Proof-of-Greed approach in the Nxt consensus

Abstract

A fundamental problem in distributed computing systems is to make the same decision on an issue. The consensus protocol describes a process to agree on some data value that is needed during computation. The work is devoted to development of the consensus algorithm based on the Nxt consensus protocol which can be implemented to blockchain systems with PoS (Proof-of-Stake). PoS consensuses based on node balances, and unlike PoW (Proof-of-Work) methods, are environmentally friendly and more energy efficient. Nowadays such types of consensuses are getting more popular. However, they remain less scrutinized than PoW. Moreover, there are some attacks and threats that cannot be completely resolved under PoS consensuses, and in particular under the Nxt. In this article we propose a modification of the Nxt protocol which solves some problems of PoS in accordance with modern requirements. The asymmetric method was used to select the best Nxt consensus parameters for decreasing of the blocktime variance. This improves the performance and reliability of the entire blockchain system eliminating the risk of disruptions due to overflowing the transaction pool. For the Nxt consensus protocol researching, the mathematical simulating model was developed using Anylogic 8.4 software. Implementation of economic leverages (tokenomics), which we called Proof-of-Greed approach, allows to prevent some types of attacks, e.g. large stake attack, and to set a fair market-based transaction fee. The using of economic mechanisms to protect distributed systems allows to prevent a number of attacks that are resistant to cryptographic methods. But at the same time, the tokenomics of the system should be strictly consistent with the protocols for the functioning of all system objects, combining them into an integrated unitary ecosystem. Also, a payback period of harvesters was investigated within Proof-of-Greed protocol. The parameters of such approach for sustained operation of a network were obtained as a result of mathematical simulating with Anylogic 8.4 software. The Proof-of-Greed approach can be implemented not only in the Nxt consensus but in some other blockchain systems based on PoS consensuses.