PROOF-OF-STAKE Consensus in a decentralized digital curren | Welcome to Oduwacoin trollbox
PROOF-OF-STAKE
Consensus in a decentralized digital currency like Bitcoin [1] is achieved by requiring generated blocks to contain a proof that the node which generated the block solved a computational hard task. Unfortunately the concept of the Proof-of-Work (PoW) based system tends to lean towards eventual self- destruction [2].
Proof-of-stake (PoS) aims to replace the way of achieving consensus in a distributed system; instead of solving the Proof- of-Work, the node which generates a block has to provide a proof that it has access to a certain amount of coins before being accepted by the network. Generating a block involves sending coins to oneself, which proves the ownership. The required amount of coins (also called target) is specified by the network through a difficulty adjustment process similar to PoW that ensures an approximate, constant block time.
As in PoW, the block generation process will be rewarded through transaction fees and a supply model specified by the underlying protocol; which can also be seen as interest rate by
common definition. The initial distribution of the currency is usually obtained through a period of PoW mining.
A. Related work
The first PoS based currency was PeerCoin [3] which is still in a period of PoW mining. Further development of the PeerCoin PoS protocol lead to NovaCoin [4] which uses a hybrid PoS / PoW system.
Oduwa Coin is the first indigenous crypto currency that uses a pure PoS based protocol which is based on the development of the above described projects.
III. SECURITY ISSUES IN POS
Besides the clear advantage of PoS over PoW as a method used to establish consensus on the network, there exist prob- lems that have yet to be solved that can greatly improve network security.
A. Coin Age
In the PeerCoin protocol block generation is based on coin age which is a factor that increases the weight of unspent coins linearly over time; the proof that has to be provided together with a new block and has to satisfy the following condition:
proofhash < coins · age ·target (1)
coin age
The proof hash corresponds to the hash of an obfuscation sum that depends on a stake modifier, the unspent output, and the current time.
With this system it is possible for an attacker to save up enough coin age to become the node with the highest weight on the network. If the attack were to be malicious the attacker could then fork the blockchain and perform a double-spend. After this is done however, a second double-spend would require the attacker to save up coin age again, as the stake resets when the block was generated.
It is worth mentioning that this situation is highly improb- able and that the incentive is questionable (saving enough coin age to be the highest weight on the network would either take a lot of time or a lot of coins, and thus money, to make this happen. Next to that, performing such an attack would probably devalue the system itself so it wouldn’t be profitable to do the attack in the long run.)
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