“Suppose it turns out that it’s impossible to have a secure proof-of-work blockchain without a block reward. Which change to Bitcoin would you be more willing to accept?”
The recent tweet by Paradigm’s research partner Dan Robinson has again brought consensus mechanism under spotlight and triggered heated debates. Opinion leaders and influencers actively participated in the discussion, one that is almost a life-and-death matter for blockchain and crypto’s fate. What was missing in the 4 voting options made available by Robinson’s hypothesis, though, is the probability of a POW + POS consensus.
https://twitter.com/danrobinson/status/1540115879773425664?s=20&t=-26QyFiRlPHw89kS55OaUw
A hybrid may sound ground-breaking, but we all know it’s something (a thought, or a concept, at least) that has already well existed since early to mid 2010s. Of all the popular replies under Robinson’s tweet, Ethereum’s co-founder Vitalik Buterin weighed in as an advocate for a hybrid mechanism, “Why not hybrid proof of stake, of the 2013-15 era designs where you have interwoven PoW and PoS blocks, so an attacker needs something like `work_share + stake_share >= 1` to do a 51% attack?”. Notably, Vitalik’s reply became the most liked tweet under the original vote.
As much as consensus attaches great importance to the ‘conventional’ world, it holds even truer for decentralized public blockchains. An efficient, fair, functional and reliable consensus is always at the core for a chain’s long-term development. The question raised by Dan Robinson on Twitter came under a backdrop of the widening concerns over Bitcoin’s continually diminishing block rewards. As the main incentive for POW mechanism, fewer block rewards further demotivate miners, which will inevitably result in higher security risks for the chain.
The DCRN’s (Decred-Next) hard fork from DCR (Decred) earlier this year represents a perfect echoing to the debates above. The hard fork was initiated by DCRN founding team, which consists of key members from Decred and other decentralized development projects, including software engineers and product managers who used to work at Google and Meta. Perhaps the hard fork would become a memorable milestone in the history of public blockchains – it won by landslide, a surprise even to the DCRN founding team. After all, DCR had once been in the club top 30 (by market value) thanks to its refreshing and almost epic consensus mechanism, which was a hybrid POW (60% reward share for validators) + POS (30% reward share for validators) consensus inherited by DCRN today.
“When DCR was first introduced, like many other OGs on this project, we were impressed by its POA (Proof of Activity) concept and innovative hybrid POW + POS consensus mechanism, it let miners and stakeholders incentivize each other,” reminisced Stephanie Lee, community manager of DCRN in an earlier AMA, “however, the change in reward structure greatly undermined DCR’s value and advantage being a hybrid consensus.”
The reward distribution on DCR used to be 60% for POW validators, and 30% for POS validators. It then aggressively reduced the POW reward share to 10%, and boosted the POS reward share to 80% in a May upgrade. This ‘update’ ultimately infuriated the-now DCRN community. “Under the current mechanism where the share of POS reward is unreasonably high, we see whales doubling up as rules enforcers, which will ultimately result in a situation of the rich get richer and pumping and dumping. A perfect case in place is the EOS community’s shrink.” Lee added.
To many who advocated for DCRN’s hard fork, time and patience were ticking as they felt the development and innovation of the DCR community had been sluggish, and that disappointed people who were passionate during the early days of DCR. “We saw little growth from the DCR community, we saw great innovations and opportunities like GameFi, NFT and Web 3.0 slipping through our fingers, and we saw DCR falling out from the top 100.” Pointed out further by Lee.
Now, the DCRN team is busily working on the development of an extendable ecology that supports a wide range of innovations, “we are utilizing EVM, sharding, OmniLayer to explore more possibilities in Web 3.0.” The DCRN token will be launched on gate.io on July 17th, 2022 at 02:00 AM (UTC) with max supply at 21 million with a daily token yield of 2880 DCRN. The incentive distribution continues the classic structure: 60% for POW, 30% for POS, and 10% for Treasury. For POW mining, DCRN uses the same algorithm as DCR. As for POS staking, users can use DCRN to purchase voting rights downloading the wallet on its official website, where the APY of POS pledge mining is shown as 2600%+.
It’s no doubt that the debate of consensus mechanism will keep going on for a while, but one thing is enduring, as what Vitalik had told in an early-day interview: “Right now, I believe that in order to succeed, a new blockchain project has to bring something genuinely new to the table, and it can’t just be a slightly better consensus algorithm.”
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