Questions
- Can ER20 Tokens use proof of Stake? (I'm getting diverging opinions on this topic even from different quite technical people)
- How would you best design a proof of stake system?
- What are the basic variables to consider aside from amount of tokens held, time tokens are held, Interest (in %)?
Background
"Proof of Work is an economic measure to deter denial of service attacks and other service abuses such as spam on a network by requiring some work from the service requester, usually meaning processing time by a computer (Basically what Bitcoin and Ethereum currently use)." The issue is that it requires A LOT of computing power and thus energy, so it's not very efficient or environmentally friendly. (via https://en.wikipedia.org/wiki/Proof-of-work_system)
"Proof of stake (PoS) is a type of algorithm by which a cryptocurrency blockchain network aims to achieve distributed consensus. In PoS-based cryptocurrencies, such as Peercoin[1] invented by Sunny King and Scott Nadal, the creator of the next block is chosen via various combinations of random selection and wealth or age (i.e., the stake). In contrast, the algorithm of proof-of-work-based cryptocurrencies such as bitcoin uses mining; that is, the solving of computationally intensive puzzles to validate transactions and create new blocks." (via https://en.wikipedia.org/wiki/Proof-of-stake)
Personal Notes and Thoughts
- For new tokens to set up a whole proof of work infrastructure is too big of an effort
- So most tokens have been doing airdrops (for new and existing token holders) as well as other tokens have been implementing proof of stake
Other use
Some websites are even making lists of tokens that use proof of stake, which makes it look a lot like dividends that some stocks give out, or interest that other investment vehicles provide
https://www.poslist.org/ (indeed here they have a column called interest, of July 25th 2018 there are 121 coins listed in this section)
As well as there are more and more articles about the subject:
- https://coinsutra.com/proof-of-stake-cryptocurrencies/
- https://www.investinblockchain.com/best-proof-of-stake-coins/
Reading list
- Vitalik on proof of stake (back in 2016) https://medium.com/@VitalikButerin/a-proof-of-stake-design-philosophy-506585978d51
- Wikipedia on the topics https://en.wikipedia.org/wiki/Proof-of-work_system & https://en.wikipedia.org/wiki/Proof-of-stake