V Systems
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V Systems

Debunking the Nothing-at-Stake Concern on SPoS

Photo by Olav Ahrens Røtne on Unsplash

Nothing-at-stake is not a likely concern

The creation of Proof of Stake (PoS), despite inspiring thousands of alternative blockchain consensus mechanisms, has faced its fair share of criticisms. One of which is the argument on the “nothing-at-stake” issue. The argument suggests that without “work” or energy consumption involved in the minting process like Proof of Work (PoW) does, and assuming minters are validating blocks out of their own financial self interest, they tend to mint on all branches of the block tree in order to avoid any loss resulted by forking and maximize their chance of earning minting rewards.

This is echoed by the social science theory of “Tragedy of the Commons”, which illustrates a situation where individuals are acting upon self interest even if it’s in contrary to the common good of the shared system.

Tragedy of the Commons. Image courtesy of Dave Cutler (artist).

However, both arguments and theories are in fact flawed in the discussion on PoS, as they have mistakenly ignored the “stake” itself, the very core of the PoS concept.

In a PoS blockchain, the stake refers to the tokens you own. The more tokens you possess, the more stake you have in the blockchain. As a minter, you lock up your tokens in order to validate a block, similar to the idea of how a collateral works.

Instead of “work” or energy consumption, the stake at hand in a PoS blockchain is the token itself. As one owns a portion of stake, it is rational to do good to the system instead of initiating attacks on the protocol. This is because the drop in coin value owing to an attack would essentially be contradictory to one’s self interest.

Sunny King’s SPoS design renders Tragedy of the Commons irrelevant

Based on this assumption of rational minters, Sunny King improved on PoS mechanism and created Supernode Proof of Stake (SPoS). It is a transparent and open design, with all information including lease rate, reward cycle etc. clearly reflected on https://vsysrate.com/ (our previous blog post detailed a complete user guide). Coin holders can calculate the expected returns from coin leasing and also compare the rewards between supernodes using the information on the supernode website.

And again because of the transparency of the SPoS design, from a supernode (minting pool) perspective, there will be a known amount of reward owing to SPoS’ constant block interval minting and equal minting right among minting slots. Supernodes can easily realize that the potential gain to mint on all branches is incomparable to the magnitude of potential loss in stake value should they set off an attack.

This renders the Tragedy of the Commons irrelevant, as every party involved (supernodes, coin holders) has full knowledge on the cost and benefit of their action, in which case the benefit of upholding the SPoS protocol always prevail.

Equal minting right brings forward a market equilibrium

Photo by rawpixel on Unsplash

Now that the nothing-at-stake issue is out of the picture and supernodes are expected to justifiably follow the protocol, let’s take a closer look at how the equal minting right is bringing forward a market equilibrium for supernodes.

Under the SPoS design, 60 minting slots are defined, each corresponding to a specific second within the minute. Every slot is given an equal share of minting right. A supernode must acquire the ownership of a slot in order to obtain the respective right. Eligible listed supernodes take a sequential turn to work on a minting slot to perform block validation.

Since every supernode has an equal turn to acquire a minting slot (each granted with an equal minting right), coin holder’s decision on which supernode they would lease their coins to come down to the lease rate set out by the supernode. Rational coin holders have a reasonable preference to lease to a supernode with a higher lease rate. However, this additional lease to a high paying supernode will eventually lower its lease rate due to the fact that minting output is always kept constant under SPoS. An equilibrium will therefore exist as a built-in force to equalize the lease rates among supernodes.

This does not only bring stability to the blockchain, but more importantly a very high level of sustainability as the ecosystem grows in a steady pace. SPoS is a well thought-out masterpiece by Sunny King, learn more about the design specifications and how Sunny King tackles different concerns on blockchain consensus mechanism on the SPoS whitepaper: https://www.v.systems/pdf/sposwhitepaper.pdf

About V SYSTEMS

V SYSTEMS is a native blockchain database and decentralized app platform that aims to create a brand new digital economy era. The project is led by chief architect, Sunny King, the legendary blockchain developer and creator of Proof of Stake (PoS), who initiated the first PoS project with Peercoin and was also the creator of Primecoin.

V SYSTEMS’ mission is to create a future economy built upon millions of blockchains. To fulfill this mission, V SYSTEMS creates a scalable and stable infrastructure that brings a healthy blockchain ecosystem based on the next evolution of PoS, Supernode Proof of Stake (SPoS). V SYSTEMS aims to materialize the vision by building an innovative database cloud to make blockchain development swift and easy.

The mainnet and supernodes of V SYSTEMS have been operating since Q4 2018. The performance has been proven stable with industrial level TPS.

Project Name: V SYSTEMS
Official Website: https://www.v.systems
Project Introduction documents: https://v.systems/whitepaper.html
Learn how to participant supernode minting : https://v.systems/supernode.html

About VSYS Coin

V SYSTEMS’s cryptocurrency exchange ticker: VSYS
VSYS Coin lists on exchanges: https://v.systems/start.html
Short Summary for VSYS Coin:
5,142,858,000 VSYS Coins (genesis block) Annual inflation rate around 5%, issued through supernode minting. VSYS Coins will be burnt during transaction, deflation may occur as a result.
VSYS coins are the cryptocurrency on V SYSTEMS blockchain.

About the V SYSTEMS Team

Architect: Sunny King
Sunny King, a legendary blockchain developer, is the inventor of Proof-of-Stake consensus mechanism and creator of three cryptocurrencies/blockchain projects, including V SYSTEMS, Peercoin and Primecoin. Each project brings important advancements to blockchain technology and its community.

Sunny King Wiki:
https://v.systems/sunnyking.html
Sunny King Twitter:
https://twitter.com/sunnyking9999
Sunny King’s statement on the V SYSTEMS public chain:
https://bitcointalk.org/index.php?topic=5095844Core

Core Developer Team Introduction:

The core developer team are experts from ex-Oracle,VMware,Google, Uber, and more other silicon valley tech companies. The leading developer team are all world’s top database scientists and mathematicians.

Social Medias of V SYSTEMS

Telegram: https://t.me/VSYSOfficialGroup
Bitcointalk: https://bitcointalk.org/index.php?topic=5095853.0
VSYS Talk: http://talk.v.systems
VSYS Twitter: https://twitter.com/VSYSCoin
Sunny King Twitter: https://twitter.com/sunnyking9999
Facebook: https://www.facebook.com/vsystemsofficial
Medium: https://medium.com/vsystems
Reddit: https://www.reddit.com/r/V_SYSTEMS

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V Systems is a general purpose blockchain database for decentralized applications. Led by Sunny King, the inventor of PoS, we aim to deliver scalable and durable decentralized database cloud technology with high finality, performance and the highest resistance to 51% attacks.

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V Systems

V Systems

A blockchain platform that supports the efficient and agile development of decentralized applications. Visit our website at www.v.systems

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