Proof of Profession, Better Alternative to Proof of Stake
Proof of Stake vs Delegated Proof of Stake
It is a well-known fact that Delegated Proof of Stake (DPoS) is more scalable than Proof of Stake (PoS), but less decentralized. Depending on how we define decentralization, however, this may not always be the case.
Under a PoS system, token holders must operate their own nodes to partake in the token economy. They also need to constantly familiarize themselves with new topics to participate in the governance process. For most stakeholders wanting to be a part of the ecosystem, this may not be an easy task. Allowing these holders to entrust their stakes to credible and like-minded delegates, as in a DPoS system, may be a fairer way to encourage participation and embrace diverse opinions. Of course, we all agree that the mechanism needs further development to allow more validator participation as existing DPoS-based platforms have few available validators.
After much deliberation, we have decided to build our Friday consensus mechanism, the token economy and governance based on DPoS. We are conducting various experiments utilizing randomness in order to achieve enhanced decentralization without sacrificing scalability. This can be another point of discussion for a later post.
Fair and Decentralized
To create a decentralized ecosystem that is fair, balanced and healthy, we are experimenting with a new concept that will verify the qualification of network participants. Ideally, participants that have access to a high number of tokens regardless of their actual contribution to the network, such as cryptocurrency exchanges, should be motivated to delegate their stakes to professional validators rather than acting as validators themselves. Meanwhile, professional validators should be able to receive sufficient rewards for contributing to the ecosystem without cutting commissions and competing for more delegation. This will enable the participants to help each other and boost the value of the entire ecosystem.
The new concept needs to blend with, not compromise, the basics of PoS. The development requires thorough examination so that the system designed to achieve fairness does not cause unfairness. Slowly but surely, we will continue to develop the concept, as drastic changes may lead to unexpected problems.
Proof of Profession
Our new concept is dubbed Proof of Profession (PoP). We are developing it through careful consideration and discussions to fully show and materialize our goal. The following policies will be implemented under the concept:
- “One token, one vote” policy will be enforced to prevent collusion among validators.
- The “Profession score” will be determined by the level of contribution to the network in addition to the amount of delegated tokens. The below elements will be reflected in the score:
- The amount of tokens delegated from stakeholders
- The level of contribution to the decentralized network
- The level of participation in the governance
- Other elements determined by the governance system
- For enhanced decentralization, the delegated amount and the Profession score will not be directly proportional to one another. Once the number of tokens delegated to a validator reaches or surpasses a certain proportion, it will start to carry less weight in determining the Profession score, which will prevent concentration of power on a single validator.
- All validator commissions will be decided in the governance system so that validators can compete by contributing to the development of the ecosystem rather than by lowering commissions to garner holders’ tokens.
- To encourage continuous participation of stakeholders, the amount of rewards for delegating stakes will diminish after a certain period of time. Token holders will need to frequent the ecosystem and re-delegate their stakes to avoid decreased rewards.
This post has been written based on the research and experiments of the Hdac economy TF. Specific figures may be adjusted with continued research.
Written by Hdac economy TF — Steve Kim, Bryan Rhee, Yongwan Ju, Yeon Hwang.
