Proof of Stake Blockchain Efficiency Framework
Algorand, efficient self-sustaining blockchain
Cosimo Bassi and Naveed Ihsanullah
Go directly to the full paper.
“PERMISSION-LESS” IS NOT “RESPONSIBILITY-LESS”
On Earth Day 2021, we took the opportunity to show to the whole community why Algorand does not trade sustainability for security, for scalability nor for decentralization. Today we present a new framework of comparison for Proof of Stake blockchain efficiency and sustainability that properly weighs these three essential elements of the blockchain’s purpose into the resulting Decentralized Network Finalized Efficiency Score (DNFES).
Sustainable development is a moral duty of our generation. As Algorand we believe that, in this historical and ecological moment, on planet Earth there can no longer be innovation without sustainability.
We believe that true commitment to a sustainable future is a collective responsibility: no single individual would ever be able to take care of our planet on their own, either we succeed together as species or we fail.
Decentralization and openness are foundational values for Algorand: these values, in fact, do not only shape Algorand’s evolution as an open and permissionless technology but also Algorand’s collective behavior as an open and inclusive community.
Being “permission-less” doesn’t mean being “responsibility-less”. Algorand will never hide its own collective moral responsibility behind the “permissionless” excuses, all the opposite: at Algorand we think that the great challenge of coordinating an open and permissionless community represents an opportunity to decentralize and coordinate hard and difficult responsible choices, as earthlings.
BLOCKCHAIN SUSTAINABILITY METRICS
The debate on blockchain technology sustainability is gaining more and more relevance among communities, businesses, institutions and policy makers. As Algorand, we want to help keep such discussions as informative and transparent as possible, supporting the evaluation of blockchain efficiency and sustainability, as a whole, with clear, objective and fair considerations.
First: if a study on blockchains’ efficiency and sustainability does not take decentralization into account, then that study is discounting the primary function of a blockchain. Any centralized data-base technology, in fact, could be considered “sustainable” to some extent, but it is simply not a blockchain. As we stated in our previous article: “Consensus Protocols such as Delegated PoS could easily claim, for example, that a network of 21 validators has low energy consumption, which is right, but the real challenge is being able to achieve sustainability without trading it for decentralization!”.
Second: as with any other engineering process, blockchains’ energy efficiency should be considered against “useful work”. When we ask “is this machine efficient?” we are implicitly asking “is this machine good at consuming input resources to produce the desired output for which it has been designed for?”. This is true for motors, computers, rockets and… blockchains too. That’s why it is fundamental to clarify that any evaluation on blockchains’ sustainability should take into account the power consumption used just for end user useful, finalized transactions. By end user useful transactions (uTPS), we mean real users’ transactions, excluding those one “consumed” by the Consensus Protocol functioning itself (if any). By finalized transactions, we mean transactions validated and permanently committed on the “main chain” (not a probable soft-forked or not finalized one). As we stated previously in our first article: “the whole amount of energy spent in validating transactions belonging to “orphan chains” is completely useless, moreover, all the energy wasted on these transactions must be spent again, until they end up being appended to the longest chain”.
Third: network “validation” and network “popularity” should be treated differently. The network could be “popular” because many Observer Nodes are synched as network’s end-points but the “validation effort”, on which efficiency claims should be addressed, only accounts for the power consumption actually used for block proposal and validation. In other words: “network efficiency” depends only on validation power consumption (Pval).
Therefore, the following study will model blockchain sustainability taking into account validation power (Pval), finalization rate (f), number of nodes (N), decentralization rate (d) and end user useful transactions (uTPS), to evaluate different blockchain networks with respect to the following question:
Is this blockchain network efficient at consuming energy to finalize end user useful transactions in a secure, scalable and decentralized way?
Proof of Stake networks are orders of magnitude more efficient than Proof of Work networks, comparing such different technologies on efficiency in single framework is almost like comparing the efficiency of electrical motors to the efficiency of old internal combustion engines.
The energy consumption difference between PoS and PoW is so huge that a single comparison framework between those technologies is not even justified.
Therefore the proposed study compares different PoS blockchains within a new comprehensive Proof of Stake Blockchain Efficiency Framework.
Continue to the full paper…
ALGORAND: A PERMISSIONLESS SELF-SUSTAINED BLOCKCHAIN
This Earth Day 2022, Algorand Foundation is leaning further into its commitment to sustainability by pledging to permanently ensure the Algorand network is carbon negative and enforcing that pledge rigorously and transparently with protocol-level commitments on chain. Using native smart contracts, Algorand’s minimal carbon footprint will be offset in perpetuity by the transaction fees of the network. The Carbon Negative Algorand (CNA) Smart Contract will use oracles to estimate current network performance and automatically purchase appropriate carbon offsets. The CNA Smart Contract will fund those offset purchases from the Algorand transaction fee wallet. As the network grows, the transaction fees will grow and the network will always have the resources required to purchase the necessary offset. The CNA Smart Contract will run in perpetuity, ensuring that the Algorand blockchain will remain carbon negative forever.
We invite/challenge dApps built in our ecosystem to follow our lead and similarly commit their carbon footprint and offsets on chain making Algorand not only the first carbon-negative Layer-1 blockchain but the first carbon-negative blockchain ecosystem.
