dpos--Authorized Equity Certificate mechanism

White Paper on the certification mechanism for authorized shares
(Delegated Proof-of-stake, DPOS)
Author: Daniel Larimer

April 3, 2014 translation: Yidaidaxia_ Shaoxi
Bit Square Digital Asset Research Club translation works (Www.bitfarm.io)
More translation version address: https://bitsharestalk.org/index.php?topic=4031.msg50570#msg50570

Summary

This white paper introduces a new way to implement a proof-of-equity mechanism that allows transactions to be verified in seconds, and provides better security in less time than any existing proof-of-stock system. After the time a chunk is generated in the Bitcoin network, an authorized Equity certificate system (DPOS) allows your transaction to be verified by 20% of shareholders, while the Bitcoin network declares that the transaction has been almost irreversible (6 blocks, about 1 hours) after the time, under the DPOS mechanism, through its representatives, Your transaction has been verified by 100% of shareholders.1.0 BackgroundDistributed transaction ledgers need to be secure, clear and irreversible in the shortest possible time, providing a solid and decentralized system. In practice, the process is divided into two areas: Select a unique node to generate a chunk, and make the transaction general ledger irreversible.
1.1 Proof of workload mechanism (Proof of work, POW)The first attempt to successfully resolve the problem is the Bitcoin system (Bitcoin), which uses a proof-of-work mechanism to make the generation of a longer general ledger difficult to calculate. The proof-of-work mechanism is like a lotto, with an average of one node finding a chunk every 10 minutes. If two nodes find chunks at the same time, the network determines which chunk to build the general ledger with the subsequent node's decision. Statistically speaking, a transaction is considered to be unambiguous and irreversible after 6 blocks (about 1 hours). However, the core developer believes that it takes 120 chunks (about a day) to fully protect the network from the potentially longer threat of an attack blockchain that has been spent on newly generated coins.
While a longer blockchain can become less likely, anyone with a huge economic resource can still create a longer blockchain or have enough hashing power to freeze the user's account.
1.2 Equity proof mechanism (Proof of Stake, POS)There are many different variants of the proof-of-equity mechanism, but the basic concept is that the difficulty of generating blocks should be proportional to the equity (ownership ratio) that you occupy in the network. So far, two systems have started running: Pips (PeerCoin) and future currency (NXT). Point currency Use a hybrid mode to adjust your mining difficulty with your equity. The future currency uses a deterministic algorithm to randomly select a shareholder to generate the next chunk. The future currency algorithm adjusts the likelihood that you are selected based on your account balance.
Both future and point coins solve the problem of who will produce the next block, but they do not find a way to make the blockchain irreversibly secure in the right time. According to the information we can find, it takes at least 6 chunks (about one hour) to point the coin, and 10 blocks for future coins. We cannot find the basis for what level of security the future currency will provide after 10 blocks.
We have previously published a white paper on the transaction-based equity proof mechanism (transactions as Proof of Stake, Tapos), in which each transaction contains the hash value of the previous chunk in the blockchain. Through this system, the network becomes more secure and irreversible for anyone, because eventually each chunk is voted on by a shareholder. The challenge for Tapos is that it does not define who will produce the next chunk.
1.3 Rayleigh consensus mechanism (Ripple Consensus)The ripple Consensus algorithm enables a group of nodes to reach consensus based on a particular node list. Initial list of special nodes like a club, to accept a new member, it must be voted by 51% of the club's members. The consensus follows 51% of the core members ' power, while outsiders have no influence. Since the club begins with "centrality", it will always be "centralized", and if it starts to decay, shareholders can do nothing. Like Bitcoin and Pips, the Rayleigh system separates shareholders from their voting rights and is therefore more centralized than other systems.

