【ANN】ælf: Specialization Does Not Mean Centralization

ælf: Specialization Does Not Mean Centralization

— Why we choose to categorize nodes and adopt DPoS

“…the longer we can delay the GPU arms race, the more mature the OpenCL libraries get, and the more people will have OpenCL compatible video cards…Maybe my effort to maintain GPU innocence is running out of time. It’s worked out so far.”, said Satoshi in his reply to Laszlo Hanecz, the man responsible for Pizza Day.

Specialization

Satoshi did foresee the evolution in mining gear. As Bitcoin gains more recognition, distributed Proof of Work (POW) ledger-nodes have been dramatically declining, and are being replaced by mining pools. These pools function as an upgraded specialized ledger system, because together they can ensure a stable speed of block formation. Demand for high-performance mining chips were also on the rise. This triggered a transition from CPUs to GPUs, then to the birth of ASIC, setting a very high entry barrier for common people to mine bitcoins.

When Bitcoin becomes even more difficult to mine, the correlation between mining power and Bitcoin market price is quite obvious — the more specialized POW becomes, the higher Bitcoin price will be.
But, the debates do not end here. People began to reconsider if POW is the best way to reach consensus, because it wastes power and energy and must be sustained by expensive mining chips. POS, on the other hand, seems to be a promising alternative. Common people can easily hop on the network simply by buying and trading coins on the market, making it more like trades of equities. Besides, it is environmental-friendly. But one problem remains unsolved — essentially, both POW and POS are designed as a game with money. In fact, people reach a consensus through POM (Proof of Money).

Decentralization

The key issue here is about the distribution of the resources/ Money. Ripple and BTS are two good examples. Ripple uses a fully distributed consensus, through which transactions are circulated among servers on the network. Only transactions that agreed upon by a “supermajority” of peers are considered valid. BitShares elects witnesses to validate and apply the updated database in proper order and keep it consistent and universally agreed upon. Their DPoS is used to settle the order of which updates should be applied. Similarly, ælf is trying to arrange resources as distributed as possible by giving the duty of keeping the network in order to various influential nodes, so that everyone can benefit from the dividend of network upgrading.

First, the efficiency of the whole network is guaranteed. While ælf distributes the computing power to a variety of nodes, it keeps the specialization of the ledgers. This increases the cost for network maintenance and threshold of being a ledger, but increases the speed of block formation and keeps the process stable as well. Each time delegates produce a block, they are paid for their services, and the rate of the payment are settled by all delegates (to be discussed later). Those failing to keep efficiency will be voted out in the future.

Second, the benefit of the network will be shared. Those qualified delegates constitutes the robustness of the ælf system. They will also hand out bonus to the stakeholders at a certain rate. Thus all stakeholders are incentivized to choose proper delegates to provide services for ælf, keeping the system healthy, for instance, scaling.

Third, decentralization is the goal. It seems the mining power has been concentrated within those delegates. But the truth is quite the opposite.

BTC has mining pools, where every miner is equal. ASIC is the only prerequisite of being a miner. This is decentralized indeed, but only exist within the specialized zone. ælf chooses POS delegates to do the work based on their capability through election by all stakeholders. So in general, every node is able to be a ledger because they can leverage the stake they are holding in ælf system. DPoS resolves consensus issues in a fair and democratic way. This is the decentralization ælf really wants to reach.

Among all the difficulties lying ahead, the key issue for this design is how to distribute the tokens. We will keep updating on our plans and technical details.

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