(✨,✨) The Blockchain Trilemma, PoW vs PoS & Mining (Starcoin Blockchain Live Twitter Space #2 Recap: 9/01/22)
The Blockchain Trilemma
Originally coined by Vitalik Buterin (Founder of Ethereum), the Blockchain Trilemma is a theoretically solvable dilemma in the crypto space, which revolves around three tenets: Decentralization, Speed, and Security. Solving for one portion of the equation leads to costs in the others and vice versa.
Decentralization: A blockchain is decentralized when it doesn’t rely on any centralized component, eg ICANN within our traditional internet, or large nodes for block validation in PoS.
Speed: When a traditional blockchain like Ethereum scales and the network is flooded with users, transaction speeds slow and gas fees rise accordingly as users compete for block space.
Security: A secure blockchain is one protected from 51% and other common malware or DDoS attacks, is not plagued by bugs caused by faulty code, or extended periods of downtime.
Tom:
Starcoin is a smart contract blockchain network that realizes infinite expansion through layers. Layer 1 ensures security and permissionless, and the second layer implements application-oriented extension, thus building the infrastructure of Web3 and the Metaverse.
Layer 1 of Starcoin is based on enhanced PoW, providing a series of rich, freely combinable, out-of-the-box general underlying standards including Token, DAO, NFT, Oracle, etc., a decentralized network for digital assets.
Through the resource-oriented smart contract programming language Move, Starcoin makes all resources on the chain first-class citizens, splits and clarifies the ownership of the smart contract state, and provides the ability to Formally Verify and mathematically prove the program’s security, so as to ensure the security and freedom of users’ on-chain property as much as possible.
Layer 2 of Starcoin abstracts different layer 2 schemes through a unified architecture, and different applications can choose different layer 2 schemes according to their own needs, so as to achieve unlimited expansion.
Included below is an excerpt detailing a brief introduction on PoW & PoS, direct from the Starcoin founder: Tim.
Tim:
In theory, PoW and PoS are both intended to solve the problem of how to keep track of accounts (i.e., generate new blocks) in a blockchain. Through proof-of-work of arithmetic power, miners compete for the right to keep track of new blocks, and the miner who competes for the right to keep track of accounts receives the reward generated by this new block; each public chain employs a unique hash algorithm. PoW was initially designed to allow ordinary CPUs or GPUs to mine. Miners, or specialized arithmetic devices, emerged as the industry evolved. PoW is distinguished by a low threshold, simple implementation, no financial collateral required (staking), and participation by any interested user.
Users competing for accounting records commit a certain number of assets, and then nodes allocate accounting rights in a randomized manner, with those who proclaim more tokens receiving more rewards. If a user mistreats the system during the record-keeping process, the system seizes all of the assets guaranteed by the user. To ensure that all nodes participate in mining in an honest manner, the PoS mechanism employs an interest-based gaming mechanism. On the one hand, the current PoS threshold is relatively high, requiring a certain amount of asset promises, and on the other, given the data size and communication efficiency of the nodes, it is actually difficult for ordinary users to participate at will.
DECENTRALIZATION VERSUS CENTRALIZATION:
More censorship, increased surveillance is a natural consequence of regulatory bodies stepping into the crypto space. As digital currencies gain precedence alongside nation-states formal adoption and creation of digital currencies a la US FED & El Salvador & others, an individual’s use of currency will become increasingly monitored while governments like the US hide their black budget, further disenfranchising the common citizen in favor of the corporate elite. Decentralized Proof of Work blockchains are far more censorship-resistant, but as regulatory pressures grow all chains will be forced to make decisions on whether to cave into growing regulatory pressures.
OFAC (Office of Foreign Assets Control): sanctions of Tornado Cash due to money laundering linked to North Korea are a prime example of increasing regulatory pressures in the crypto space. Tornado Cash, a bitcoin mixer, is the first example of a smart contract protocol being labeled as a terrorist. As these pressures grow, blockchains will by necessity be forced to decide whether to comply with an ever-growing sanctions list that increasingly affects an ever-larger subset of users within the cryptocurrency space.
Tom:
In the current PoW-based public chain, PoW is not only a security-wise consensus mechanism, but also a Token distribution strategy. In the economic model of the PoW chain, Tokens are firstly distributed to miners and then transferred to other ecosystems.
However, for chains such as BTC that target value storage, this model can form an ecological closed loop. But for smart contract chains, the value of Tokens depends on the prosperity of the on-chain ecology, so the Token distribution strategy should be leaning toward the upper-level ecological applications, and at the same time, Tokens need to be distributed through ecological construction, not simply through miners.
