Quote from: iddo on November 30, 2012, 11:24:05 AM

Hello cunicula,

Quote from: cunicula on November 27, 2012, 12:47:17 PM

Blacklisting/heartbeats aren't really necessary. What blacklisting does is assure a minimum level of incentive for participation. (i.e. if you get blacklisted you lose say 5% *(years since last signature)*balance. Without blacklisting, then the incentives to participate come from fees. Fees probably need to be somewhat higher to make up for this. I'm not that worried about this though.

There could be rational/malicious stakeholders who always provide the voluntary signatures to avoid the demurrage fee, but would be less willing to provide the mandatory signatures. To measure the participation level of a particular stakeholder we have to use voluntary signatures, because mandatory signatures that he failed to provide won't be recorded anywhere. Therefore the benefits of blacklisting become less straightforward, even if we do the lottery only among stakeholders who provided a heartbeat (whitelist). In other words, the voluntary signatures indeed force the stakeholder to maintain a full node that's always online, but it doesn't force the stakeholder to participate in generating mandatory blocks. So we overcome the concern of "lazy" stakeholders who aren't online, but not the concern of rational/malicious stakeholders who attempt to enrich themselves by denying service until their demands are met. Assuming that the would-be lazy stakeholders are honest (i.e. accept the recommended fee price as specified by the protocol), the voluntary signatures will push the fees downwards (compared to non-blacklisting protocol). But if the would-be lazy stakeholders are rational/malicious, the voluntary signatures wouldn't help in this regard.

Regarding the simple non-blacklisting protocol. Suppose that every (say) 5th block is the PoW block that derives the winning stakeholders who should create their mandatory block, and at the end of the difficulty retarget window we measure two difficulties: the regular pure-PoW difficulty, and the difficulty of the special 5th PoW blocks (by summing up the time differences between every 5th and 7th blocks in the retarget window, where the 6th block is the stakeholders block). Now we can have a separate difficulty re-adjustment for the special 5th blocks, which means that if too many stakeholders are greedy/malicious and deny service until their demands are met, then at the next retarget window it would be easier for the miners to generate the 5th PoW block, so more potential stakeholders would get a chance to participate (by re-solving the block when there aren't willing stakeholders available), which will hopefully push the stakeholders' fees downward toward the recommended fee that's used by honest clients?

What about you idea of using mandatory fixed fees, say 0.1% fees? We could re-adjust the mandatory fixed fee at the next retarget window for example according to total txn volume (fewer total number of txns imply that we need higher fixed fee) ? This way it'd be futile for stakeholders (and miners) to demand higher fees, they could only refuse to generate blocks while not enough (high-paying) txns were broadcast. I think that you mentioned this idea in relation to bribe attacks?

I don't think you have to worry about people providing voluntary signatures only. It doesn't make any sense as a rational strategy.

If you are trying to force higher fees on people, then you want to control txn inclusion in as many blocks as possible. To do this, you refuse to sign blocks unless you are the PoS miner. Say there are 5 signatures and the fifth signer mints a PoS block. You are the minter and you have 10% of active stake to work with. To control blocks, you veto anything that doesn't make you the block miner. The base probability you are the PoS minter is 10%. The proportion of blocks you can veto is 1-(9/10)^4=34%. There will still be the other 56% of blocks that get through. For these blocks you won't be able to control anything. Going the veto route raises your effective control of block content from 10% to 10%/(10%+56%) = 15%. This would be scary if veto's were costless. However exercising a veto means giving up rewards. Previously, you earned a reward from 41% of blocks. Now you will only earn a reward from 15%. To justify this, you need to have increased fees by 2.7-fold. However you have only decreased non-controlled block space by 34%. Whether this is worthwhile or not depends on the price-elasticity of demand (defined as % change in quantity / % change in price) http://en.wikipedia.org/wiki/Price_elasticity_of_demand). For the strategy to be worthwhile, we need a price-elasticity of greater than -34%/270% = -0.125. This is not plausible. Only very cheap essential goods like salt have this characteristic. I'm pretty sure people will give up coin txns before they give up salt.

If you own more than 10%, then the math will get less attractive. However, if you own a lot you also have to think about the asset value which we haven't factored in. Presumably if fees go up, then price goes down.

This also silly because it ignores the PoW blocks, which the big source of vulnerabilities. It will be a couple of orders of magnitude cheaper to manipulate these. For this reason, I think there should be equal proportions of the two blocks rather than more PoW blocks than PoS blocks. In fact, if you want to control everything, the best way to do it is just get a lot of hashing power, drive up PoW difficulty, and then only announce PoW lottery draws which make you the PoS minter. This doesn't allow you to double-spend, however, unless people react to it, it would allow you to monopolize all the blocks. With 10% stake, you would need 10-fold greater hashing power than the rest of the network to achieve this. If we want to prevent this, we have to have multiple PoS blocks for every lottery draw.

Note: Another option is to get rid of PoW entirely and use txns as a source of a random number generator. I discuss this here: https://bitcointalk.org/index.php?topic=127954.msg1369600#msg1369600 Of course you could still use PoW to hand out free coins.