Proof of Activity Proposal

[iddo]

I suppose it will just readjust based on the implicit(explicit?) fraction of BTC stakes, as well as the PoW being done?

Yes, by readjusting the PoW difficulty according to how many blocks were created in a retarget window, we can achieve a predictable gap between blocks, where the new difficulty is derived both from the stakeholders' participation level and the PoW participation level.

I'm always annoyed that in one breathe people are concerned that miners will mine empty blocks, but similarly we shouldn't worry about PoA stakers to not do it.

Stakeholders shouldn't want to mine empty blocks in a malicious attack to destroy the system, as this would diminish the value of their stake. The bigger concern is closely related to the centralization/monopoly risks, i.e. miners cartel that obtains dominance and could then impose their policies (exclude transactions that don't conform with the fees that they impose, etc.). If PoW mining hardware is completely unusable for anything besides the particular cryptocurrency, then stake and PoW hardware would indeed be very similar in this regard. But ASIC/GPU can be repurposed for other uses, in particular to mine other cryptocurrencies, even as part of auto-switching centralized pool.

If we are capping value of blocks, will we have a rule that allows a single transaction block that goes over that limit? Otherwise you wouldn't be able to spend BTC at extremely large valued addresses.

Since the objective is to discourage stakeholders (or miners) from accepting low-fee transactions, I don't see any problem with value cap rule that lets the last transaction overflow. It doesn't have to be a block that includes only a single transaction, for example if the limit is 100 BTC and there are transactions of 70 BTC and 60 BTC (with high proportional fees), then you can include the 70 BTC, then also include the 60 BTC, but then you must finalize the block because 70+60=130 BTC is over the limit.

Would the cap value mean miners will just include tons of dust transactions? Or would the value cap be *in addition* to the 1MB data cap?

It's "in addition", see the paragraph that starts with "There is also a third tragedy of the commons problem" in section 2.1 in the paper. The point is that if there's only data size cap and let's say Alice wishes to send a low-value transaction and Bob wishes to send a high-value transaction, then Alice and Bob will compete for space and whoever of the two who offers the higher fee gets included. With the value cap, users who transact with higher values will pay higher fees (same proportional amount but higher in absolute terms), which is more fair. The data size cap is more controversial because it should accommodate the economy and reflect the wishes of the users. This is easier to see when you consider an extreme example, e.g. if Bitcoin allowed only 5 transactions per block now, then obviously everyone will revolt, hence similarly if the transactions volume increases substantially in the future (due to popularity) then the users will revolt if the 1MB cap remains.

Or are we hoping the size propagation penalty will naturally force this down? Would this also encourage people to split up their BTC into smaller value, increasing the UTXO set? Just random things to think about.

I failed to understand, what is a size propagation penalty? Why split up into smaller values?

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[Gyrsur]

the most important part of the paper is this:

Money supply

With pure Proof of Stake cryptocurrencies, distributing the coins to the interested parties in fair manner is
less straightforward than with PoW cryptocurrencies. For example, it is informative to observe the hardships
that Ripple runs into as it handles the initial distribution of its built-in coin [38].

With PoA, we have the benet of the PoW aspect that is incorporated into the system, which can be
used for handling the initial distribution of the coins. However, if the PoA protocol species that the block
reward subsidy is divided about equally between the miner and the N lucky stakeholders, starting from the
genesis block, then this is likely to enable the rich to get richer in an unfair manner. One alternative is to
use a pure PoW protocol until the first block reward halving after 4 years, and only then roll out the full
PoA scheme. Another alternative is to always give the entire reward subsidy to the PoW miner who solved
the block, and share the transaction fees between this miner and the N lucky stakeholders. This may imply
that users will have to pay nontrivial transaction fees starting from the genesis block, in order to incentivize
stakeholders to run full online nodes. However, it is reasonable to expect that the fees paid to stakeholders
would not be excessive. This should mean that the added incentive to hoard will be small, i.e. the fees can
be a nice added bonus if the stakeholder wishes to save the coins anyway, but if she has alternative uses for
the wealth then these fees will not be enough to make her hold.

The apportionment can be specied according to certain constants. The portion that goes to the N^th
stakeholder should be relatively big, unless perhaps if all the N lucky stakeholders must maintain the UTXO
set (see Section 3.2.2). E.g., with N = 3 the protocol can dictate that 1/2 of the reward goes the miner, 1/4
goes to the 3rd stakeholder, and 1/8 goes to each of the two other stakeholders. The apportionment can also
be dynamic, in accordance with Section 3.2.1.

to the core devs: you have an issue with the amount of full nodes and you have an issue with the centralization of hash power by pool mining. the network is one of the most essential part of Bitcoin like a payment backbone of other instituations.

this proposal could be a solution for the issues. act now!

[Nik1ab]

I read in an independent news outlet that GHash is close to be hitting the 51%.

