Week 8: Alternative Algorithms
Hello everyone, welcome back to my blog!
This week, in addition to further completing my implementation of the proof of work history algorithm, I have decided to do a deep dive into popular alternative, consensus mechanisms.
The first that I found particularly fascinating was the delegated byzantine fault tolerance algorithm. This was an algorithm that was invented to be applied within the NEO Blockchain, which operates with the utilization of two digital tokens: one, the native NEO token (similar to how the Ethereum Blockchain has ETH tokens) and two, GAS. GAS is a payout/dividend that is rewarded to block validators similar to the block rewards of proof of work and proof of stake. The Blockchain operates with the use of three roles each node can fill: a citizen, any NEO token holder, a delegate, bookkeeper nodes almost like proof of stake validators, and a speaker, which changes for each block and is a chosen delegate who proposes (but does not confirm) new blocks to the chain. A node can become a delegate if it has 1000 GAS, solid internet connection, and specific hardware specs. The algorithm’s process starts by allowing citizens to vote for delegates and then one of those delegates is chosen at random to become the speaker. The job of the speaker is then to compile the new block’s information and propose it to the remainder of the delegates. These delegates then take a vote on whether they would like to approve the proposed block, and with a two-thirds majority, a block will be added to the chain. I believe in the power of this algorithm because it encapsulates and maintains the core democratic principles of decentralized finance and Web3. Although, in practice, the current NEO Blockchain is not yet operating with the security offered by this algorithm, the concept still holds merit.
The second mechanism I found that could have potential is the proof of importance algorithm. This algorithm is an extension of the proof of stake method, because it also requires that nodes vest a certain amount of tokens in order to become validators. This is extended in PoI with the use of network theory. This essentially means there is an additional layer that attempts to measure a node’s transaction and validation behavior on chain. Over a 30 day period nodes will earn an importance score based on their behavior that will support them in validating future blocks. This behavior score considers actions like activity clusters, reputation, and transactions made through any given address, etc. I believe this could have realistic use cases because it operates with similar proxy metrics for quick and reliable verification that happens currently in centralized finance transactions across the globe.
Both of these algorithms serve as useful inspiration and ideas for the future algorithms that I will innovate.