The document discusses the proof of stake (PoS) mechanism for cryptocurrencies, highlighting its energy efficiency and lower entry barriers compared to proof of work (PoW). It explains the importance of coin age in securing the network and determining the main chain, as well as addressing potential problems like the reduced incentive for active participation. Variations of PoS are also introduced, including PoS 2.0 and proof of stake velocity, to promote greater network involvement.

1. PROOFS ON CRYPTO
CURRENCIES
PABLO SERRANO
IVAN SANCHEZ

2. PROOF OF STAKE
• Also helps to secure the network.
• Proposed by King and Nadal in 2012
• Based on Coin Age: Combination of Amount of currency owned and the time
held.
• Coin Age is a measure in
• determining staking weight and
• Probability of a PoS coin holder winning a block.
• PoS is a Form of proof of ownership of the currency.
• Coin age can be considered a form of PoS
• PoS cannot be easily forged (key requirement of monetary systems).
• PoS block mints coins based on the consumed coin age in the coinstake
transaction.

3. BLOCK SIGNATURE & DUPLICATE STAKE
PROTOCOL
• Each block must be signed by owner to prevent replay attacks.
• Duplicate-stake protocol defends against attackers using a
single PoS to generate multiple blocks as a DoS Attack.

4. HASHING
• Input of Coinstake:
• Kernel: Required to meet certain hash target protocol.
• The hashing operation is done over a limited search space.
• Hash target that stake Kernel must meet is a target per unit
coin age (coin-day).

5. MAIN CHAIN PROTOCOL
• Protocol for determining the main chain relies on coin-age.
• Every transaction in a block contributes its consumed coin age to the
score or the block.
• Block with highest consumed coin age is the main chain

6. DIFFERENCES WITH POW
• As opposed to Proof of Work (Pow)
• Lower computational cost & more energy efficient (less
environmental costs)
• Lower entry barrier for newcomers
• Main chain is determined by total consumed coin age and not by total
work of block.
• Cost of controlling significant stake might be higher tan cost of
acquiring mining power.
• When PoW mint rate approaches 0, there is less incentive to mint
blocks. If energy consumption reaches 0, protection for PoW decays.
PoS is immune to this.

7. PROBLEMS
• First PoS eliminates competitive model that incentivized users
to participate actively (active nodes) in Network maintenance.
• Some coin holders accrued interest without contributing to
secure the network.
• Lower cost of attacks on the entire blockchain (due to total
consumed coin age main chain determinism method).
• No completely distributed, some centralized checkpoints are
needed to secure block chain.

8. OTHER VARIATIONS
• Eliminate Coin Age (PoS 2.0)
• Proof of Stake Velocity (PoSV): Reward active participants and
punish infrequent stakers (Give big reward to those who win
blocks every 2 weeks)
• Proof of Stake: Definite (PoS:D). Replaces interest based stake
reward system with a inflationary system of constant rewards.
• Ensures that a set amount of coins are issued each block.