In the long run, the basic on-chain ecological benefits are finally included in the Treasury. If the funds in the Treasury can finally cover future R&D investment and miner rewards, it means that the economic model of the chain has bootstrapped itself up.
So what does decentralization look like on a blockchain, and why is it so important?
Control over the money supply translates to control over a population. When all basic necessities require money, the government’s basis for strict control over said money supply becomes apparent. Money in the bank can be frozen, seized, delayed: the current state of our global financial system is one of total control. This is why self-custody of bitcoin and other digital currencies is so crucial — it cuts out middlemen and returns us to the barter economy. Physical cash (bank notes, coins, currencies) continues to become less prevalent due to the current socioeconomic climate, credit cards and digital currencies are gaining dominance. As this multifaceted development continues, it is important that Web3 alternatives continue to emerge to combat the growing censorship of digital currencies.
The basis for why crypto exists, and what it is “intended” to solve.
The movement away from the core elements of centralization in Web2 into Web3 infrastructure is the path towards societies of various nation-states to wrest power from the old guard of the IMF, US FED & Trad Finance, politicians, and corporate elites. A decentralized, hard cryptocurrency is one resistant from censorship and able to function in an environment of growing regulatory pressures. A fully decentralized blockchain is impossible to shut down due to its nature: it is so widely dispersed that there is no one critical point of failure.
Tom: Proof of Stake is a bastardization of crypto ~ a shadowed copy of the global financial market controlled by a few key organizations.
Starcoin is a multi-layered blockchain
L1: 4600 TPS (~AVALANCHE)
L2: ZK-rollup for near-instant consensus and two orders of magnitude greater transaction capabilities.
A key component of Starcoin’s strength lies in its core team and the decisions they make in building out their blockchain.
Optimistic rollups require up to 3–7 days to complete transactions and sync layers, while zk-rollups express near-instant confirmation. On top of not being user-friendly at all, this delay is a barrier for many new users to trust on-chain interactions. Although development costs and difficulty may be lower, an optimistic rollup for Layer 1 — Layer 2 scaling is insufficient when considering whether a blockchain has scaled effectively while combating the blockchain trilemma.
Q: What is the expected performance of Starcoin Layer 2 when it goes live?
A: Starcoin Layer 2 is instantly confirmed, and transactions on Layer 2 will automatically rollup to Layer 1, requiring a 5–10 second upload time. Generally speaking, the second layer is not an infinitely scalable technology, and the general implementation can be 2 orders of magnitude higher than the performance of the first layer. If higher performance is needed, further layering, such as a three-layer solution, can be used to achieve infinite scalability.
Projected efficiency of Starcoin’s Layer 2 Scaling is two orders of magnitude greater than its L1 of 4600 TPS. Eventually, a Layer 3 solution can be developed and deployed to achieve infinite scalability.
Starcoin’s ethos revolves around decentralization. Everything is done in a decentralized manner. It is a truly public blockchain that anyone can interact and participate in. All of its core components are open-sourced, making it truly transparent and verifiable from an end-user perspective. Starcoin is a transparent, community-owned blockchain (powered by its DAO), and therein lies its greatest strength.
Starcoin:: MOVE
We talked about this in some detail in our last space, but Move is the programming language developed specifically by Facebook for its Blockchain project, Diem. An expanding L1 ecology is growing around the Move programming language, with large crypto finance firms seeding blockchain projects Aptos and Sui. Aptos investors, for example, include:
Tom on Move:
Starcoin has a new generation of layered smart contracts for distributed financial networks. From the beginning of the design, the issue of security has been the most important concern. On the one hand, Starcoin hopes to solve common security problems, on the other hand, Starcoin hopes to lower the security threshold for developers. In the end, Starcoin chose Move as the smart contract language. Move has many advantages, and the biggest highlight is security. Move introduces many security features for smart contract scenarios without increasing the burden on developers.
Without getting into too much technical detail, Move’s resource-oriented programming is a brand-new programming model that can easily avoid many common security problems and lower the development threshold.
In the Solidity project, the data generated by everyone through a contract is stored in a centralized account. This is a very unsafe practice and has significant security risks. On the one hand, it is unreasonable that the personal data of a certain user is centrally stored in another account– On the other hand, once there is a security issue in the contract, everyone’s data will suffer loss. This element of centralization is a core security flaw in Solidity.
In the Move project, data is stored dispersedly in the personal accounts, making it clear that the ownership of the data belongs to the respective users, and at the same time, only they can actively operate their own data. In this way, the data is stored dispersedly, even if there are bugs in the contract, hackers have no authority to modify everyone’s data, which greatly reduces the scope of the vulnerability, protects the data, and avoids the security problems caused by large arrays at the same time.