2.0 Authorized Equity certification mechanism (DPOS)When using the decentralized autonomous company, DAC, the idea of centrality means that each shareholder has influence in proportion to its shareholding, and the outcome of the 51% shareholder vote will be irreversible and binding. The challenge is to achieve 51% approval through a timely and efficient approach.
To achieve this goal, each shareholder may grant his or her voting rights to a representative. The top 100 members with the highest number of votes have taken turns to generate blocks according to the established timetable. Each delegate is assigned a time period to produce the block. All representatives will receive 10% of the transaction fee in the block equivalent to the average level for the remuneration. If an average chunk contains 100 shares as a transaction fee, a representative will receive 1 shares as compensation.
Network latency may cause some delegates to not broadcast their chunks in time, which will result in blockchain branching. However, this is unlikely to happen because the representative of the manufacturing block can establish a direct connection with the representative of the block before and after manufacturing. Establishing this direct connection to your representative after you (and perhaps the representative that follows) is to ensure that you are paid.
This mode can generate a new chunk every 30 seconds, and the likelihood of blockchain branching under normal network conditions is extremely small, and can be resolved in a matter of minutes, even if it occurs.
2.1 Becoming a representativeTo be a delegate, you must register your public key on the network and assign it to a 32-bit unique identifier. The identifier is then referenced by the "head" of each transaction data.
2.2 Authorize your vote.Each wallet has a parameter setting window in which the user can select one or more delegates and rank them. Once set, each transaction made by the user will transfer the ballot paper from "input representative" to "output representative". In general, users do not create deals that are specifically for voting purposes, because that would cost them a transaction fee. But in an emergency, some users may find it worthwhile to change their vote by paying the fee in a more positive way.
2.3 remain representative of honestyEach wallet will display a status indicator to let the user know how their representative is performing. If they miss too many chunks, the system will recommend the user to change to a new representative. If any representative is found to have issued an invalid chunk, then all standard wallets will ask for a new representative before making more trades on each wallet.
2.4 Solving the blockchain forkAs with the proof of work system and other equity proof systems, the best blockchain is the longest effective blockchain. At any time, a representative misses the opportunity to issue a chunk that will be shorter than a potential competitor. As long as 51% of the 100 blocks after your transaction has been written to the chunk are produced, then you can safely assume that you are on the main block chain.
Perhaps the most important thing to do to prevent the loss of the Blockchain fork is to know the news the first time after the incident. Because delegates are well paid for their production blocks, they will maintain close to 100% of their online time to prevent loss of revenue from being voted off. You can safely assume that if there are one or two blocks in the past 10 blocks missing production, some parts of the Internet may be having connectivity problems, and users should be particularly vigilant and require additional confirmations. If there are more than 5 missed productions in the 10 block, then this means that you are likely to be on a branched chain, so you should stop all trades until the fork is resolved.
Simply discovering and alerting the user's network fork in a timely manner (less than 5 minutes) is a very important ability to minimize potential losses. It's even more important to know if you're on a chain.
2.5 100 delegates are going to be centralized? Because de-centering has become a popular term, its definition is difficult to completely fix. We look at the free market as a fundamental form of centrality, and will consider barriers to entry into the free market as the basis of all centrality. As with anything, there is a degree of centrality, so we compare the mechanism of authorization of ownership to the degree of the centrality of other schemes.
2.5.1 BitcoinThe Bitcoin system is currently operating on the basis of an authorized workload certificate (delegated Proof of work, DPOW), so approximately 10 delegates control the vast majority of the hashing force. In the hands of those who compete to use economies of scale for non-profit mining, the hashing force itself is centralized. Finally, the workload proving mechanism sets barriers to market entry, making it impossible for "incumbent" block makers to be easily replaced. Compared with the bitcoin system, Dpos is at least 10 times times more westernized in terms of block production, and may be a few times more central to market competition.
Although there is a certain amount of de-centering in the hashing force, we consider the Bitcoin system to be the most centralized when thinking about the proportion of the shareholders (bitcoin holders) holding the Bitcoin system. If you consider the total number of users using the Bitcoin system, there is likely to be less than 1% of those involved in mining.
2.5.2 PipsThe point coin is a hybrid system, so it is partially centralized because of the workload proof mechanism. Like the bitcoin system, it also has a mineral pool. The point coin is undoubtedly more centralized than Bitcoin, however, since the stock-proof mechanism requires the user to keep their computer online and the wallet unlocked, only a small percentage of shareholders are involved in any form of mining.
2.5.3 Future CoinsThe future coin uses transparent forging to determine the next manufacturing node to be selected. It can be likened to the use of an authorized equity proof mechanism but you can only grant your voting rights to yourself, and the frequency with which you get the forged block opportunities depends directly on your account balance. In this sense, the future currency is more centralized than the point-and-Bitcoin. But because of concerns about security risks and the fact that most regular users do not open their computers all day long to gain the advantage of forging opportunities, it still suffers from poor mining involvement.
From this point of view, we can conclude that the future coin network is a small number of shareholders to protect the network security. In fact, if you don't vote on the line, you'll lose your vote. To solve this problem, some future-currency users build equity pools with their stakes and trust third parties to dig for them. This is a form of authorization to increase shareholder participation, but it also puts their account balance at risk when they participate in these pools.

