What:
Similar to Proof of Work, we need a Consensus Protocol as our solution to the Consensus Problem in Blockchain. In PoW, your probability of winning is proportional to how much compute you throw at finding the next trailing 0 number.
But in PoS? Your probability is proportional to how much cryptocurrency you own.
Design Restraints:
- You canāt just make the puzzle easier the more stake you own. Attackers with drastically better compute will still be able to grind through more possibilities.
- You canāt just remove the actual blockās content. If an attacker won the lottery, then they could propose a block that rewrites history. Thus, the winner must sign their block and its contents.
Final Design:
- Coin owners stake their cryptocurrency to earn the opportunity to validate transactions. Your coin becomes collateral.
- You run a Verifiable Random Function (VRF), presumably timestamped. You encrypt it with your private key. If you won, others can decrypt it with your public key, proving itās yours.
- We split up the entire timeline into epochs. At the beginning, everyone ālocks inā their stake and VRF key.
- After, a random seed is generated for the epoch.
- We also have block density protection. If a a chain is dense with just a single userās blocks, after a long time it could grow to overtake the real one. This would meanwhile be free for the attacker.