Because proof-of-stake blockchains will need the use of trustworthy execution environments

Computer science innovation in the open source community has surged with the introduction of Bitcoin. Despite its apparent popularity, there are a number of drawbacks to using Bitcoin. Slow, costly, volatile and public transactions make it unsuitable for use.

Various public-facing cryptocurrency initiatives have attempted to address these issues. Solving the scalability problem has piqued the community’s attention. Only seven transactions per second are supported by Bitcoin’s proof-of-work consensus process. In addition to Ethereum 1.0, which uses the proof-of-work consensus process, Ethereum 1.0 also performs below expectations. Transaction fees suffer as a result of this. The cost of a transaction varies according to the volume of transactions taking place on the network. Fees may range from as little as a penny to as much as $50 at times.

Blockchains that use proof-of-work also use a lot of power. A typical Bitcoin mining operation uses roughly 91 terawatt-hours of power per year, according to the current data. 5.5 million people use more energy than Finland, a country of that size.

When it comes to the costs of preserving the whole financial system, there are some critics who believe that this is a necessary expense that cannot be avoided, while there is another group who believe that this cost can be eliminated by building proof of stake consensus mechanisms. Consensus proofs based on proof-of-stake provide substantially greater throughputs as well. Up to 100,000 transactions per second are being targeted by certain blockchain initiatives. Blockchains may compete with centralised payment processors like Visa if they reached this level of performance.

Using proof-of-stake is a major departure in the consensus model. Tendermint is a popular consensus architecture for proof of stake. Tendermint is used by a slew of projects, including Binance DEX, Oasis Network, Secret Network, and Provenance Blockchain. Ethereum is moving from a proof-of-work to a proof-of-stake model. There are now over 300,000 validators on the Ethereum network. The Ethereum Virtual Machine (EVM)-based blockchains are expected to follow suit as Ethereum makes the move. Non-EVM blockchains like Cardano and Solana, Algorand, Tezos, and Celo, on the other hand, employ proof-of-stake consensus instead of the EVM consensus algorithm.

Blockchains based on proof-of-stake impose additional conditions

As the use of proof-of-stake blockchains gains traction, it is critical to examine the developments in more detail.

We have stopped “mining” for one thing. Instead, “staking” is used. Putting the original blockchain currency at risk in order to earn the authority to validate transactions is known as staking. This means that the staked coin cannot be used to make payments or interact with smart contracts. Businesses paying fees to submit transactions to the blockchain are subsidising those who stake cryptocurrencies and execute transactions. Staking yields may be anything from 5% to 15%..

Proof-of-stake, on the other hand, is a consensus technique based on voting, as opposed to proof-of-work. It is a given that a validator will remain online and vote on transactions after it has staked bitcoin. Transaction processing would be halted completely if a large number of validators were down for whatever reason. A supermajority of votes must be obtained in order to add new blocks to the blockchain, which is why this occurs. Unlike proof-of-work blockchains, where miners could come and go as they pleased, and their long-term rewards would rely on the amount of work they performed while participating in the consensus process, this is a major shift. A portion of a validator’s stake is forfeited in proof-of-stake blockchains if they fail to remain online and vote on transactions.

If a miner misbehaves, for example, by attempting to split the blockchain, it ends up injuring itself in a proof-of-work network. It is a waste of time and energy to mine on top of a bad block. In proof-of-stake blockchains, this is not the case. Forks on the blockchain are really rewarded for a validator node to support both chains. This is due to the fact that the forked chain has a very limited probability of becoming the main chain in the long run.

Misconduct on the blockchain should be punished

To address this issue early on, early proof of stake (POS) blockchains depended on nodes that participated in consensus without misbehaving. However, this is a bad assumption to make in the long run, thus modern designs include a technique called “slashing.” The malicious node may be cut down if a validator node notices that another node has misbehaved, such as by voting for two blocks with the same height. Part of the cut node’s staked bitcoin is lost. The particular blockchain determines the size of a sliced cryptocurrency. The regulations of each blockchain are unique.

Slashing may occur in proof-of-stake blockchains if the correct setup is not used. Misconfigurations like as this one, where numerous validators are utilising the same key, are commonplace and may be caused by human error. Slashing is a logical consequence.

Finally, early proof-of-stake blockchains put a strict limit on the number of validators who could participate in consensus. One time during the protocol’s preparation phase and once again during the commit phase, each validator signs a block twice. There is a lot of room in the block for these signatures. It was found that blockchains based on proof-of-stake were more centrally controlled than those based on proof-of-work As a result, newer proof-of-stake blockchains are migrating to crypto systems that permit signature aggregation, which is a major concern for proponents of decentralisation. As an example, the BLS cryptosystem allows for the aggregation of signatures. For example, a BLS cryptosystem may be used to aggregate thousands of signatures such that each signature takes up the same amount of space as one signature.

How proof-of-stake blockchains may benefit from the use of trustworthy execution environments.

Proof-of-stake blockchains may benefit from trustworthy execution environments, despite the fact that the primary principle of blockchains is based on trustlessness.

Maintaining the security of validator keys over extended periods of time

Validator keys must be securely handled for proof-of-stake blockchains. Such keys should not be made public in any way, shape, or form. They should only be created and utilised in situations that can be trusted. In addition, catastrophe recovery and high availability must be ensured through trusted execution environments. In order to meet the needs of validator nodes, they must constantly be available.

Code that must be executed safely

Key management is only one aspect of today’s trusted execution environments, which are capable of so much more. Additionally, they may be used to deliver highly secure programmes. Consistent communications are critical in the case of proof of stake validators. Several proof-of-stake blockchain technologies impose economic penalties for signing messages that contradict. There must be a level of integrity in the programming that keeps tabs on the status of the blockchain and guarantees that no validators sign contradictory messages.