Galaxy Proof of Stake Research Paper

Noah Maizels
Wanchain
Published in
7 min readMar 31, 2019

Today, the Wanchain research and engineering team has released a research paper covering the Galaxy Proof of Stake consensus. This paper is the result of months of dedication by the academics and engineers in Wanchain’s research and engineering teams in Beijing and Austin. Wanchain, previously operated by Proof of Work, will move to the new Proof of Stake algorithm by Q4 2019. This is significant for Wanchain for several reasons. First, this Proof of Stake consensus protocol offers mathematically proven efficiencies in comparison to Proof of Work consensus based on proof of physical computing power. In addition, Wanchain will now begin our path to full decentralization through the public release of consensus nodes. This technology shift will also improve the transactions per second (TPS) rate and security of Wanchain’s network. Once the proof of concept has been validated and confirmed, Galaxy will soon be ready for alpha testing by the end of Q2. The transactions per second is still under heavy testing, but we hope to release more details in our Alpha release. Below we will cover Proof of Stake basics, as well as expand on some of the key takeaways of our PoS mechanism.

If you have questions for the team, please submit them on this reddit thread.

What is consensus?

Consensus refers to process by which nodes in a distributed network come to agree on a single truth. For example, with Bitcoin, consensus refers to all the rules and processes which allow the Bitcoin network to agree on a shared set of transactions. The consensus mechanism allows the blockchain to ensure, through self-monitoring, that a single, agreed-upon blockchain or ledger is used by the whole network. Consensus achieves this by incentivizing parties to ensure every block is accurate, while also disallowing malicious parties to take control or alter the ledger in any way.

How can we ensure that a network reaches the correct consensus?

Different consensus methods use different systems to ensure that the correct consensus is reached, and that no malicious nodes can get good nodes to agree on incorrect transactions. Bitcoin’s consensus protocol uses a Proof of Work (PoW) system to secure its network, while others such as Wanchain and Tezos use a Proof of Stake system to secure their networks.

How does Proof of Work (such as Bitcoin) secure a network?

Under a PoW system such as Bitcoin, nodes known as miners organize sets of transactions into groups called blocks by solving complex computational problems which require large amounts of computing power to complete (this is the ‘work’ from Proof of Work). It is very difficult for miners to produce a valid block, so miners will compete with each other to see who can be the first to produce the next valid block. When a miner produces a valid block under the rules of consensus and the block is accepted and confirmed by the network, that miner will then be rewarded with some Bitcoin for their work. Because it takes time and resources (computational power, cost of electricity) for a miner to produce a block, they are incentivized to produce only blocks with valid transactions, since invalid blocks do not have a chance to earn the block reward, and will simply waste the resources of the miner operator.

How does Proof of Stake secure a network?

As with Proof of Work, the goal of a Proof of Stake system is to ensure that the network reaches consensus by agreeing on the same set of transactions, and that no invalid transactions are accepted. While Proof of Work uses computational power to secure the network, Proof of Stake uses purely economic incentives. In a Proof of Stake system, nodes put up a bond or ‘stake’, consisting of a valuable digital currency such as WAN. While in Bitcoin, nodes which perform work can gather transactions and propose blocks, in a PoS system, only nodes which have a certain amount of stake can propose blocks. Those PoS nodes will enter a lottery in order to determine which node is the block producer and receives the block reward. If a node breaks the rules of consensus, for example by trying to include an illegitimate transaction, then the system will automatically punish that node.

Why Proof of Stake?

As mentioned above, PoW systems require large amounts of computational power, which make use of large amounts of energy. This is undesirable for a variety of reasons. It requires the purchasing of expensive hardware to perform the computational work. This hardware quickly becomes outdated and must be replaced, leading to large amounts of waste and high costs. The large amounts of energy needed to power the hardware is also very expensive and can contribute to global pollution when it comes from non-renewable sources.

Galaxy Proof of Stake

The Galaxy Proof of Stake algorithm draws on previous proof of stake models such as Ouroboros and others, while also innovating in several key areas. In Galaxy, the set of all stake holders who are eligible to participate in consensus are referred to as the Community. Every member of the Community has a chance to participate in consensus and earn rewards. Community members’ chances of earning rewards are determined by how much WAN they hold as well as how long the WAN is locked. In order to join the Community, members must hold a certain minimum threshold of WAN and register to join through the official Community smart contract. In order to receive delegation from other accounts, members must hold a larger minimum amount. These minimum thresholds will soon be released to the public.

Time Periods: Epochs and Slots Explained

Galaxy divides time into periods called epochs and slots. An epoch corresponds to roughly one to two days, which is the frequency in which incentives are distributed. Transaction fees are gathered for each epoch and released to the participants along with block rewards for that epoch. Each epoch is further divided into periods called slot, and each slot has at most one block.

Epoch Leaders and Random Number Proposers

Within each epoch, two groups of Community members will be chosen to act as consensus participants. The first group is known as the Epoch Leader Group. Members of the Epoch Leader Group are responsible for proposing blocks. The second group is the Random Number Proposer group. This group is responsible for generating the random numbers which are used as the basis for random elections in the protocol. These two groups are chosen by random weighted election according to their stake in the system from the entire set of eligible Community members. Stake is determined according to the amount of WAN staked as well as the length of staking time and other parameters. Once chosen, the Epoch Leader Group and Random Number Proposer group members will remain constant during the entire epoch.

Slot Leader Selection Process

Within each slot, one Slot Leader will be selected from within the Epoch Leader Group to propose the next block. All Epoch Leaders have an equal probability of being chosen as Slot Leaders (not weighted by other factors such as stake amount or staking time). The selection is made using the random element generated by the Random Number Proposer Group (the group also produces the random element which serves as the basis for the general selection of the two main groups from the larger Community). After the selected Slot Leader’s block is proposed and confirmed, they will then receive their block reward in the form of WAN. A portion of each block reward will also be allocated for the Random Number Proposer group in order to reward them for their work.

Galaxy Delegation Mechanism

In addition to the protocol as described above, an innovative delegation mechanism was implemented allowing holders of smaller amounts of WAN to participate in the consensus process and earn rewards by contributing their stake. Through this mechanism, WAN holders may send their WAN to smart contracts associated with a delegate. When a delegate’s node participates in consensus and earn a block reward, the rewards will then be automatically shared through the smart contract with all delegates.

Delegation Reward Rates

Each delegate node is free to set their own reward rate, which will be publicly posted on the blockchain. Individual accounts are then free to choose from amongst all the available delegates. In this way, through natural competition, an acceptable market rate will be established.

Proof of Stake Partners

Wanchain will be working with Staked upon launch of our Proof of Stake solution later this year. Staked provides staking services for institutional customers. See the Medium article below for more information on Staked.

About Wanchain

Wanchain is the infrastructure connecting the decentralized financial world. Wanchain’s live cross-blockchain solution is EVM-based, includes optional private transactions, and provides a decentralized, permissionless, and secure approach for interoperability. Wanchain has employees globally with teams in Beijing (China), Austin (USA), London (UK), Kuala Lumpur (Malaysia), Paris (France), and Madrid (Spain).

You can find more information about Wanchain on our website. Additionally, you can reach us through Telegram, Discord, Medium, Twitter, and Reddit. You can also sign up for our monthly email newsletter here.

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