Author Topic: Extending NXT PoS system  (Read 3684 times)

dance on: October 25, 2014, 05:47:33 PM

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I came to a solution of NXT 'rich get richer' problem (when an account have no activity at all, but forging all the time, in the limit tending to infinity he will acquire all of the coins, and during this his forging rate is constantly increasing).

Not sure it wasn't discussed before. Haven't looked through all threads and forums.

Actually it could be applied to any PoS coin with NXT alike 'forging' algorithm.

But this solution is kind of another 'paradigm-shift' (+1 to using crypto-currencies in general :), and I'm not sure average Joe will accept it.

The idea is to add, lets call it, 'forging energy' to any account balance. It could be positive, equal to zero, or negative.

Each time the forger account receives transaction fees, his 'energy' balance is decreased by the received amount.

Each time someone is making a transaction, his 'energy' balance is increased by payed fee.

Example:
X has 1000 coins
Y has 1000 coins
Z has 2000 coins
All with initial zero energy.

X is sending 1000 to Y, paying 1 coin fee. Z is chosen to be the forger.

Result:
X - 0 coins, 1 energy
Y - 1999 coins, 0 energy
Z - 2001 coins, -1 energy

When the process of choosing a next forger is taking place, each node is measured not by his balance, but by his balance value + energy value.

What do we have from this?

1) Each received fee does not change the ratio between forger 'forging ability' and 'forging ability' of all others taken together.

2) Each fee payed increases the 'forging ability' of the node. (If not counting in the amount he actually send off from his account).


Now, the main thing.

Energy 'units', positive or negative, could be sent the same way as coins. But only as an addition to a coin transaction.
With any proportions/amounts, with only two rules:
1) Modulo of negative energy of the account can't be more than it's balance.
2) Modulo of added negative energy to a transaction can't be more than the amount of coins being sent.

From this we have another interesting consequences:

1) It's impossible to get rid of your negative energy by yourself without giving it to someone else. (Someone could help you by sending his positive energy to you).

2) You can be a forger with zero balance, just by having positive energy.

3) Each receiver decides by himself how to treat received negative/positive energy.

4) Energy is getting it's own value, as a 'forging tool' if it is positive. Some kind of pure PoS 'ASIC'. Or as 'waste' if it is negative, for which you can pay somehow someone for taking it from you.

5) Even when someone is getting rid of his negative energy the initial ratio of his 'forging ability' compared to others taken together is still the same.


Negative consequences:
1) Increased complexity of PoS crypto-currency system.
2) Forged coins are not increasing your forging strength.
3) Anyone must deal by himself with situation of receiving negative energy.
4) Someone could not notice added negative energy to coins he received.
5) Asset exchange trading and smart contracts becomes more complicated.
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id-entti-tentti #1 on: October 25, 2014, 06:34:51 PM

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DC8 #2 on: October 25, 2014, 06:55:34 PM

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dance #3 on: October 25, 2014, 07:00:54 PM

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dance #4 on: October 25, 2014, 07:01:13 PM

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J #5 on: October 25, 2014, 07:06:30 PM

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Too long to read for now for me, but after additional PoS rewards in FIMK are gone, forging will be as useless as it is in NXT now :) For those who get blocks in NXT amounts are smaller than micro amounts compared to their stack. In bitcoin based PoS reward system there is a thing what count how long your coins have been waiting to get reward increasing chance to get block.

Sorry I try to read this idea fully by better time :D

dance #6 on: October 25, 2014, 07:16:05 PM

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Too long to read for now for me, but after additional PoS rewards in FIMK are gone, forging will be as useless as it is in NXT now :)
The largest NXT holder, holds his 50,000,000 coins since the genesis distribution.
He forged like 14% of all blocks already, and received more than 200,000 NXT as the fees.
If NXT usage was 10 times higher. It would be 2,000,000 NXT. In less than a year.
Several years later, with increasing usage - and he (or few largest holders) are receiving most of the fees, and have most of the coins.
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J #7 on: October 25, 2014, 07:27:55 PM

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The largest NXT holder, holds his 50,000,000 coins since the genesis distribution.
He forged like 14% of all blocks already, and received more than 200,000 NXT as the fees.
If NXT usage was 10 times higher. It would be 2,000,000 NXT. In less than a year.
Several years later, with increasing usage - and he (or few largest holders) are receiving most of the fees, and have most of the coins.

Ok, thanks for clarification, I did not realize there is that big whales in NXT. If I remember right it was tried to ignore that kind of situation on IPO of FIMK, but yes if usage increases heavily forging becomes more profitable.

Lunero #8 on: October 26, 2014, 12:53:15 AM

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Ok, thanks for clarification, I did not realize there is that big whales in NXT. If I remember right it was tried to ignore that kind of situation on IPO of FIMK, but yes if usage increases heavily forging becomes more profitable.
Whale incentivization is probably the biggest technical problem in fimk. I feel like with all the price rise and fall, there is all ready huge whales out there. Anyone could buy a ton of fimk, just to live off forging when the system grows up.

We have talked about decreasing the block reward, or increasing the time, but Dirk seems to disagree, or think its too hard or not possible.

Dirk Diggler #9 on: October 26, 2014, 12:40:54 PM

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The forging algorithm and the forging rewards are two totally separate entities. When discussing these two entities care should be taken not to confuse them.
The forging algorithm (who forges the next block) is something I don't think anyone has a problem with. It's the height of the reward that is paid to the forger of that block that causes concern, from this concern sometimes the conclusion is drawn that a change is required in who forges what block and that through this change we get to the more desired situation of a fairer distribution of those rewards. But this is not the solution.

Right now the block rewards in FIMK (I am not talking of fees here, just the added block rewards) are paid to the forger of the block. This is not entirely useless since it incentivises large holders of FIMK to get or hold more FIMK which in turn could have a positive effect on the price of FIMK in the market. Whether this is working is debatable.

