As we said in the previous blog, VEE is committed to reducing the cost of building blockchains and making them more viable for use as databases — our chief architect Sunny King’s vision is to create a new economic era based on many blockchains powering all kinds of human activity from finance to the gaming industry. Among the current hurdles in the path of this goal is consensus — which is the key underlying principle enabling the decentralised nature of blockchains, as opposed to centralised network models.
For a blockchain to function, it needs the composite parts to agree on changes and updates, rather than these being actioned by a central administrator. VEE will adopt the most effective forms of consensus, including SPoS — the latest iteration in a series of improvements that are making consensus faster and more cost-effective.
From the beginning, the Bitcoin blockchain has used Nakamoto consensus — the breakthrough innovation that kicked it all off. It solved the classic ‘Byzantine Generals’ Problem’ in technology: how to reach agreement between scattered network participants so as to move forward in unison. In blockchains, this is critical to ensuring the chain is updated consistently so that all parts reflect the same changes — such as when a transaction is registered.
Nakamoto consensus is a proof-of-work model: this means it weights the contribution of each participant in the chain according to the amount of computing resource they consume in arriving at the point of confirming a transaction. This includes activities like mining, which is resource-intensive and is therefore ‘compensated’ for with a higher consensus weighting. Nakamoto consensus has been running reliably since 2009 and underlies the majority of current cryptocurrency activities.
While Nakamoto consensus creates efficient verification, it relies heavily on the consumption of power, which opens it to criticism that it is wasteful and has significant negative side-effects. With PrimeCoin, Sunny King introduced a new kind of proof-of-work consensus which uses prime numbers instead of power consumption to create a participant’s weighting in consensus. Participants are required to ‘find’ chains of prime numbers through their computing activity which then qualify them to participate in consensus actions. The PrimeCoin model has a number of innovations which assist in making consensus more efficient and has been deployed successfully for a number of years.
Introducing SPoS consensus
Sunny King created proof-of-stake (PoS) consensus with PeerCoin in 2012 to break the link to resource consumption — instead, it allocates a weighting relative to the quantity of coin holdings participating in the consensus activity. It is no longer proof of effort expended, but of the participant’s stake in the transaction. By severing consensus from resource consumption, PoS reduces overall system operating costs — and with reduced cost comes lower barriers to entry, enabling a much more diversified blockchain ecosystem. In a nutshell, it increases scalability. Several major networks have been running PoS consensus systems for several years and it has a proven track record.
But there’s more to come. Even more efficiency and cost-reduction can be introduced to blockchains through what we’re calling Supernode PoS (SPoS), which is the next logical evolution of the PoS concept. Simply put, nodes are the individual servers making up the the distributed network that hosts a blockchain, each of which is regarded as equal despite how much (or little) work they do; Supernodes are high-performance versions which take on much more of the heavy lifting in the network.The Supernode is not a shareholder but a minting pool in the system, which means it carries out functions both for the system and for miners. The minters’ activities take precedence in consensus weighting as their activities create value: they are rewarded for supporting and protecting the network while passive holders of coins are not.
In addition, Supernodes are very stable by design as they produce blocks at a constant rate, rather than randomly like previous nodes, making it inherently more scalable. Adopting an SPoS consensus algorithm can deliver high-volume transactions-per-second (TPS) and reduce the operating cost of the whole system while also solving the energy consumption problem.
Welcome to check the SPoS whitepaper here👇👇👇:
The VEE vision proposes several major advances in blockchain development, all of which will contribute to increasing opportunities to create and deploy specialised blockchains by lowering costs and complexity. Just as creating a viable Bitcoin blockchain became possible with the first workable consensus model, we see better consensus as the most important enabling step toward our goal. We will implement the systems described here — but we won’t be limited to them: we will evaluate the viability of other consensus propositions and implement any that are innovative and reliable.
VEE will be back with more on how our system will revolutionise blockchains — look out for our account of how we plan to update and improve ways of creating sidechains.
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