Author Topic: POS Hoarding/Full-Nodes  (Read 1604 times)


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POS Hoarding/Full-Nodes
« on: August 10, 2014, 01:42:27 PM »
2.2.2 Hoarding
The entire PoS network depends on coin age as the scarce resource. Coin age
can only be earned by holding coins. To earn coin age at a higher rate than
others, one must hold more coins. Coin age is consumed when a coin is spent
in a transaction. PoS mining requires a user to repeatedly send coins to herself,
thus consuming his reserve of coin age in exchange for probabilistic winning
a PoS block reward without reducing the size of the holding. Coins spent in
transactions facing other users also have their coin age reset to zero but this
consumption of coin age is outside the scope of PoS mining, unquali ed for block
rewards and is considered a \waste" by most PoS stakeholders.
It now becomes clear that PoS has been designed to encourage hoarding
and discourage spending. Some PoS coins, such as Peercoin, openly declare
their philosophy to \function more as a long-term store of value than medium
of exchange." In this sense, PoS coins are created to be collectibles rather than
currencies. Scarcity is a necessary but insufficient condition for collectibles to
have value. Collectibles must also o er some form of utility such as aesthetics
and historic significance. Considering the fact that anyone can access and mod-
ify the source code of PoS coins and potentially o er an improved version, in
theory there is in nite supply. The scarcity condition doesn't hold. It remains
an unsolved puzzle where PoS coins marketed as collectibles derive their value
2.2.3 Full Nodes
PoS transforms all stakeholders into miners. All they need to do to collect
interest rate is to leave their wallets running and connected to the PoS network
and participate in the confirmation of transactions. Wallets which stay online
for extended periods of time are called full nodes. Staying online seems to be a
rather simple requirement. So it comes as quite a surprise that PoS coins tend
to suffer from insufficient number of full nodes. This seeming paradox can be
explained by two reasons.
First, coin age equals number of coins times holding period. It doesn't
matter whether a wallet is connected to the PoS network during the holding
period. An offline wallet accumulates coin age at the same rate as an online
The only difference is that an always-online wallet receives block rewards in
a fashion that's more evenly spread out over time while an occasionally-online
wallet receives block rewards in a few concentrated clusters. This difference
alone is insufficient to encourage most stakeholders to stay online.
Second, it's commonly perceived by average PoS stakeholders that running
wallets and staying connected for long periods of time significantly increases
security risk. This was a particularly grave concern when early versions of PoS
wallets didn't support wallet passphrase during mining. Since then there has
been workaround to reduce the security risk.
By considering the two reasons above, an average PoS stakeholder tend to
make the rational decision of connecting to PoS network only sporadically. The
lack of sufficient number of full nodes can result in higher risk of security breach
on PoS networks.

source:  page 5/6
« Last Edit: August 10, 2014, 02:02:57 PM by Sudo23 »
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Re: POS Hoarding/Full-Nodes
« Reply #1 on: August 12, 2014, 03:23:02 PM »
2.2.3 Exchanges

Within a PoS network exchanges represent one of the largest challenges to overcome. The strength of a PoS only network rests on reducing the barrier for people to stake their coins over a short period and guarding against exchanges Staking and selling coins on their own market.

With a very short minimum Staking period such as with Reddcoin, the potential for exchanges to Stake their coins will always exist and considering that Vericoin has around 30% of their coins on Mintpal, percautions need to be put in place to restrict the amount of coins that an exchange can Stake without affecting the average person.

In terms of minimum/maximum stake weight, the closer the minimum is to the initial transaction, the more likely it is that an exchange can receive Stake on the coins listed on their exchange. The further out the minimum Stake age is, the less likely that holders will end up Staking their coins and reduces the security and transaction speed of the network.

Exchanges also cause a very large amount of Bloat to the Blockchain, with traditional mining transactions are split up into very small transactions so during times of large volume, one large withdrawl can result in the combination of 2000-5000 transactions and a significant amount of extra data being added to the Blockchain.

In regards to the time span between the minimum and maximum stake period is the number of Blocks available to Stake. At 3/7 days Min/Max weight it would represent 5,760 Blocks available to Stake during the period which raises the barrier for those who would wish to Stake their coins and concentrates the rewards more towards the largest holders.

I believe that 7/15 day max weight will be more beneficial to our goals because with maximums put in place as to which point transactions pull from the largest and oldest transactions, as well as strong minimum fees per transaction and minimum signature operations, it would reduce the amount of potentially Staked coins from a large, high volume wallet.

Fees are very under utilized in Cryptocurrency and in Proof of Stake it becomes an added reward to each Block so the minimum fee charged should be high enough that it becomes an incentive to Stake as frequently as possible in order to receive a larger portion of the fees collected through transactions in addition to the amount received through Stake.

I have set the Stake weight at 7/15 days because not everyone will be capable to leave their wallets online 24/7 and set up wallets on virtual private servers. An 8 day window in order to Stake your Coins without receiving any kind of penalty creates a situation where you can be semi-active and open your wallet once a week to Stake or spread out your Blocks over the period in order to receive more coins from transaction fees.

We should make allowances both for holders that do not want to keep their wallets open 24/7 but still heavily reward those that do in order to promote the use and development of private wallets. This is something that the community can foster with new ways of reducing the barrier of entry for hosting and maintaining full nodes and working together to make changes to the ways the network pays out it's rewards.

Fees should not be seen as something that is a hinderance because in a PoS only network, all coins generated from fees go to other holders so for long-term investors it is more positive to have higher fees because it limits transactions.

In terms of the flow of money we face a similar paradox because the holders would want to build their blocks in order to Stake in the most effective way and also be charged Fees from combining and moving around their blocks in order to receive the highest amount of Stake and Fees.

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