IOST: Decentralized. Scalable. Believable.
TL;DR on our full review on IOST
Introduction
IOST is an ultra-fast, decentralised blockchain network based on the next-generation consensus algorithm “Proof of Believability” (PoB). The infrastructure is scalable, stable and allows low-level customisation for different business requirements.
Consensus mechanism
PROOF-OF-BELIEVABILITY
The Proof-of-Believability consensus protocol divides all validators into two groups, a believable league and a normal league.
- Believable validators process transactions quickly in the first phase.
- Normal validators sample and verify the transactions in the second phase to provide finality and ensure verifiability.
The chance of a node being elected into the believable league is determined by believability score which is calculated by multiple factors (e.g., token balance, contributions to the community, reviews, etc). One with higher believability score is more likely to be elected into the believable league. Believable validators follow the procedures to decide the set of committed transactions and their order, as well as process them in order. Believable validators also form smaller groups — one validator per group. Transactions will be randomly distributed among these believable validators. Consequently, they produce smaller blocks with extremely low latency.
However, it may introduce security problem as only one node is performing the verification. As a result, some corrupted transactions might be committed by misbehaved validators. In order to solve this security problem, IOST specify a sampling probability that normal validators will sample transactions and detect inconsistencies. If a validator is detected as misbehaviour, it will lose all the tokens and reputation in the system while the defrauded users will be compensated for any loss. The believable-first approach makes processing transactions extremely fast as only a single (believable) validator is doing the verification and it is unlikely to misbehave.
The normal league runs the Byzantine consensus scheme based on ByzCoin, because it scales efficiently to thousands of consensus group members. ByzCoin uses collective signature (CoSi), a scalable cryptographic primitive that uses multi-signatures, to make traditional consensus algorithms such as PBFT scale. ByzCoin distributes blocks using multicast trees for performance, and falls back to a star topology for fault tolerance. It ensures that all the honest members of a shard agree on a specific common sequence of actions, despite some malicious nodes are in the shard, while guaranteeing safety and liveness.
Network Stats
According to iost.biss.com on 25.07.2019 there are 140 elected nodes out of 303 candidates in IOST ecosystem.
As can be seen on the screenshot, the most popular DApps are gambling ones, they have highest user number and transaction volume. According to dapp.review and dappradar.com there 28 DApps in IOST ecosystem, 14 of them are gambling, 7 gaming, 5 financial, 1 account generation and 1 voting DApp.
Token Mechanics
IOST Nodes are successfully on-boarded into the IOST network if they receive 2.1 Million votes or more. IOST Nodes can choose to be:
A Servi Node is a “full” node that stores the full transaction history of the IOST blockchain, produces blocks and validates transactions. This requires a moderately powerful server and large disk space. It must stay up to date with the current IOST protocol version and remain stable. Servi Nodes are rewarded for this by earning from the “Block Production” reward pool (25% of total rewards). Opting to be a Servi Node is recommended for those with technical knowledge of servers, coding and blockchain protocols.
A Partner Node is a node that does not produce blocks and is meant for non-technical users who wish to contribute to the ecosystem and earn rewards. There is no setup or maintenance required by you. It is the easiest way to earn from contributing to the ecosystem and recommended for marketers, websites, investors, evangelists etc. You earn rewards based on your share of votes as well as your contribution to the ecosystem in which ever way you choose.
Elected IOST Nodes share in 4% of the total circulating supply (840 Million IOST) annually as rewards, of which:
- 420 Million IOST comes from the IOST Ecosystem Fund, and
- 420 Million IOST comes from Token Issuance.
Contribution Tier Rewards
The objective of the Contribution Reward System is to incentivize all Nodes to contribute towards building and developing the ecosystem, as well as allowing Nodes that do not receive a large share of votes to still earn a larger amount of rewards for significant contributions to the IOST ecosystem.
Unlike the Token Issuance Reward Pool which is paid daily, the Contribution Reward Pool is paid out quarterly (every 3 months).
Share of votes calculation is made daily, and rewards are based on the average share of votes received for the quarter.
Nodes can submit reports for 1 of the 5 categories. The chosen category for each Node should be the most relevant one. If there are contributions made outside of this category, they should still be submitted as they will count towards the final ranking. E.g 2 Dapp developers launch Dapps of equal value, but if one of the Dapps also create content to promote it, this Node will rank higher.
The reward categories are as follows:
- Content creation and promotion
- Dapps
- Integrations (wallets, exchanges, explorers etc)
- Events / meetups / hackathons
- Community building
Once all Nodes’ contribution reports have been assessed and ranked for each category, Nodes are assigned a tier based on their rankings. There are 5 Tiers, with Nodes split equally among tiers (rounding down where necessary). I.e top 20% of Nodes in “Content” category will be assigned Tier 1, next 20% into tier 2 etc.
Nodes in each tier receive the same amount of reward regardless of category. The 210M Reward Pool based on contribution is divided between tiers in the following way:
Rewards for Voters
Voters receive:
- 50% of election rewards and
- 50% of contribution rewards
of Node Partners that they vote for, but will not share in the block production and referral rewards. This is to help Node Partners defray the server costs incurred in maintaining ledgers and processing transactions for the IOST network. When a Node Partner claims the reward, the voter can get his own proportional rewards.
1. Election Rewards Distribution (For Voters)
- Election rewards are issued on a daily basis.
- When a node partner claims a reward, 50% of the reward is distributed proportionally to the voter as a an airdrop reward.
2. Contribution Rewards Distribution (For Voters)
- Contribution rewards are issued quarterly, and rewards will be distributed according to the voting data on the chain.
Originally, we planned to include an example of rewards calculation, but in IOST rewards differ greatly (8–200% per year) and it depends on a large number of factors (such as number of tokens staked by validator, by voter, contribution tier of validator, how much quarters validator stayed elected, number of tokens staked by all validators and so on). Long story short, you can reach to us and we could provide help with calculations, if anyone is interested.
Summary
IOST is an ambitious 1st layer project with plans to address the problem of scalability. They planned to achieve that through their new Proof-of-Believability (PoB) consensus mechanism, Micro State Block (MSB), Distributed Randomness Protocol (DRP) and Efficient Distributed Sharding (EDS), though not all of them are implemented.
IOST whitepaper is outdated, several features mentioned there are still in development (Atomix, TransEpoch, EDS) and some like DRP were implemented differently then what was proposed.
According to dappradar.com, there are 28 DApps in IOST ecosystem, 5 of them are in the top 100 by the number of daily users, and 4 of them are in the top 100 by daily $ transaction volume. IOST actively onboard partners who will launch DApps, and increase their ecosystem further.
Given the above, it can be said that IOST is more focused on building and growing their ecosystem, than on mindless race for higher tps (though they still conduct research and test their sharding scheme).
Check out our full review on IOST to know more about token mechanics, token allocation, vesting periods and more!
This is not financial advice.
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