Consensus through Collators:
KILT as a Nominated Proof of Stake Network
By Ingo Rübe, founder of KILT Protocol and CEO of BOTLabs
Update: KILT has decided to shift from a Nominated Proof of Stake (NPos) network to Limited Delegated Proof of Stake (LDPos), in order to adopt a mechanism that better supports KILT in the long term. See our blog post from 8 July 2021 here.
12 March 2021 — In my previous blog post I outlined why KILT needs a parachain and provided a roadmap on how we plan to roll out KILT Protocol. Here, I will provide an update on how we envision the KILT Protocol as a Nominated Proof-of-Stake network.
KILT Protocol is designed to be a fully decentralised permissionless blockchain network. That means that KILT is being built to evolve into a blockchain that is run for the community, by the community, with all decisions being made by KILT token owners.
Following the model used by Kusama and Polkadot, in order to achieve decentralisation KILT is set out to become a Nominated Proof-of-Stake (NPoS) network. Consensus in the system (agreement on the information on the KILT blockchain) will be achieved by collators who produce “blocks” of data on KILT and pass it to the validators in Kusama/Polkadot, who then pass the information to the Relay Chain.
These collators will be backed by nominators — KILT token holders who trust the collators and use their KILT tokens to back them. For this system to work, a way to incentivise the collators and nominators needs to be built into the system, similar to that used by the Kusama and Polkadot networks.
In Kusama and Polkadot, validators (the equivalent of collators) and nominators receive staking rewards for participating on the network. Such rewards on Kusama and Polkadot are a result of their on-chain network inflationary mechanisms and performed in their native tokens KSM and DOT. In KILT Protocol, collators and nominators will be rewarded by a similar mechanism, receiving KILT tokens for participating on the decentralized network.
At maturity, KILT is set out to be fully decentralised and run as described above. In addition to the security provided by collators on the network, KILT benefits from a major and ground-breaking feature of Kusama and Polkadot: shared security. All parachains connected to the Relay Chain share in security of the network as a whole. This is provided by the validators and NPoS design.
Being part of the Kusama network also enables highly secure interactions between the KILT blockchain and other parachain projects on Kusama and, when a connecting bridge is enabled, also to Polkadot projects. This is a very valuable feature, because it puts the KILT functionality in the center of the most promising blockchain ecosystem to date. It makes KILT Credentials and DIDs easily available for an increasing number of highly valued projects, which will greatly increase the usage of KILT.
Obtaining a Parachain Lease
Parachain leases on Kusama and Polkadot will be obtained by auctions which are expected to begin soon. When a project puts down a bid for a parachain lease and wins the lease, then the bid (KSM or DOT) is locked for the duration of the lease. This means the tokens cannot be staked or used for any other purpose as long as the lease is running. At the end of the lease, the bonded KSM/DOT are automatically unlocked again and returned to the bidder. This way, the projects which obtain a lease just pay the opportunity cost of not using the KSM/DOT for other purposes during the lease period.
KILT aims to secure one of the early parachain slots on Kusama, so that the KILT functionality will be available for other parachains projects at the earliest possible time. Securing a Kusama parachain slot brings us one exciting step closer to KILT mainnet launch and full decentralisation.