3.0 AttackIn general, networks must withstand two types of attacks: denial-of-service attacks and double-payment attacks. An attacker could perform a denial of service attack by not adding some or all of the transactions to the general ledger. This attack can be done by anyone with 51% networks (Bitcoin, future currency, or otherwise). With the short-term advantage that the network is trying to reach consensus, a double payment attack can be made.
To withstand these attacks, the network must reach an agreement with 51% of its shareholders as soon as possible.
3.1 Preventing the exclusion of transactionsHaving a total of 100 delegates elected by the shareholder and rotating the blocks as required means that any transaction approved by at least 1% shareholder will be able to join the general ledger within 30 minutes. This means that no representative can gain benefits by excluding transactions that vote for other delegates.
3.2 Centering The power of some representativesIt has nothing to do with the right to vote, and the first 100 people have the same weight, and each delegate has an equal right to vote. Therefore, it is not possible to concentrate power on a single representative by obtaining more than 1% of the votes.
It is possible for individuals or organizations to control multiple representatives of the blockchain. But this process will need to deceive a large proportion of the number of shareholders to support the "puppet".
Even if these 51% golems can be built, their ability to disrupt the network will remain limited and can be quickly corrected by rapid identification. Without the entry barriers set by the workload proof mechanism, the majority of honest users will identify the attack and then fork the code and ignore the blocks produced by the attacker. This attack can disrupt the network, but it will not be fatal.
3.3 Distributed Denial of Service attacks (DDOS) for delegatesBecause there are only 100 delegates, you can imagine an attacker making a denial-of-service attack in turn for each representative of the production block. Fortunately, the threat of this particular attack is easily mitigated by the fact that each representative's identity is its public key rather than the IP address. This makes it more difficult to determine the target of a DDoS attack. The potential direct connection between representatives will make it more difficult for them to block their production.

4.0 Trading-based equity proof mechanism (TAPOS)Representation is an efficient way to reach a solid consensus within a short period of time, and Tapos provides shareholders with a long-term mechanism to directly approve the conduct of their representatives. On average, 51% of shareholders will confirm each block directly within 6 months. Depending on the proportion of active shares, almost 10% of shareholders can confirm the blockchain within a few days. This direct acknowledgement ensures the long-term security of the network and makes all attack attempts extremely clear and easy to see.

5.0 High-quality serviceAssuming that a dpos system has a total market volume of $10 billion, with an average annual transaction fee of 0.25%, and delegates getting a total of 10% of all transaction fees, each representative will receive $25,000 a year to keep its nodes online.
This is a lucrative role that many people will continue to compete for to gain it. This means that everyone who wants to get the job will find ways to "steal" it from the person who owns the job. To do this, they will perform a statistical analysis of representative behavior to find any deviations from the standard algorithm. Once the deviations are found, they can hope to win some votes.
Those who have the job may go out of their way to prove that they are running on standard software. The more effectively they demonstrate the integrity of their block production, the more likely they are to keep their jobs. You can imagine that developers will be able to make systems quickly, and these systems can be used to quickly prove which transactions are widely disseminated.
In fact, market competition will produce the most creative solutions to demonstrate the integrity and reliability of our delegates. The job of making the network more secure can yield a lot of benefits, while trying to get around the network is not going to do much good.

6.0 ConclusionThe network of the DPOS process and the tapos will prove that the network consensus can be at least 3 times times the bitcoin, the point currency and the future currency network. Dpos is able to reach consensus faster and eliminate the possibility of small-scale interference from small, random shareholders. Economic incentives ensure that delegates are committed to demonstrating their good behavior and may adopt a consensus algorithm similar to that of the AAC system (to achieve this). DPOS, in fact, is a way to generate a list of the special nodes of a Rayleigh wave through a de-centering approach without the network fork.