Another method would be to pay block rewards to a limited set of registered participants, the pool members will receive FIMK based on a lottery where the blockchain is used as a source for determining the winning ticket. Registration would be required to prevent people from gaming the system by creating large numbers of accounts. This is however a centralized solution and not in the spirit of decentralized crypto currencies. Also one could ask what it exactly is we are rewarding the participants for. Such a scheme is not completely useless since it's purpose can be that of community building and bringing in new users.

Yet another method would be to reward those that are online, this for me seems like the most logical solution. FIMK is a distributed system and it lives as long as people host servers
or run FIMK on their desktop. Since that part is so important to FIMK survival it seems logical that the rewards go to the people who help keep FIMK alive (which means online). But now the question becomes "Who is online".

There are POS clones (can't remember which ones) who have a mechanism for this where they pay nodes that are online and have a hallmark. But those solutions are all 100% centralized solutions, the servers might run an automated script that does the payments but the owner of that server can either turn off the server or take all the funds that are reserved for rewards and walk away with that. Again not at all distributed.

To determine who is online from a crypto currency pov is something I have been pondering on for quite some time and it it is already some time ago that I believe I have found a cryptographically provable distributed method to solve this problem. Without exposing too much of the solution all I can say is that it requires the block forger to talk to it's connected peers before it forges the block.

We have talked about decreasing the block reward, or increasing the time, but Dirk seems to disagree, or think its too hard or not possible.

Decreasing the height of the reward per block is possible. What is required is a consensus from the community on this issue.
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dance #10 on: October 26, 2014, 01:23:09 PM

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What I would have done regarding FIMK distribution, is to have changed the proportion of IPO holders total capital comparing to the amount to be distributed as national income.
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abctc #11 on: October 26, 2014, 04:13:46 PM

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...
There are POS clones (can't remember which ones) who have a mechanism for this where they pay nodes that are online and have a hallmark. But those solutions are all 100% centralized solutions
- it is NSC asset, and yes, it is centralized solution.   Would be great to have decentralized solution at FIMK, but it is very difficult to solve the problem of network connectivity, especially with 30 sec block.


What I would have done regarding FIMK distribution, is to have changed the proportion of IPO holders total capital comparing to the amount to be distributed as national income.
- it is unacceptable to change the rules of the game after the start of the game. It will kill FIMK.

dance #12 on: October 26, 2014, 04:20:06 PM

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- it is unacceptable to change the rules of the game after the start of the game. It will kill FIMK.
It's not a game.
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id-entti-tentti #13 on: October 26, 2014, 07:06:36 PM

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The forging algorithm and the forging rewards are two totally separate entities. When discussing these two entities care should be taken not to confuse them.
The forging algorithm (who forges the next block) is something I don't think anyone has a problem with. It's the height of the reward that is paid to the forger of that block that causes concern, from this concern sometimes the conclusion is drawn that a change is required in who forges what block and that through this change we get to the more desired situation of a fairer distribution of those rewards. But this is not the solution.

Right now the block rewards in FIMK (I am not talking of fees here, just the added block rewards) are paid to the forger of the block. This is not entirely useless since it incentivises large holders of FIMK to get or hold more FIMK which in turn could have a positive effect on the price of FIMK in the market. Whether this is working is debatable.

Another method would be to pay block rewards to a limited set of registered participants, the pool members will receive FIMK based on a lottery where the blockchain is used as a source for determining the winning ticket. Registration would be required to prevent people from gaming the system by creating large numbers of accounts. This is however a centralized solution and not in the spirit of decentralized crypto currencies. Also one could ask what it exactly is we are rewarding the participants for. Such a scheme is not completely useless since it's purpose can be that of community building and bringing in new users.

Yet another method would be to reward those that are online, this for me seems like the most logical solution. FIMK is a distributed system and it lives as long as people host servers
or run FIMK on their desktop. Since that part is so important to FIMK survival it seems logical that the rewards go to the people who help keep FIMK alive (which means online). But now the question becomes "Who is online".

There are POS clones (can't remember which ones) who have a mechanism for this where they pay nodes that are online and have a hallmark. But those solutions are all 100% centralized solutions, the servers might run an automated script that does the payments but the owner of that server can either turn off the server or take all the funds that are reserved for rewards and walk away with that. Again not at all distributed.

To determine who is online from a crypto currency pov is something I have been pondering on for quite some time and it it is already some time ago that I believe I have found a cryptographically provable distributed method to solve this problem. Without exposing too much of the solution all I can say is that it requires the block forger to talk to it's connected peers before it forges the block.

Decreasing the height of the reward per block is possible. What is required is a consensus from the community on this issue.

Thanks Dirk. Generally I agree on the importance of decentralization, but FIMK "basic income" is already a feature that is not fully decentralized, so it could be possible and perhaps most ideal to reward "basic income" identities for online forging and sharing their processing power - if as you say that is technically possible.

If this sounds basically good for the rest of the community, what we need is a sound long term plan for combining with and/or gradually changing from rewarding IPO whales. Unless things are left unchanged for five years?
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Eliphaz Fimk #14 on: October 26, 2014, 07:26:28 PM

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Sorry to ruin the utopia but we are not currently considering change of the block reward. It has been discussed ad nauseatum and to great technical extent (probably like 50-100 pages) with Dirk in private, and it's not feasible to proceed with planning that ahead right now for both technical and community based / integrity reasons.

EDIT read id-entti-tentti in hurry, there is a point in what he says, I mean that our hands are currently so full with the new wallet and all that these plans'll be better suited to a later point in time after the basic income is well going.
« Last Edit: October 26, 2014, 07:31:44 PM by Eliphaz Fimk »