The notion of a “trustless” ledger continues to gain in popularity. A public blockchain is often described in this way as it does not require a “trusted” third party. The responsibilities of third parties such as banks, payment or credit card providers is to act as the authority that prevents double spending. Blockchains on the other hand, use various types of consensus mechanisms to reach an agreement on the ledger and to authenticate each transaction. Ironically, trust is still a factor in trustless systems, with trust derived not from a central system but from decentralized consensus.
The cost to attack a decentralized consensus mechanism is directly related to its security. To increase security, Nexus implements reputation as a cost, which is related to how much consistent time a staker contributes resources. A mechanism called “Trust” records past work to create a reputation system, which is currently implemented on the Nexus Proof of Stake channel.
Proof of Stake is a form of mining based on ownership of a digital currency. This ownership represents a “stake” in the sense of an interest in something. By staking, NXS holders earn a NXS Stake Reward. NXS can only be staked inside the official Nexus wallet. In return, stakers are rewarded for operating the wallet (a Nexus node) which provides security to the network.
Trust adds another weighting to the security of the Nexus protocol. A Trust score is defined as the total time a specific user has contributed weight or realtime resources to the network. A Trust score is gradually built over time as one consistently operates a node in an honest, trustworthy, and timely manner to validate transaction data by running a wallet on a computer with continuous internet connection (24 hours a day, 7 days a week). In some circumstances, such as when a node goes offline for a significant period of time, the node’s Trust Score will be reduced. Therefore, one has the incentive to operate a node continually and consistently providing security to the Nexus network.
The Stake Reward rate depends on the node’s Trust Score. The Stake Reward rate is a value that represents your current annual NXS rate of return (%). Unlike most other PoS systems, the Nexus reward rate isn’t constant. The rate starts at 0.5%, and can increase to 3.0% after 12 months of consistent staking. The rate increase is nonlinear, slowing in terms of its increase over time. It takes several weeks of consistent staking to reach 1.0%, and around four months to reach 2.0%. With this rate, you can calculate the average amount of NXS you can expect to receive each day for staking.
The key to a good reputation system lies in the effort required in gaining a reputation versus the comparative ease of losing it. By coupling an economic incentive with greater trust, such as higher returns on verification, there is a non-trivial cost incurred by loss of reputation. Trust in our implementation is gained by consistent block production within a three day moving window. If this time is exceeded, the value of trust decays at a rate of 3x, which means if a node misses one day of staking, it receives a penalty of three days worth of lost trust. This mechanism forms a basic foundation for the discernment of the quality of nodes.
It is possible to stake with only one single NXS at a rate of 0.5%. However, as of 15th April 2019, it takes at least ten thousand NXS to be able to reach the maximum stake reward of 3.0%. The amount of NXS required to achieve a higher stake reward depends on its fiat price, as an increase in the price of NXS increases the required amount to attain the maximum stake reward. Trust supports the viewpoint that “not everyone has money, but everyone has time,” implying that anyone can build trust if they have some time, as only a minimal amount of hardware and NXS is required to begin building a trust score.
Similar to other forms of mining, Proof of Stake mining has a level of difficulty. As more people successfully stake on the network, the difficulty of staking increases. This results in an increasing amount of NXS required to increase the stake reward. Furthermore, a larger balance of NXS in the wallet will increase the frequency of NXS rewards.
Trust adds a layer of protection against attacks that further increases the Nexus network’s Byzantine Fault Tolerance. Together with the other two Nexus mining channels, limitations on block frequency, ten-minute decentralized checkpoints, it is very unlikely for an attacker to perform a successful 51% attack, because it would take an enormous amount of resources and time to gain enough trust from the network, in order to take control of all three channels. Not only does Trust increase the security of the protocol, it also increases the efficiency of the protocol and therefore its potential to scale.
We believe reputation is an important mechanism to take into consideration when discerning the mathematical truth of a decentralized consensus. Reputation in Tritium will extend beyond just Trust, by implementing signature chains. A signature chain is comparable to having a personal blockchain, which can be accessed by a username, password and pin, and augmented with various hardware password managers or biometric usernames. The result is a transparent ledger of events associated with a given user, that can provide the data set to form more complex reputation systems interpreted from this series of events. We plan on extending our current reputation systems into many more areas, such as our multidimensional chain.
