Tech Update #4 —Comparing 5ire’s SPoS with DPoS and NPoS

6 min readDec 10, 2021

Blockchain technology is a distributed ledger that is used to record all network transactions.

Decentralization is an ingrained notion in the architecture of blockchain technology. Decentralization is an important concept of blockchain technology. It means that transactions are not recorded by a central authority, but instead stored on multiple nodes throughout the network. The technique enables the verification of transactions through the use of cryptographic hash functions. Hash functions are specialized functions that return unique results for distinct inputs. The basic premise is that the record with the greatest number of nodes is most likely the least unreliable. Consensus protocols serve as the foundation for blockchain technology by assisting all nodes in the network in verifying transactions. Bitcoin’s consensus process is proof of work (PoW), which is energy and time intensive. Bitcoin transactions are verified comparatively slowly in comparison to most other cryptos after it. As a result, other consensus techniques have been suggested.

Proof of Work and Proof of Stake

The terms Proof of Work (PoW) and Proof of Stake (PoS) have been incorrectly used to refer to the consensus techniques employed by blockchains, but this does not convey the complete picture. Consensus is reached within a blockchain when all network members agree on the sequence and content of the blockchain’s blocks. Proof of work” and “proof of stake” are the two primary consensus mechanisms used by cryptocurrencies to verify new transactions and add them to the blockchain. PoW is the method for agreeing on a block author and is included in the fuller Nakamoto consensus algorithm, which also includes a chain selection algorithm (longest chain rule in Bitcoin). Similarly, PoS is a collection of rules for picking the validator set; it does not provide a chain selection rule or the mechanism by which a chain may attain finality. Historically, PoS methods have been combined with an algorithm for achieving Byzantine agreement between nodes. Tendermint, for example, is a viable Byzantine fault resistant algorithm that selects validator sets using PoS.

Proof of Stake

Proof of stake consensus was embraced by a few legitimate projects in the blockchain space, including PeerCoin and NXT. Ethereum, as of this writing uses Proof of Work, is targeting to switch to Proof of Stake by 2022.Let’s try to make sense of this example a little better. Assuming, we are miners who are responsible for validating transactions on-chain. With bitcoin, only one does the validation by computing the hash value with a specific number of leading zeros receives the assigned quantity of bitcoins. In proof of stake consensus, a validator is selected and allocated a block to work on the consensus. To begin validating, the miner must allocate a specific portion of his crypto to the process. If the miner is successful in invalidating the transaction, the prize will consist of the stake they have pledged at the time of the transaction, as well as certain transaction fees. Basically, it is a way of incentivizing good behaviour and punishing bad behaviour simultaneously. One of the drawbacks of PoS is that participation in block production is dependent on token ownership rather than computing capability. While the majority of PoS developers argue for decentralized operation with equal participation, the majority of projects ultimately offer some kind of centralized operation with a limited number of validators who have full participation rights. Due to their investment, these validators are generally seen as the wealthiest and have power over the PoS network.

5ire Sustainable Proof of Stake

Using a Sustainable proof of stake reduces the problems associated with PoS. In SPoS, the stake of each node is utilized to pick the delegates, in conjunction with randomised voting. SPoS’s consensus mechanism enables us to efficiently carry out our mission by accelerating global blockchain adoption and assisting in the achievement of UN SDG goals through a paradigm shift from for-profit to for-benefit. By incorporating sustainability and social effect into the runtime logic of the 5irechain. We guarantee that actions linked with the United Nations’ 17 Sustainable Development Goals are completed in a timely manner. As a result, we choose to accomplish these aims through the employment of a one-of-a-kind consensus mechanism. We will not employ nominated or delegated proofs of stake; rather, we will use each individual node’s stake to pick delegates and actualize randomised voting. We decided that SPoS may help us prevent network cartelisation by allowing nodes to choose validators on a per-node basis.

Delegated Proof of Stake (DPoS)

Delegates are not responsible for block generation or transaction validation in Delegated Proof-of-Stake, but they do monitor network settings such as transaction fees, block sizes, witness pay, and block intervals. While delegates are not compensated jobs, the boundaries under their purview are not anticipated to alter often. Following significant judgments, certain DPoS blockchains provide a limited window for re-electing delegates if the verdict is not agreed by their voters. Election voting is a continuous process, which means that each witness or delegate is constantly under threat of losing his or her seat to a more popular opponent. Their avoidance from malevolent activity is motivated mostly by reputational and financial damages. The majority of DPoS-based blockchains take stake size into account. The voter’s voting power is defined by the number of tokens he or she has. However, there is no restriction prohibiting consumers from voting if their investment is insufficient. The fact that every network user has the ability to vote makes DPoS the most democratic approach to blockchain consensus algorithm.

Nominated Proof of Stake

Nominated Proof-of-Stake is a powerful validator’s selection mechanism that includes high-security guarantees, fair representation of all the actors, scalability, and efficiency by design. A democratic approach where everyone can become a validator candidate or a nominator approving and backing validators. It is highly recommended for them to back up validators with a good reputation as they will be able to collect higher rewards, whether it is block production rewards or transaction fees. The higher reward for electing validators that their activities are applying to the 17 United Nations Sustainable Development Goals, thus bringing a paradigm shift from a for-profit to a for-benefit, and also validators that generate the most positive social impact by building a history of social and environmental driven donations gains more reputation thus more rewards. Moreover, electing validators that have a low reputation will only promise lower to negative economic returns.

Using the stake each node to pick delegates through random voting is at the core of 5ires’s unique sustainable proof of stake protocol. By utilizing BABE as a block production mechanism, which runs between the validator nodes and determines the authors of new blocks. It helps to assign block production slots to validators according to stake and using the 5ire’s randomness cycle.

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