Looking for stability in proof-of-stake based consensus mechanisms
The Proof-of-Stake (PoS) consensus algorithm has been criticized in the literature and in several cryptocurrency communities, due to the so-called compounding effect: who is richer has more coins to stake, therefore a higher probability of being selected as a block validator and obtaining the corres...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2024-12-01
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| Series: | Blockchain: Research and Applications |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2096720924000356 |
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| Summary: | The Proof-of-Stake (PoS) consensus algorithm has been criticized in the literature and in several cryptocurrency communities, due to the so-called compounding effect: who is richer has more coins to stake, therefore a higher probability of being selected as a block validator and obtaining the corresponding rewards, thus becoming even richer. In this paper, we present a PoS simulator written in the Julia language that allows one to test several variants of PoS-based consensus algorithms, tweak their parameters, and observe how the distribution of cryptocurrency coins among users evolves over time. Such a tool can be used to investigate which combinations of parameter values allow to obtain a “fair” and stable consensus algorithm, in which, over the long term, no one gets richer or poorer by the mere act of validating blocks. Based on this investigation, we also introduce a new PoS-based consensus mechanism that allows the system to keep the wealth distribution stable even after a large number of epochs. |
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| ISSN: | 2666-9536 |