[Gyrsur]

"Among the Litecoin devs we have come to agreement that PoA was a bad idea as it can be abused by centralization.  It will absolutely not happen with Litecoin."

https://litecointalk.org/index.php?topic=576.0

So the concept was a joke or how should this to be understandable??

what is the reason for the stop? please explain: "can be abused by centralization"

[killerstorm]

"Among the Litecoin devs we have come to agreement that PoA was a bad idea as it can be abused by centralization.  It will absolutely not happen with Litecoin."

https://litecointalk.org/index.php?topic=576.0

So the concept was a joke or how should this to be understandable??

Litecoin developers aren't the ones who have written the paper. It was coblee's idea (although the current version is very different from his), but it was just an idea, they weren't committed to implementing it.

what is the reason for the stop? please explain: "can be abused by centralization"

Litecoin's bread and butter is copying Bitcoin is some minor tweaks. They (neither developers nor users) aren't interested implementing new, experimental features. So this is understandable.

But "can be abused by centralization" is a bullshit excuse. It doesn't make sense.

PoA still can be implemented as an alt-coin. And perhaps after some testing more established alts will consider adopting it.

[Gyrsur]

to argue it makes no economic sense to do a 50+ percent attack is BS. if this concentration exist there is a chance for an abuse by a third party (e.g. a hack).

(maybe the PRoC will hack into GHash.IO and destroy Bitcoin)

EDIT: do not want to have an another shitcoin, want to have this issues fixed in Bitcoin.

[killerstorm]

to argue it makes no economic sense to do a 50+ percent attack is BS. if this concentration exist there is a chance for an abuse by a third party (e.g. a hack).

I hope this is something everyone agrees with. People who deny this are no better than AIDS denialists.

EDIT: do not want to have an another shitcoin, want to have this issues fixed in Bitcoin.

I do not like shitcoins either, but we need some chain to test this on (preferably with valuable coins, in order to observe real-world behaviours and give people incentive to try to hack it).

[Nik1ab]

to argue it makes no economic sense to do a 50+ percent attack is BS. if this concentration exist there is a chance for an abuse by a third party (e.g. a hack).

I hope this is something everyone agrees with. People who deny this are no better than AIDS denialists.

EDIT: do not want to have an another shitcoin, want to have this issues fixed in Bitcoin.

I do not like shitcoins either, but we need some chain to test this on (preferably with valuable coins, in order to observe real-world behaviours and give people incentive to try to hack it).

Litecoin would come to mind, but they said no.

[instagibbs]

I meant to ask: If there's only a value cap, that'd mean a miner could trivially blow up the blockchain in size by adding a bunch of near-zero transactions and everyone would accept it as valid.  

I'm sure it can be worked around, but would involve some sort of upper-bound cap.
 
As far as rolling out the ideas, it's hard. Something like Litecoin is perfect because it has actual value, which is the only real test of the hybrid systems, to be honest.

[Meni Rosenfeld]

I meant to ask: If there's only a value cap, that'd mean a miner could trivially blow up the blockchain in size by adding a bunch of near-zero transactions and everyone would accept it as valid.  

I'm sure it can be worked around, but would involve some sort of upper-bound cap.
 
As far as rolling out the ideas, it's hard. Something like Litecoin is perfect because it has actual value, which is the only real test of the hybrid systems, to be honest.

There won't be only a value cap. There are several costs for transactions, and the caps / hardcoded fees need to account for all of them. A value cap helps sponsor hashing, you'd also need a cap on size, and maybe also on computation.

[iddo]

I meant to ask: If there's only a value cap, that'd mean a miner could trivially blow up the blockchain in size by adding a bunch of near-zero transactions and everyone would accept it as valid.  

Not exactly, because the transaction fees policy can be such that if you wish to send a near-zero amount then you have to pay a large fee.

I attempted to give a more complete answer in the previous reply, regarding "third tragedy" paragraph in the paper. The data size cap should be aligned with the amount of compensation that the nodes who secure the network get, otherwise it would be unprofitable for them to provide this security.

[coblee]

I'm interested to see where this leads. Although it would have to be a very compelling and obvious win in order to risk changing Litecoin's PoW at this late stage of the game.

[killerstorm]

I'm interested to see where this leads. Although it would have to be a very compelling and obvious win in order to risk changing Litecoin's PoW at this late stage of the game.

I think it can be compatible with existing mining hardware. Whether it adds security or not depends on distribution of 'stake' and how much active stake there will be.

[doldgigger]

If the node which may sign the next block is determined by the network before it's signed, how to handle the cases where

* node with signing privilege refuses to sign, or

* signing node is attacked in order to prevent signing?

[dogisland]

If the node which may sign the next block is determined by the network before it's signed, how to handle the cases where

* node with signing privilege refuses to sign, or

* signing node is attacked in order to prevent signing?

It's possible more than 1 miner would solve the block at 1 time. So if the block is prevented from being signed as you mentioned above, another miner might get lucky.

The block that gets signed is the one that enters the blockchain.