Thread by @SoorajKSaju

#Bitcoin is the only #blockchain that offers

Dynamic participation for validator nodes in a decentralized environment

None of the PoS #blockchains can offer this

But Ouroborus Genesis will make #Cardano the first PoS #blockchain with this capability

How? Here's a Thread🧵👇

Ouroboros Genesis is a highly anticipated upgrade to the consensus protocol of #Cardano in 2022

This upgrade is designed to address the issues of costless simulation and the bootstrapping problem and mitigate the threat of long-range attacks

in a decentralized, open environment

To understand how Ouroborus Genesis will give #Cardano the same security guarantees ad #Bitcoin

We need to start from the basics

To understand this topic from a first principles perspective!

For that let's start form #Bitcoin

Bitcoin uses an immutable ledger with strong security guarantees through PoW

This provides a high level of security & enables a decentralized and secure network structure

Which allows parties to join and leave the network at will ( a.k.a. Dynamic Availability)

So, how does that work?

PoW uses computational resources, specifically the process of hashing, to produce new blocks

Meaning,

Adding a block to the Bitcoin blockchain requires using processing power

resulting in energy consumption for each block added to the chain

The difficulty of producing a chain increases with its length

making it computationally expensive to produce blocks

Meaning

Adding blocks to a blockchain requires processing power,

so a longer blockchain uses more energy, and nodes will always choose it over a shorter one.

This expense, which is in the form of electricity costs

prevents dishonest nodes from producing multiple different blocks.

As a result,

nodes will always adopt the chain with the most energy consumed

Commonly referred to as the “longest chain.”

This makes it easier for the new nodes joining the system to select the honest chain

Which in turn allows the network (validators) to join & leave the network at any given time

and keep the network secure

In short, this enables the dynamic availability of the Bitcoin network.

But PoW comes with some problems

As PoW relies on puzzle-solving, that becomes harder as more parties join the network

This leads to an ever-increasing demand for energy, which has become a major concern for the future of the network

and it also creates "Composability issues"

Composability refers to the ability of different protocols or systems to work together seamlessly

without introducing unintended consequences or breaking their intended functionality

But in the case of #Bitcoin, reliance on PoW creates composability issues

In PoW blockchains

Issues can arise when other protocols use the same cryptographic puzzle-solving process as mining

Miners can potentially try to double the value of their effort by using the same hash query for both chains

Leading to inefficiencies & security vulnerabilities

Due to these limitations of PoW

The search was on for an alternative mechanism to secure the ledger

This led to the introduction of proof-of-stake (PoS) systems, which use virtual resources (stake) to secure the network

instead of physical resources (hashing power)

PoS systems are based on the idea that

PoS systems can enhance scalability & energy efficiency while preserving security features of the ledger

by allowing parties to extend the blockchain based on the number of coins they own

Instead of relying on computing power.

Although several PoS-based proposals have been developed over time with formal security proofs

It does come with some trade-offs

In particular, these protocols can restrict the dynamic availability of participants compared to PoW-based systems

Why? let's dig a bit deeper!

Although PoS protocols are more scalable & energy efficient

They currently have some fundamental drawbacks

Among these are

▪️the nothing-at-stake / costless simulation problem

▪️long-range attacks

▪️and the Bootstrapping problem

As no physical resources are needed to produce blocks in PoS

it is possible to build an alternative history of the blockchain and create multiple competing chains at no cost

Where in PoW, where energy costs must be incurred for each competing chain.

The nothing-at-stake problem/costless simulation occurs

When a block producer evaluates the likelihood of two branches A and B, of a blockchain

and decides to work on both rather than just one

This results in the block producer having a higher expected reward and no chain containing the highest stake

Leading to the network not reaching a consensus on the canonical branch

The costless simulation then results in another problem known as long-range attacks

Here the attacker builds a long chain by forking from an earlier point in the primary blockchain

And continues to add blocks to this chain

This makes it difficult for new participants to determine which chain to support

To mitigate this, checkpoints are established along the blockchain

and any fork starting before a checkpoint is considered invalid

However, for new participants or validators who have been offline for a period of time

it can be difficult to determine the longest chain

This makes them vulnerable to joining a malicious chain

This gives rise to the “Bootstrapping Problem”

Where new validators joining the network potentially end up joining the malicious chain

increasing the network’s vulnerability to long-range attacks

So how does PoS survive?

So now let's take a look at how PoS-BFT protocols like (#Ethereum, #Algorand, etc.)

Try to solve the problem of costless simulation

In PoS BFT protocols,

the consensus is reached among the nodes running the protocol on all blocks

This eliminates the occurrence of forks

And thereby, the need to resolve disagreements

However,

in order to effectively operate the protocol must be aware of the level of participation of nodes in the network at any given time.