Today, there are a handful of consensus mechanisms that have been designed to create decentralized networks. Though all of these mechanisms serve to protect against sybil attacks and double spending, many have a limited ability to capture the reputation of the nodes in the network. Most follow pBFT (Practical Byzantine Fault Tolerance) using stake-based weighting such as Cosmos or Casper. Though these consensus mechanisms are BFT below 33%, this can be improved through the implementation of a reputation system that utilizes time as an equally available weight, which can extend the security of conventional consensus mechanisms.
Ironically, trust is still a factor in trustless systems, with trust derived not from a central system but from decentralized consensus. Although decentralized consensus mechanisms are resistant to manipulation, they become vulnerable when one party begins to control at least 33% of nodes for pBFT, or 51% of network computational power for PoW (Proof of Work). By studying these threats, we have found that including reputation as a part of the consensus process can improve the byzantine fault tolerance (BFT). Further reading on this topic can be found in the link below, which proposes a reputation protocol that claims a 20% increase in fault tolerance.
Nexus currently implements a reputation or trust-based proof of stake protocol that maintains random selection inherent in pure Nakamoto consensus, but also overlays a reputation to each validating node. The reputation of a node combined with their stake produces a weight that determines their probability of finding the next block. In order to provide the proper incentives for validators to gain trust, the rate of return ranges from 0.5% to 3.0% after a time period of 1 year. Trust in our implementation is gained by consistent block production within a three day moving window. If this time is exceeded, the value of trust decays at a rate of 3x, which means if a node misses one day of staking, it receives a penalty of three days worth of lost trust. This mechanism forms a basic foundation for the discernment of the quality of nodes.
Reputation and Relationships
The system tolerates byzantine faults through the distribution of validators and implementation of relationships between nodes. In our context, reputation is designed as a public indicator of a node’s history whereas relationships are a private indicator of a node’s relationships with other nodes. In this respect, it is easier to prevent a byzantine fault if the probability of an assumed fault is known. In simple terms, this means that one can more easily discern the difference between a byzantine fault and an honest node based on previously experienced faults.
We believe reputation is an important resource to take into consideration when discerning the mathematical truth of a decentralized consensus. With the knowledge we have gained through our current implementations, we plan on extending our current reputation systems into many more areas. Through our architectural development named the “TAO” (Tritium, Amine and Obsidian), we are deploying reputation into our multidimensional chain primitives, as part of the immutability and authenticity (Y) axis.
We have noticed several benefits of nodes keeping a history of their subjective relationships with one another, that is a private indicator of the quality of data and communication between nodes. This is not suitable for consensus critical rules, but rather for the detection of malicious actors in a system. The result of this, through some of our basic implementations, is an ability for the network to discourage dishonest behavior without experiencing consensus failures. This allows imperfection in detecting qualities of good and bad, while detecting potential byzantine faults in advance and the option not to propagate them. These concepts have been tested, where dishonest blocks could be detected and not relayed by a consistent set of rules. If other nodes on the network still propagated these blocks and built upon them, they would then be seen as a valid part of the blockchain and a false positive realized.
Reputation in Tritium
Reputation in Tritium will extend beyond just trust keys, which are the basis for the legacy client, by implementing signature chains. Signature chains are a hybrid signature scheme that use hash-linking, and asymmetric cryptography to form a primitive user-level blockchain. This chain contains all the actions invoked by a specific user, without revealing their actual identity. The result is a transparent ledger of events associated with a given user, that can provide the dataset to form more complex reputation systems interpreted from this series of events. The enforcement of reputation on the ledger layer is through the 1:3 ratio for staking currently implemented, and the aforementioned relationship system on the network layer.
Miners will see their reputation improve through consistent actions performed on the mining network as Amine and Obsidian approach release. This will give a similar variable reward model as nPoS, but with the requirement being mining power in order to produce consistent blocks over time. These reputation models will favor nodes with a consistent history, and will penalize nodes that hop from blockchain to blockchain in pursuit of profit. As your reputation will be a factor in mining profitability, incentives will align miners to contribute more consistent power to the network consensus, providing better security properties. Miner reputation could provide greater resistance to 51% attacks, similar to how reputation can improve the pBFT-model by 20% or more.