Proof of Stake Recap Bitcoin Incentives Block subsidy Transaction - - PowerPoint PPT Presentation

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Proof of Stake Recap Bitcoin Incentives Block subsidy Transaction - - PowerPoint PPT Presentation

Proof of Stake Recap Bitcoin Incentives Block subsidy Transaction fees Recap Proof of Work Mining Transactions UTXO Nakamoto Consensus Longest chain Recap Scripting Bitcoin Stack Machine Recap


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SLIDE 1

Proof of Stake

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SLIDE 2

Recap

  • Bitcoin Incentives
  • Block subsidy
  • Transaction fees
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SLIDE 3

Recap

  • Proof of Work
  • Mining
  • Transactions
  • UTXO
  • Nakamoto Consensus
  • Longest chain
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SLIDE 4

Recap

  • Scripting
  • Bitcoin Stack Machine
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SLIDE 5

Recap

  • Ethereum
  • Ethereum Virtual Machine
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SLIDE 6

Recap

  • Turing Complete
  • Solidity
  • Halting Problem
  • Gas
  • Smart Contract
  • DApps
  • DAO
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SLIDE 7

Recap

  • Proof of Work
  • Computational cost
  • Attacks
  • 51% Attack
  • Longest chain
  • Diminishing Block Subsidy
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SLIDE 8

Proof of Work

  • Central to what we saw
  • What are the emergent properties?
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SLIDE 9

Energy Footprint

digiconomist.com

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SLIDE 10

Energy Footprint

digiconomist.com

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SLIDE 11

Centralization

btc.com

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SLIDE 12

Centralization

  • SIGNIFICANT chunk of blocks mined by a few

pools

  • Worse as block subsidy drops
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SLIDE 13

Time

  • SegWit and Lightning are good steps
  • Ethereum?
  • ~ 15 txns per second
  • (VISA: ~2k per second)
  • But high activity can bring things to a crawl
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SLIDE 14

Time

  • Cryptokitties
  • 6x increase in txn queues
  • With finality?
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SLIDE 15

Proof of Work

  • Computational Cost
  • Arms race
  • Energy consumption
  • Centralization
  • Pools
  • More?
  • Time
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SLIDE 16

Proof of Work

  • PoW uses:
  • Computational Cost
  • Expensive to Solve
  • Easy to Verify

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SLIDE 17

Proof of Work

  • Avert Sybil Attack
  • Spawn a large number of fake identities
  • For influence
  • PoW makes mining expensive
  • Multiple identities mean zilch w/o compute
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SLIDE 18

Alternative?

  • Goal:
  • Avert sybil attack
  • Avoid:
  • Computation cost
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SLIDE 19

$$

USE THE COIN ITSELF

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SLIDE 20

How?

  • Instead of proving computation power
  • Prove net worth
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SLIDE 21

Proof of Stake

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SLIDE 22

PoW/S

  • Chance of mining
  • W - Proportional to compute
  • S - Proportional to net worth
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SLIDE 23

The Challenge

  • Easy to verify
  • Hard to come up with a solution
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SLIDE 24

PoW/S

  • Proving:
  • W - Compute - race to discover nonce
  • S - Net Worth - just verify
  • (using your KeyPair)
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SLIDE 25

PoS

  • Chance of mining
  • Proportional to your net worth (Stake)
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SLIDE 26

What About Forks?

  • Forks in PoW?
  • Nakamoto Consensus
  • Forks Here?
  • No cost to building on both (all) forks
  • Potential Double Spend
  • How?
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SLIDE 27

Alice / Bob Example

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SLIDE 28

From: Alice To: Bob From: Alice To: Alice … … … …

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SLIDE 29

In PoW

  • If Alice has >= 51%
  • Alice can make the second chain longest
  • And Bob is S/O/L
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SLIDE 30

In PoS

  • No cost to adding blocks
  • Alice can just build both
  • Problem
  • Nothing at Stake Attack
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SLIDE 31

In PoS

From: Alice To: Bob From: Alice To: Alice … … … … 99% 99%

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SLIDE 32

The 1%

  • Wherever that 1% is staked wins
  • Double spend
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SLIDE 33

So Far

  • Doesn’t seem to have happened
  • Stake does count for something
  • Bad actions
  • Consequences
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SLIDE 34

Finality

  • Bitcoin?
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SLIDE 35

Finality

  • PoS?
  • NXT
  • Longest chain
  • Bitcoin
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SLIDE 36

Finality

  • PoS?
  • Casper
  • Validators - a new type of node
  • Checkpoint every 100 blocks
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SLIDE 37

Finality

  • PoS
  • Tendermint
  • Validators elected
  • Propose block
  • Finality every block
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SLIDE 38

Tendermint Issues

  • Validators known
  • Can DDOS
  • Chain won’t advance
  • Mitigation burden placed on validator
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SLIDE 39

Proportional?

  • Sample at random with probabilities

proportional to stake

  • Where is this randomness coming from?
  • In PoW?
  • In PoS?
  • So?
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SLIDE 40

RNG

  • Stakes are public
  • Compute power is not
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SLIDE 41

Alternative

  • Coin age (peercoin):
  • Only coins over 30 days old
  • Once used for proposing, age is 0
  • Reset at 90 (else you can just hold and win)
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SLIDE 42

Long Range Attack

  • Negligible Cost to Making Blocks
  • Can just start from scratch and rewrite history
  • If you had a lot of stake in the beginning
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SLIDE 43

Issues

  • RNG - DDOS
  • Long Range Attacks
  • 1% Attack
  • Stake Pool? (analogous to mining pool)
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SLIDE 44

Hybrid PoW / PoS

  • Peercoin
  • PoW for new coin
  • PoS for recording transactions
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SLIDE 45

PeerCoin

  • Mine using PoW
  • Reward diminishes with difficulty (not

height)

  • PoS for new blocks
  • So it transitions to PoS
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SLIDE 46

Casper

  • Validators
  • Stake some ether
  • Validate blocks by placing a bet on it
  • If block is appended, reward proportional to

bet

  • Malicious activity punished (all staked ether

burned) - Slasher

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SLIDE 47

Questions?