Because its impossible to make the network dynamically available & also know the level of participation at the same time

With PBFT; you throw away dynamic availability

On top of that #Ethereum implements measures like freezing staked coins & slashing to deter malicious activity

This disincentivizes the involvement of honest parties with smaller stakes in the network

thereby decreasing the decentralization of the #Ethereum network

So now let's take a look at how #Cardano is taking the problem of Costless Simulation

with the Ouroborus praos protocol

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Let's continue

Ouroboros Praos is the current consensus mechanism used in Cardano,

and it takes a different approach to ensure the security and integrity of the network

compared to traditional consensus mechanisms like Proof of Work (PoW) or PoS-BFT protocols

Key word: Verifiable Random Function (VRF)

A verifiable random function is a cryptographic function

that takes a series of inputs, computes them

and produces a pseudorandom output

along with a proof of authenticity that can be verified by anyone

How is it used by Praos?👇

It uses a VRF to elect a node as the slot leader for each block

Here's how it works

Before each epoch, a stake distribution snapshot is taken

The previous epoch’s randomness seed is used as input for the VRF of each node

This is used to generate a pseudo-random number.

The node with the highest number becomes the slot leader and creates the block

encrypting the number into the block header

All other nodes use their own VRF to validate the election outcome.

The protocol restricts that a slot leader cannot extend the chain with multiple blocks for the same slot

Therefore all honest parties extend their chain by at most one block per slot

This prevents malicious behaviour of slot leaders

The outcome of the slot leader election is not revealed until the block is signed or the node wins itself

At the end of each epoch,

all the numbers encrypted into the block headers are combined

and it is used to calculate the randomness seed for the next epoch

This creates an endless cycle of

▪️Stake distribution snapshot

▪️VRF generation

▪️and randomness seed calculation

that repeats throughout each epoch

The blockchain is maintained through the longest chain rule

meaning,

the slot leaders add a block to the end of the longest chain they have observed

and then broadcast it to the network

But how does Ouroboros praos resist long-range attacks?

In praos,

a form of rolling checkpointing is employed to prevent a long-range attack

This is known as the "bounded-depth longest-chain rule”

i.e., the nodes adopt a valid new chain

Only if it is longer & does not fork by more than "k" blocks from the local chain

But this comes with two main limitations

1st one

▪️The Online parties maintain a moving checkpoint

Meaning

The newly joined parties would need trusted advice

This is not desirable when it comes to decentralization (The bootstrapping problem)

2nd one

▪️There is a fixed & known lower bound on participation

Meaning

Protocol must be aware of the minimum no: of participants at any given time

Meaning,

No flexible participation

The protocol might be stalled if there is a sudden drop in the no: of validator nodes

This is most probably the reason why #Cardano stalled for ca. 7 minutes

During the event last month,

which caused a huge number of nodes (>50%) to go went offline

And when those nodes came back online

The protocol picked it from there and started producing blocks again

Because of the above mentioned limitations of the "Ouroborus praos"

#Cardano cannot currently allow dynamic participation

the ability of validators to join or leave the network in a flexible, constantly changing manner

without disrupting the functioning of the network

And as a matter of fact,

none of the PoS blockchains can allow dynamic participation

Protocols like #Algorand would stall

If there was a sudden drop in participation of more than 30% of nodes at any given time

But Ouroborus genesis can enable dynamic participation

How?👇

Ouroboros Genesis introduces the Plenitude Rule

A game-changing "chain selection solution" that solves the bootstrapping problem

by allowing the new nodes joining the network to detect the honest chain

without any trusted information

So how does it work?

Researchers have proved that,

if the majority of parties follow the protocol

Then at any sufficiently long time segment, the honest chain will be denser, especially after a fork

Meaning

Adversarial chains shortly after forking exhibit a less dense block distribution

So when multiple chains of similar length are available,

the Plenitude Rule looks for the point at which the chains diverge regarding their block distribution

It then divides the most recent past from the history of the chain into periods

And then determines which chain has the densest block distribution

after the divergence point/forking

Then the nodes in the network can adopt a chain, which also has the densest block distribution after forking

So with Ouroborus genesis

The nodes that are new to the network or have been offline for a while can re-join

and be guaranteed to download the correct version of the chain,

as long as there are enough honest parties (an assumption that #Bitcoin also makes)

Furthermore,

With Plenitude Rule "Ouroborus genesis" makes it possible to guarantee that

No one can counterfeit their way into creating a block during someone else’s slot

Making it impossible for a single node to create a fake chain

So

“The Genesis version” of the Ouroborus protocol will be the first PoS protocol

that is mathematically proven to guarantee persistence & liveness in both synchronous & semi-synchronous settings

under the assumption of an honest majority participating

Just like #Bitcoin

Tl;DR

▪️Ouroboros Genesis will make Cardano more secure than other PoS protocols

- that requires at least 2/3 honest participants (e.g. Ethereum Casper, Algorand)

▪️and is equally secure as Bitcoin

▪️But with much lower energy expenditure & better performance

Btw

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