Combining the Benefits of Both PoW and PoS, What Innovations will PoSW bring?
With the development of the industry, the PoS consensus has been recognized by more and more people. June 16, Infinity Stones held an event about PoS consensus. QuarkChain was invited to join this summit and jointly explored what new opportunities the PoS consensus can provide for the development of the industry in the future with founders from Harmony Protocol, Celer Network and Top Network.
During the event, there were two panels that focused on the benefits, trade-offs, properties and future potentials of PoS. The first panel was “Who can be my node?”, and the second panel was “Stake or Not?” Junjia, QuarkChain’s engineer discussed QuarkChain’s in-house PoSW consensus with the panelists.
Q1. Will you please briefly introduce QuarkChain?
We propose a simple hybrid PoW/PoS — proof of staked work (PoSW), which harvest the benefits of both PoW and PoS. The idea is when miners stake a certain number of tokens, they will effectively lower the block difficulty, which essentially means their effective hash power increases accordingly.
Q2. What’re the benefits of staking in the ecosystem?
In the beginning, we are designing our sharding scheme as a root chain/shard chain architecture, and the first decision we make is that all of them will be running PoW. However, the obvious problem is the hash power dilution. It becomes very easy to attack a single shard, though in our network attacking a shard also requires attacking the root chain, still, the required hash power is relatively low.
Then we thought about keeping PoW for the root chain while running PoS for the shard chains. In that case, all the hash power is concentrated on the root chain, which means you need 51% hash power to attack the whole network, and shard chains can run the transaction smoothly.
PoW has demonstrated its strong security; however, it is slow and energy inefficient. PoS is more efficient in terms of energy resources; however, it suffers from several security concerns such as nothing at stake, staking grinding, and long-range attack. Instead of using PoS design, we tried to figure out how to add a PoS flavor to our PoW consensus, and we named it Proof of staked work (PoSW). PoSW maximizes the hash power that a miner could contribute to the network, by requiring miners to acquire some stakes proportional to the percentage of the hash power in the network. If you have more stakes in your mining address, you can lower the difficulty, which effectively means increase the hash power.
If nobody stakes, this is still a pure PoW game; if everyone stakes to the maximum, still, this becomes yet again a pure PoW game. In both cases, all miners have the same effective hash power. But we think, even without rigorous proof, the game-theoretic equilibrium lies somewhere in between where miners will stake proportionally to their relative hash power, which means attacking the network requires a significant portion of hash power and additional staking tokens. And this should raise the attacking cost quite a lot.
Basically PoS for us is a design mechanism to ensure network security.
Q3. Can you talk about the behaviors of PoW miners who participate in the QuarkChain network?
We do not know how miners would behave for now, and that’s why when we launched mainnet on 4/30, we used 8 different shards as an A/B testing framework with different parameters. The thing we really want to know is how miners will react to different shards with different parameters. Each shard has different parameters for PoSW, which dictates how many tokens a miner should stake to enjoy the benefits. We want to know how miners will allocate hash power, like will they put all hash power to mine a specific shard or will they distribute hash power equally into different shards.
Q4. Do you think there is an ideal staking ratio on the blockchain or do you think there are too many people participate in the PoS staking will cause questions for blockchain?
We have 8 shards, and we are basically running the A/B testing right now, to find out the best parameter/ratio. We will find answers shortly after we figure out the real behavior of miners, and how they react to different parameters. We are really leveraging our architecture as a tool for solving this question.
Q5. Do you see the possibility that centralized entities like btc.com or Bitmain emerging in a PoS world?
This is really relevant to us because miners are still in the game. The question is how they are going to actually stake as a miner farm for their own benefit, and we don’t know the answer. The things we DO know are 1. because we still use PoW, we can only alleviate bitcoin’s problems but not eliminate them. 2. however, with staking, we are essentially encouraging smaller-scale mining farms to use it as a leverage to compete with the bigger farms. Also, since we are not a real PoS chain, there isn’t a straightforward way for token holders to join the mining game, but we can encourage building staking farms through which stakers can contribute the tokens to smaller mining farms, then those small-scale miners can use those stakes to take advantage of PoSW and effectively enhance their hash power. In conclusion, with staking, we can do better than the bitcoin world by encouraging smaller farms to compete with bigger farms.
Thank you for joining this event, if you have any questions about PoSW consensus, please leave comments or connect us through QuarkChain’s official social media channel.