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Proof-of-Stake algorithm: what is it?

February 19, 2022

Hello, friends! Today I’ll tell you about the main FOIL protocol: Proof-of-Stake. There are three types of it used in the network, and all of them are critically important for work.
What does Proof-of-Stake mean? It’s simple: now you don’t need to have powerful equipment to receive coins. The validator will be selected randomly. Not from the owners of great video cards, but from the owners of the control token. This lowers the entry threshold: forging, unlike mining, can be done by anyone. Staking — by everyone who has 50,000 FOIL. This contributes to decentralization.
Next. How the forging and staking process works.

Every block (transaction) needs to be confirmed in the blockchain. This is done by validators, they are supposed to receive awards. At the same time, the blocks validation is more likely to be done by the one who has more tokens. That is, a person with 100,000 FOIL is twice as likely to confirm a new block as a person with 50,000 FOIL. Accordingly, the reward for the block is likely to fall to him. There is no need for powerful video cards, ASICs or any other mining machinery. You just put tokens on staking, and they work for you.

At first glance, it’s unfair. They say, who initially has more, is in the black. And we should not forget about the “51% attack”. But every network using PoS has several ways to resist unscrupulous validators. FOIL also has them.

The decentralization problem
Many people will say, “for what, for what is all this? After all, someone with 10,000,000 FOIL will almost always earn more. Almost the entire remainder of the available coins will accumulate in his wallet. Why do we need this currency at all, why should we value it? One person, who initially had more, rakes in everything for himself?”

No, he won’t. Firstly, the validator can’t collect two blocks in a row using the network protocol. Secondly, the maximum stake on the wallet is 1,000,000 FOIL.

I also remind you that the initial FOIL Network goal is to popularize Pure NFT, a token standard ideally suited for unique authored content. Uncorrupted authorship fixation and automatic attachment of rights transfer agreements. The FOIL cryptocurrency is implemented only during the implementation of the original idea.

In addition, the decentralization problems are very solvable. In particular, there is such a protocol option as Delegated Proof of Stake (DPoS). You can use it to regulate rights. Either they are delegated by a decentralized community, which is reflected in the name of the protocol, or rights are established using statuses. The community can change the parameters of the awards distribution if something or someone affects the network stability by simply voting.

In addition, FOIL has a unique Proof of Identification (PoI) protocol. Public transactions are available only to registered and verified users, who have passed KYC/AML verification. In fact, this is an additional protection of assets from fraud. Users’ personal data also remains protected, although state regulatory authorities can join the FOIL Network and work with it.

Forging pools
If you don’t have the minimum number of tokens required for staking (50,000 FOIL), you can take part in forging. Someone creates a pool, you add your conditional 3,000 FOIL to it, and then your pool works as a full-fledged validator. Yes, the rewards distribution inside the pool is also proportional to the contribution, but now something will drop for you in any case.

At the same time, ownership of tokens is not transferred to the pool. This is the Leased Proof-of-Stake (LPoS) protocol. It says, “please take into account my tokens for blocks validation”. Thus, the entry threshold is lowered to zero. Even someone who has 0.00001 FOIL is able to take part in the network operation. In addition, there are welcome bonuses. Your conditional 150 FOIL will easily turn into 200 (maybe more). Since this moment, a little more coins will work for you, which will affect the amount of rewards.

If you want to exit the forging pool and take out funds, you can do it at any time. But it will take some time for the network to confirm the consensus. So everything is clear and understandable.

Okay, I accept your terms.

How to become a validator?
Actually, it’s not that difficult. First of all, you need to purchase the necessary minimum of tokens. It is better to buy them directly from FOIL via Telegram, Discord and other communication channels. Next, you should request the full node (Java Development Kit is required). In the future, after opening the code, anyone can become a validator by simply downloading the node.

After installing a node, a regular validator can run it and forget about it. The main thing is to keep the node turned on constantly. Approximate technical requirements — 4 gigabytes of RAM and a spacious hard disk (1-2 TB).

The forging pool creator must make an additional configuration — an SSL certificate (HTTPS) and a normal domain name are required. The certificate can be added in the node application itself. It’s better for the forging pool creator to have more RAM - 6-8 GB. Internet speed is not very critical, but still, if heavy blocks with heavy NFTs are created, it’s important.

As you can see, nothing complicated. Accumulate FOIL, install JDK, install node, launch, enjoy. But you need to keep the node turned on constantly. You can’t run it for five minutes, collect rewards and forget, because the blocks creation and validation takes place in real time.

By the way, the FOIL Network developers are already reducing the workload so that the rewards for validators do not fall for the first two years. By the decentralization moment they plan to completely disable their nodes, leaving only separate validators on the network.

I hope it has become a little clearer to you how it all works. But many people are worried about one more question…

What about ecology?
Actually, nothing. Seriously. The Proof-of-Work protocol encourages mining, which has a huge number of negative consequences. The Proof-of-Stake protocol lacks these disadvantages. See:

  • A forger, unlike a miner, is not required to buy powerful equipment. Thus, the prices of computer hardware remain within limits. No one will buy top video cards by the thousands for the sake of a mining farm.

  • Based on the previous paragraph, a huge amount of electricity will not be burnt. People, haha, will have reduced bills for electricity. There is an obvious plus for the planet — no emissions, "carbon footprints" and other concepts that different “green parties” like to use so much.

  • Based on the two previous paragraphs, it’s possible that the hype around cryptocurrencies running on the PoW protocol will decrease, or some ones will switch from PoW to PoS (Ethereum, as far as I know, are already switching). Perhaps the PoS protocol problems will be solved so well that everyone will forget about PoW like a bad dream. Anyway, this possibility leads us to a bright future, right?

  • And a bonus. Someone who invested in the power and created a parallel chain will be able to publish it with a different list of transactions. This will lead to the network’s total collapse. It is called the “51% attack”. In the case of the PoS protocol, power doesn’t affect anything, but buying 51% of coins is much more difficult than investing money in power, right? Especially in the case of FOIL, where you can redistribute rights using DPoS.
Well, now we know that FOIL has four protocols, three of which are PoS variants (classic Proof-of-Stake, Delegated Proof-of-Stake and Leased Proof-of-Stake). Nodes-validators work for network decentralization, and KYC/AML verification is for protection from scammers. Thus, security issues are solved with the help of all four protocols, especially if they work together.

With the Proof-of-Stake protocol, nodes validate blocks, not mine. Therefore, power, computer hardware, ecology, and electricity are saved. The first step into a bright future.

And in the next article, probably, the process of generating blocks will be considered in more detail. Or maybe something else from the FOIL Network features. Stay in touch!

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