What is the definition of effective proof-of-stake?

In this post ”What is the definition of effective proof-of-stake?”, you will learn the meaning of effective proof-of-stake, proof of stake (PoS) and how it works. And also about stakeholder effectiveness, voting power and the shard committee and lots more.

Harmony’s version of the Proof-of-Stake consensus method, Effective Proof-of-Stake, strives for both safety and decentralization.

Meaning of Effective Proof-of-Stake

Harmony has implemented its own makeshift Proof of Stake consensus protocol, which ensures decentralization through arbitrary state sharding. The goal is to avoid significant stakeholders on the network from concentrating power.

Proof of Stake (PoS) and how it works

The proof of stake consensus technique allows new blocks to be created while also preventing double-counting. People who own virtual currencies can stake them in order to confirm operations and receive rewards. Actual evidence is a cryptocurrency that replaces proof-of-work, which needs miners to tackle tough issues in order to generate new blocks. In contrast to proof of labor, the complexity of creating a block on a proof of stake network increases as the validator stakes more coins. For instance, if anybody stakes 1% of the total network coins, they should receive 1% of all validation rewards.

More on Proof-of-Stake (PoS)

Harmony is one of the first mainnets to use a completely sharded PoS architecture in operation. Blocks are generated every 5 seconds across the 4 shards of the Harmony mainnet. nd cross-shard transactions are completed in 2 block times.

Harmony’s Effective Proof-of-Stake (EPoS) is the first staking method to accomplish both security and decentralization in a sharded blockchain. Staking from multiple of validators is possible with EPoS. And the distinctive effective stake method eliminates the risk of stake concentration. Stake delegation, reward compounding, double-sign slashing, and unavailability checking are all supported at the same time.

Our token economics model compensates initial stakers with bigger incentives in order to properly bootstrap the network. This guide will assist validators and delegators who want to join Harmony Open Staking in getting started and learning how it works.

Stakeholder Effectiveness

Effective stake is a novel measure in EPoS that aims to avoid stake concentration while maintaining capitalistic balance. The following is the design rationale for how it accomplishes that.
Let’s call the raw stake the bid price of the elected BLS keys. An elected BLS key’s effective stake is a limited value on its raw stake with a threshold around the median bidder’s raw stake. (shown as median stake in the diagram below). The maximum and lower thresholds are 115 percent of the median stake and 85 percent of the median stake, respectively. The effective stake of a key with a raw stake that is outside the bounds of the threshold will be restricted by the equivalent threshold. Else, the effective stake will be the same as the raw stake.

During the election process, the effective stake of each BLS key is established at the last block of an epoch. And remains constant during the next epoch.

Voting Power and the Shard Committee

The BLS keys assigned to a shard now become committee of that shard after the election and shard assignment. The criteria used to quantify the key’s weight in the consensus voting procedure are the voting power of an elected BLS key in a committee. A shard committee’s total voting power is always 1.0. (or 100 percent ). A committee’s consensus can only be reached if more than 2/3 of the voting power is represented in the votes.

Each BLS key in the committee has a particular voting power proportionate to its effective stake in the committee as a whole. For instance, if the committee’s total effective stake is 10k ONE. BLS key with an effective stake of 1000 ONE will have voting power of 0.1. (or 10 percent ).

Reward for Blocking

Each of the blocks produced and validated inside a shard should have signatures from keys with more than two – thirds of the shard committee’s total voting power. Each confirmed block will generate 7 ONE as a block reward for the committee’s validators. The 7 ONE is distributed according to the voting power of the key(s) that signed the block to all validators whose BLS keys signed it.

After the commission charge is deducted, the allotted block reward for a validator will be given to delegators proportionately to their stake. For instance, a validator with a 25percentage commission rate was given 4 ONE for each block it signed. The validator staked 1000 ONE and has two delegations, each of which has staked 1000 ONE.

This validator’s block reward is distributed as follows:

1. A commission fee of 1 ONE (4 ONE * 25%) is deducted from the original reward. And credited to the validator.
2. The remaining 3 ONE reward is then distributed proportionally to all stakers. (including both the validator and its delegators) depending on their stake. The stakers (the validator and the two delegators) each staked/delegated 1000 ONE, hence their reward distribution is 1 ONE.

Slashing a Double Sign

The validator will be cut and permanently banned from the network if any BLS key(s) are identified signing contradictory blocks. (locks with the same height and view ID but different block hashes). When a validator is slashed, a particular percentage (i.e. slashing rate) of staked tokens from the validator and its delegators are forfeited. Half of which is burned and the other half is awarded to the double sign event reporter.

The cutting rate is calculated by adding all of the voting power of the double signing keys and subtracting 2%. For instance, if three BLS keys with voting power of 3%, 3%, and 4% double sign at the same time. The validators who possess the three BLS keys will be slashed with 10% of all staked tokens.

Unavailability and Uptime Penalty

The elected validators are required to validate blocks using the BLS keys they have chosen. An elected validator should sign more than two-thirds of the signatures that its BLS keys are required to sign in each epoch.

Uptime is a % metric that represents the signing performance. The ratio of the number of signatures its elected BLS keys signed to the maximum number of signatures the keys should sign is the validator’s uptime. A validator, for instance, may have two BLS keys, each of which is given 100 blocks to sign. The first key signed 70 blocks and the second key signed 80 blocks at the end. Therefore, the validator’s uptime is (70+80) / (100*2) = 75 percent .

At the close of each epoch, the validators with uptime of no more than 2/3 (66.66 percent ) will have their category set to “Inactive”. And be ruled out from the new election. In order to take part in subsequent elections, these inactive validators must configure their status to “Active”. This is issuing an EditValidator transaction. Validators are encouraged to be proactive in maintaining good uptime. In order to stay elected and get the largest block reward.

Below is a list of related topics you might find interesting:

  1. Blockchain Technology
  2. Defi
  3. NFTs
  4. DAOs
  5. Crypto
  6. Web 3.0
  7. Altcoin Tokenomics
  8. Metaverse
  9. Smart Contracts

Leave a Comment