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     2 years ago  

    Because I didn't do that much research and the consensus algorithm for Koinos is fully beyond the scope of what I'm talking about here. To be fair I did know that Koinos CLAIMS to be "proof-of-burn". You can see how this is an easy mistake to make:

    First of all, what do you need to burn tokens? Correct, you need STAKE to burn tokens. It is not a stretch to be like actually this is just a slightly different flavor of proof-of-stake or DPOS. As we can see they are already quite liberal with the claims they make in the whitepaper.

    I'm searching the whitepaper more for information on proof-of-burn, and you know what I find? Well, actually, it's what I'm not finding. Why would anyone burn stake to mint a block? What's the financial incentive to do that? Can't find it... do you know what it is? I'd love to know before I can continue this assessment further.

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    So there is a block reward

    This counts as financial incentive... but again I see very little in terms of how to stop bad actors or Sybil attack. Why wouldn't block producers be burning the exact amount of Koin they get in return from the block reward? How is this any different from letting just anyone mint a block?

    You see even after reading the whitepaper and focusing on consensus it still makes very little sense. The key components are missing:

    • What is the financial incentive?
    • How does this system bring in trustworthy block producers?
    • How do you prevent Sybil attack?

    If anyone knows the answers let me know.

    Until then I have to assume that I'm missing something.

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       2 years ago  

      financial incentive is coming from the 2% inflation. If 50% of Koin is burned this equates to a 4% APR. I expect it to be rather between 5-6% since not 50% will always be burned.

      I suppose the idea is to have as many burn pools and individual nodes which would mitigate several bad actors with large "stake" (i.e. Koin which they can burn)

      see Justinw

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       2 years ago  

      Wrote a response about Sybil attacks on my post: https://peakd.com/koinos/@justinw/rpb9qm

      tl;dr it's very similar to Bitcoin

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       2 years ago  

      Proof of Burn is a mix between PoW and PoS, but more inclined to PoS. I tend to think that PoB is like PoS where you are continuously unstaking.

      It is like Proof of Stake because:

      • You burn koins to get VHP (stake).
      • Each time you produce a block part of this VHP is converted back to Koin plus a reward (unstake + reward for block production).
      • If you don't want to run a node you can send your VHP to a mining pool (stake in a pool).
      • The more VHP you have the more blocks you can produce (same as PoS).

      It is like Proof of Work because:

      • You burn koins to get Virtual Hash Power (symbolism of investing in hardware to mine).
      • You get back Koin only when you produce blocks (in PoW you have to mine to get back the investment plus rewards).
      • Your VHP is losing value when you procude blocks (like consumption of electricity plus hardware getting obsolete)
      • You can sell your Virtual Hash Power (like selling your hardware).
      • You can send your Virtual Hash Power to a mining pool (like attaching your hardware to a PoW mining pool).
      • The more VHP you have the more blocks you can produce (like in PoW).
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