Proof of Stake and Casper Overview
- PoS is a consensus mechanism for public blockchains where an individual’s ability to mine by validating block transactions is equated to the stake they own in the network.
- PoS differs from proof of work (PoW) in that it does not require so much electricity consumption and emission.
- Casper’s goal is to implement proof of stake in Ethereum, which is still predominantly a PoW chain.
- Casper the Friendly Finality Gadget (“FFG”) is a hybrid PoW/PoS mechanism where the blockchain would grow every block with the PoW algorithm, but every 50 blocks validators assess it via PoS “checkpoint.”
- Casper the Friendly GHOST: Correct-by-Construction (“CBC”) – here protocols are partially specified in the beginning, while properties of the system can be further derived through the implementation of a safety oracle.
- Increased economic security
- Reduced risk of centralization
- Energy efficiency achieved through sharding
- Better recovery properties
- Transition from PoW
- Maximizing cost of attack
- Minimal synchronicity assumptions
- Long-range attack – a mechanism that makes a longer chain that rewrites the ledger in the attacker’s favor, often going much further back in the chain’s history.
- Nothing at stake theory – validators are expected to build on every fork because it is in their financial interest to do so; unlike in PoW, it costs nothing to validate on multiple forks – this means the validator gets the reward regardless of the outcome of the fork.
Both of these challenges are resolved via ideas from “slasher.”
- Validators are known, which allows for fault attribution.
- “Slashing conditions” help disincentivize specific actions and provide accountable safety.