Author

Topic: A greener alternative for PoW without the centralization problem of PoS? (Read 28 times)

newbie
Activity: 3
Merit: 1
Oh wow, thanks for the links. There's much to read but it seems to be quite the ting I searched for! At least the central idea is the same.
hero member
Activity: 1110
Merit: 534
Man. I have partially undestood what were you writing because
because mathematics is not my forte!

In my opinion your idea resamble a little bit PoB (Proof of Burn)
where account burns a part of stake to be able to "mine" produce blocks
in future depending of the number of coins he has burned.

Maybe you could take a look at this project which uses all 3
consensus mechanisms,  PoW,PoS and PoB.

The project was started long time ago but original developer left
and there is a group of enthusiasts trying to revive it.

old thread
[ANN] Slimcoin : Proof of Burn NEW BLOCK GEN, Mineable by low power computer!

new thread:
Slimcoin | First Proof of Burn currency | Decentralized Web
newbie
Activity: 3
Merit: 1
It's only an idea, nothing more. There is no proof of concept, no team, no project, no time (from my side) to develope something like that if it came to it.
I thought it through as far as I could but I have no capacity to go further and it would be a dead end if I kept it for me. So, I posted it here. Wanted to see if it's worth something.
sr. member
Activity: 2268
Merit: 275
who has an idea as great and complex as this? what is being said, makes us even unable to support it so far. so to build any ideas do you have a reliable team. I appreciate your ideas and ideas, but is it just a theory that still needs tools in terms of its application?
newbie
Activity: 3
Merit: 1
Hi All,

Tldr: I have an idea of a consensus mechanism which eliminates the energy consumption problem of PoW and the centralization problem of PoS. I need your help to evaluate the idea of this (afaik) new concept.

I think Bitcoin with Proof of Work (PoW) is quite a brilliant concept. But the biggest disadvantage of it is nearly disqualifying, meaning (of course) the high energy consumption. Actually, it is only the combination of today’s climate crisis which makes it so bad. If we already had worldwide 100% renewable energy production, I wouldn’t see it so serious. But it’s simply not the case and it will not be the case for the next few decades or even centuries. I know there are arguments claiming that the energy consumption of PoW would not increase much more or that the high energy consumption does not make that big part of CO2 release. None of them are convincing for me (but this thread shall not be a discussion of them…).

So, we already have an alternative to PoW, Proof of Stake (PoS) and their “derivates”. It solves the energy consumption problem but has its own problems, one of the biggest being the problem of centralization (see, e.g. https://medium.com/stakin/centralization-of-stake-in-pos-f7ccb8f8254). In short: owning a certain number of coins (or some derived value) is some kind of “power” (e.g. to forge new blocks) with which you can earn even more coins and thus “collect” more power. You cannot lose the power you have. In contrast, in PoW you can lose (mining) power by others implementing more (mining) power. Your mining market share decreases. This cannot happen in PoS.

Lately, I thought about these problems a little and come up with an idea of a consensus mechanism which combines the advantages of both (or rather eliminates the described biggest problems of both). The core idea is a PoS-similar mechanism but without a stake being the weight which enables you to be chosen for the forge of a new block but rather some kind of investment which is used as this weight. The relation between investment and block forging probability shall reflect the relation of PoW miners which must invest some money in their mining hardware to increase their market share and thus increase their probability of mining new blocks.

Now, let’s be concrete about this consensus mechanism, let’s call it Proof of Investment (PoI) and the respective coin YAC. Here are the properties of PoI/YAC:
  • Every forged block gives a reward which consists of a constant block subsidy (S) plus all transaction fees to the validator of the block
  • Everyone can buy “forging power” (measured in YAC) which is proportional to the probability to be chosen as the validator of a new block
  • These investments in forging power, paid in YAC, are burned and vanish from the blockchain
  • Forging power “deteriorates” over time; the deterioration factor of an investment exponentially decreases with the distance to the newest block (n)
  • The contribution of a specific investment to one’s overall forging power is Ix Dn with Ix the investment, D the deterioration rate (a number between 0 and 1) and n being the distance between the block the investment is made in and the newest block
Note that:
  • There will be constantly investments in forging power because it is profitable up to a certain point
  • Assuming an average investment per block (Iav), the resulting overall forging power is
    FP= ∑n=0 IavDn= Iav/(1-D)
  • An investment Ix initially leads to a probability of Ix/FP to be chosen for the next block validation, if the investment is one block old the probability is decreased to D⋅Ix/FP and if the investment is n blocks old the probability to be the block validator is decreased to Dn⋅Ix/FP
  • Neglecting the transaction fees for now, the average return on investment (of a specific investment Ix) over all time is
     ROI=((Ix/FP)⋅S+(DIx/FP)⋅S+(D2Ix/FP)⋅S+⋯)/Ix=∑n=0 (Dn/FP)⋅S=S/(FP(1-D)) =S/Iav
    this means, if the (current) average investment per block is higher than the block subsidy then the return on investment is lower one (an investment is unprofitable), if the average investment per block is lower than the block subsidy then the return on investment is higher one (an investment is profitable)
  • With transaction fees (small against the block subsidy) the above equation changes a bit to a higher ROI but overall, the average investment per block will be near the block subsidy
  • You lose forging power if you don’t reinvest (like the hashing power market share in PoW)
  • If there is a competition between investors and each investor wants to maximize its own profit, the ROI will be slightly higher than one and richer market participants are not better off with more/higher investments as these would push the ROI to lower than 1 and they would lose money
  • We have three “free variables”: the block subsidy (S), the deterioration rate (D) and the overall money in YAC, we can use these variables to “fine tune” the market dynamics (e.g. we want a block subsidy high enough compared to the overall money to prevent “51%-attacks”/”investment attacks” but not too high compared to transaction fees so a censoring by block validators is unprofitable)
   
There are problems, though:
  • The total amount of YAC can vary: the block subsidy is the (only) source of YAC and the investments are the (only) sink of YAC. Fortunately, both will have approximately the same rate. If block subsidy is (slightly) higher than the average investment, YAC would be an inflationary money, if block subsidy is lower than the average investment, YAC would be a deflationary money. It is difficult say which of these both cases would be the stable point in practice. If the investors want to be profitable, the block reward should be slightly higher than the average investment. As the block reward consists of block subsidy and transaction fees, the fees could mitigate the difference between source and sink rate of YAC.
    • I haven’t found a mechanism which preserves the total YAC amount
    • A solution could involve additional artificial sources/sinks of YAC which are regulated automatically by the algorithm. A sink could be a small “burning rate” for every transaction made (a fraction of a percent or so). A source is more difficult to realize because just increasing the block subsidy wouldn’t work as this would be balanced again by the average investment made by all investors. Probably, the blockchain algorithm could track the “loss of money” and in regular periods the amount of lost money could be transferred to specific addresses (e.g. developers or some welfare group) which are chosen by some kind of voting mechanism (the block validators can vote for addresses?)… just an initial idea…
  • How exactly should the validator-choosing-algorithm (some kind of pseudorandomness would be involved) work without being manipulated by the block validators? (how is it solved in PoS?)
  • An initial fair distribution of YAC
  • I am sure there are more caveats I don’t see. Be free to discuss them 😊

So, these are my thoughts. Do you think these are valid? Where are problems? Can it work at all? Is there already a similar concept?
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