Move introduces a resource type, and guarantees that the resource type follows the above constraints from the virtual machine level, and can neither be dropped nor be copied. Developers only need to simply declare the structure as a resource type, and the structure will be protected by the virtual machine, thus avoiding many common security risks, such as unlimited additional issuance vulnerabilities caused by memory copying.
Mining
Tom:
Enhanced Starcoin Consensus:
Anyone who knows the blockchain knows that a very big highlight of Bitcoin is that it guarantees basic trust between people through algorithms. This is what we call the PoW consensus, which can be understood as an algorithmic credit system and the cornerstone of Bitcoin. Compared with other centralized or semi-centralized consensus solutions such as PoS, Starcoin firmly chose PoW to ensure that the Starcoin network is safe under decentralized conditions. At the same time, in order to solve some of the limitations of the Satoshi Nakamoto consensus algorithm and further strengthen the security of one layer, Starcoin has made some very interesting optimizations to the consensus.
The Starcoin consensus is an enhanced version of the Nakamoto consensus. In order to speed up the block generation and reduce the transaction confirmation time, the introduction of runtime data such as the uncle block rate, which can detect network congestion with a lower delay, and automatically dynamically adjust the block generation time, difficulty, and block rewards, thereby maximizing the use of the network, while trying to avoid the risk of uncertainty caused by the network, at the same time, reducing user waiting time and improve user experience. When the computing power of the whole network fluctuates greatly, the difficulty can respond quickly and play a role in protecting the Starcoin network.
MINING HARDWARE >>> GPU, CPU, FGPA, ASICS
Starcoin’s consensus derives from Cryptonight-R, one of Monero’s eight variants of prior to moving to RandomX. Starcoin’s take on the cryptonight algo, cryptonight-rs, remains a cpu-intensive algorithm that, with some difficulty, manufacturers can design ASIC miners for. Goldshell, the manufacturer, and DXpool, the main distributor of ST-Boxes, produced around 2000 ST-boxes in a small production run sometime in 2021. As production of new, larger and more efficient miner variants is heavily reliant on large capital expenditures by manufacturers (~$3 Million), PoW cryptocurrencies are more likely to be targeted the higher their market cap.
I personally am of the mind that future batches of ASIC miners will inevitably be produced to mine Starcoin, but the timing is uncertain.If you are interested in mining starcoin with a Goldshell ST-boxes, best practices involve purchasing from verifiable distributors — though do keep in mind, with the limited stock available, prices may vary considerably.
Mining Pools
Stratums provide a framework for directing the collective hashrate of many miners into a single pool. Starcoin’s network is currently comprised of several mining pools and the remaining “unknown” hashrate: hashrate that can’t be identified but can be attributed to those that are node mining.
The distribution of hashrate between the existing mining pools is as follows:
Kelepool (33%)
DXPOOL (57%)
Poolin (10%)
Total overall hashrate translates directly to security against 51% attacks. As mining pools introduce some element of centralization, there is some small concern as to the problem of evil: if a single mining pool captures enough hashrate and they had ill intent, they could attack the system which they are intended to protect. However, mining pools are incentivized to be “good” due to the continued, uninterrupted flow of profits derived from their fee structure. Miners can move their hashrate to another provider at a moment’s notice for any reason at all, and so the probability of a mining pool attacking a blockchain for its own gain is small due to a relative lack of merit, which declines further as pools gain a vested interest in the chain’s success. However, it is still beneficial to disperse hashrate across available mining pools to ensure the hardest, most decentralized blockchain. This is why smaller pools & community-run mining pools provide valuable alternatives in the case of a single mining pool capturing a majority of hashrate, especially for less technical miners who for whatever reason are unable to mine to their own node.
Running your own node & node mining
A wonderful guide maintained by community member, an_change, provides a clear walkthrough for those interested in running Starcoin nodes via docker, windows, or ubuntu. A dispersed array of nodes is a crucial component of a thriving blockchain. Independent chain verification: running a full node creates a full copy of the chain. More nodes equals a harder, more secure network and protects against malicious nodes/actors. Furthermore, it is possible to mine locally to one’s own node, which by my own account is a worthwhile and rewarding prospect for those seeking a technical challenge.
That wraps up the recap for Twitter Space #2, conducted by Starcoin Blockchain (Ashely & LemonHX) and hosted by Tom and I. Stay tuned for the next edition, which will be posted following our next Space on 9/16/22.
(✨,✨)
~Ren
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