-stake
The concern on nothing-at-stake
is in fact unnecessary, as it ignores the fact that when a person owns a
certain amount of stake in the ecosystem, the person is motivated to maximize
the interest of the community instead of initiating attacks.
Coin owners who seek to maximize
profits use the exchange value of the coin as a measurement of the coin value.
Minting on all branches of block tree will be contradictory to his self
interest, as it is considered a type of attack and the action will lead to a
drop in the exchange value.
Considering the negative impact
on the coin value, the potential loss on not minting on all branches is far
less than the potential loss on coin value. Rational coin owners will always
choose to uphold the protocol and ideologies of the consensus mechanism in
order to maximize the interest.
In fact, the issue of
nothing-at-stake has yet to be observed in a real scenario.
2. Stake liquidity
With a high level of stake
liquidity, minters can spend or transfer their stake at any time. Coin leasers
can also withdraw their lease, spend, or transfer their stake at any moment.
This freedom of movement helps safeguard the blockchain. Take an extreme
example of when supernodes are under attack — under SPoS mechanism, a coin
holder can immediately withdraw the lease and switch to a secure backup
supernode. This will render the attack meaningless, and also make it difficult
to attack the blockchain as a whole, as in theory the hacker will have to
attack an unlimited amount of supernodes.
Although there is a concern of
busy contention attacks due to stake liquidity as mentioned in previous
section, SPoS is well adapt to counter the situation. The mechanism introduces
a unique measurement of account balance, similar to the accumulative average
measurement during minting contention. The idea is that the stake must remain
in the account for a period of time and wait for the metric to return to full. This
design helps eliminate the concerns on frequent attacks.
3. Coin age
A minting balance mechanism is
introduced for coin age measurement in the SPoS mechanism. The idea is that
when a stake is withdrawn from the supernode, the total amount of stake on the
supernode is immediately reduced. However, when a stake is leased to the
supernode, the total amount of stake on the supernode is not immediately
increased.
Whether the supernode wins the
minting right depends on the minting balance. This minting balance, on the
other hand, is dependent on whether the leased stake has been placed for a
sufficient period of time. Yet, the length of the stake placement time and
minting rewards are not correlated.
4. Minting security
To raise the level of security,
SPoS mechanism separates the roles of minter and spender. That is, the private
key of the coin holder can be different from the private key of the coin
minter. With this design, all private keys of the stake can be put in offline
storage.
This naturally allows the
emergence of minting pools — the supernodes in SPoS. It is a similar concept to
mining pools in Bitcoin.
Sunny King has also introduced a
balanced minting right to prevent centralization of supernodes. This will be
further explored in later sections.
5. Supporting large scale
decentralized applications
The introduction of supernodes
provides sufficient incentives to ensure that the supernodes continuously
upgrade the hardware to support the blockchain expansion.
Also, the fixed block production
sequence and production interval allows the supernode local clock to
synchronize with the Internet time protocol. This ensures a high efficiency of
block production as well as improves the security and predictability.
5. Technical and economical
features of SPoS
Key technical features of SPoS:
1. Fixed block production
sequence and constant block interval
2. Cold minting
3. Supernodes
Key economical features of SPoS:
1. Both stake owners and
supernodes receive incentives for block production
Minting rewards are shared by
supernodes and stake owners. The reward sharing ratio is determined by the
supernode. Currently, there are 15 supernodes running on the V SYSTEMS mainnet.
Coin holders (stake owners) can lease their coins to the supernode in order to
earn the minting rewards. Each supernode takes turn to generate blocks in a
minute, with each block bringing 36 VSYS Coins as rewards.
Based on the current number of
supernodes, each supernode will generate 51,840 VSYS coins per day. After
deducting around 20% of the reward for hardware upgrade and other operational
costs, the remaining 80% will be proportionately distributed to coin holders
who leased their coins to the supernode.
2. Minting right and
minting rewards are distributed in a fair manner, thus eliminating the risk of
minting pool centralization
Equal minting right for each
minting slot gives supernodes an equal standing and minting output. This is
contrary to the design of Bitcoin, where no built-in mechanism is put in place
to prevent the domination of mining pools. SPoS eliminates this major barrier
that hinders the goal of decentralization.
The equal minting right of
minting slot plays an important role in the minting economy. Supernodes form a
market of minting pools. The minting market will then form an interest rate for
leasing. Since stake owners have a reasonable preference to lease to a
supernode paying higher lease rate, and the additional lease to a high paying
supernode will lower its lease rate due to the constant minting output of the
supernode, an equilibrium exists as a built-in force to equalize the lease
rates of supernodes.
6. Advancements of SPoS
1. Superior version of PoS, following the
stake-as-power philosophy
2. The only everyone can easy minting and easy out
consensus.
3. Performance-oriented, support large scale
decentralized applications
4. Most resistant consensus mechanism to 51%
attack
5. Highly secure of minting progress for all
ecosystem participants
6. Decentralized supernodes
7. Simplify the consensus using a mathematical
approach just like bitcoin & PoW did
No comments:
Post a Comment