Reward Mechanism in Enecuum Trinity Consensus Algorithm
Blockchain has emerged as a technology for secure decentralized transaction ledgers with a broad range applications based on data sharing in distrubuted untrusted environment. The consensus algorithm ensures the integrity and security of transactions in a distributed network where some of its nodes could be uncertain or even malicious. Enecuum Platform is based on Trinity consensus algorithm which combines Proof of Work (PoW), Proof of Stake (PoS), and Proof of Activity (PoA) mining algorithms. This hybrid approach aims to overcome inbuilt architectural limitations of blockchain that have compromises in security, speed, and scalability.
The PoW mining mechanism is about solving of complex mathematical puzzle to determine who is capable to add next transaction block to the distributed ledger ant profit from the monetary compensation associated with it called reward. The PoW-based consensus algorithms have inbuilt architectural limitations that compromise security, speed, and scalability that and lead to high energy consumption and longer processing time of all transactions. Additionally, with the help of specific mining hardware which solves the puzzles more efficiently than a vast majority of ordinary users’ computation power the whole system could fall under the influence of few big players and becomes more centralized.
This facts break down the main blockchain priviledges — anonymity and decentralization and go against the will of blockchain creators. Enecuum Platform utilizes several solutions, helping to overcome the existing protocol design limitations
This, in turn, is to stimulate miners’ activity and create conditions beneficial for implementation of microtransaction services. Enecuum is also mining resistable and based on stronger dynamic cryptographic protocols. Second, Proof of Stake mining mechanism, where a consensus leader (or miner) is chosen randomly with a probability that is proportional to owned coins to add a new transaction block to the distributed ledger. Third, Proof of Activity is our solution to the problem of decentralization is to stimulate users to adopt a vast landscape of their devices (like smartphones, tablets, smartwatches and etc) that able to share computing, storage or some other resources.
So, we offer a blockchain of tomorrow that also utilizes the capabilities of smaller devices that provide a lot of computation. Enecuum platform is based on PoA algorithm that combines PoW and PoS. This hybrid provides a high degree of network decentralization, while significantly increasing both the network security level and its execution speed. The workload on the Enecuum system will increase as the number of users on the Eneecuum platform grows, and decentralized applications are developed on top of the Enecuum blockchain.
By default, the mining reward is distributed between the participants as follows: PoW — 10%, PoS — 25%, PoA — 65%. Later this proportion could be changed taking into account market situation. The key if rewarding mechanism that is responsible for reward sharing. Doing away with fixed algorithms allows for more flexibility and market-oriented behavior. Reward sharing between participant nodes is a typical problem of cooperative game theory which focuses on predicting which coalitions will form, the joint actions that groups take and the resulting collective payoffs.
In our setting we use the following assumptions. All agents are divided into three types — PoW, PoS, PoA with desired reward proportions. Incoming users significantly that break the balance would be truncated. Let’s denote Ai — reward of type i agents, Pi — unit cost of type i agents, Wi — average processing power of type i agents, Ri — theoretical percentage of type i agents. Than reward for every agents type will be counted by the formula
Ai = (Pi * Wi * Ri / (Σ Pi * Wi * Ri)).
The main question is what are the actual proportions should be corrected during the game. Also our reward mechanism should stimulate agents to correspond desired proportions. We propose a certain reward distribution mechanism and make a computer simulation of it.
where alpha_i — reward of type i agents, epsilon_1, epsilon_1 — structural constants characterizing the speed of correction procedure, Ai — theoretical reward of type i agents, r_i — actual proportions of type i agents, R_i — actual proportions of type i agents.
We have sketched the main points of Enecuum Platform design that overcome main blockchain limitations by using the best practices of hybridization and utilizing of small devices. We are confident that Enecuum provides a road to a fundamentally new road to blockchain of tomorrow and will allow a full realization of all the advantages of the distributed registry technology in everyday life.