Motivation

A fundamental and perpetual debate in the crypto community attempts to discern the most efficient and secure consensus protocol for block production on blockchains. The core debate centers around proof of work (PoW) versus proof of stake (PoS). The goal of any PoS scheme is to eliminate the expensive hash mining step in PoW, used to cryptographically secure data in a blockchain. Eliminating PoW can improve decentralization, vastly improve energy efficiency, and allow a greater rate of transaction processing. The difficulty is finding a PoS protocol that is at least as secure as PoW. The greater ambition is to find a PoS protocol that is far more secure than PoW in order to improve scalability, e.g., by allowing trustworthy sharding.

Several impossibility proofs in distributed computing make this goal seem daunting. In fact it is obvious there can be no single, fixed, entirely algorithmic policing solution which completely prevents independent nodes in a distributed system from gaming the system by producing blocks with transactions that advantage some parties over others. As factors change, such as markets forces and network performance, new opportunities arise for parties to profit at the expense of the majority, e.g., by censoring transactions. Therefore a successful PoS protocol must be flexible enough to continually police new attack strategies. A secure PoS protocol requires a proper incentive structure which perpetually motivates users to produce valuable blocks, to police the production of blocks which violate protocols, and to improve block production protocols in response to gaming.

To create a successful system with proper motivations, we must widen our scope and consider the circular relationships between 1) the block producers and validators, 2) the blockchain and its production protocols, and 3) the off-platform users who inject the fees which drive the system. Under the Semada platform, these three branches are called 1) the bench, 2) the forum, and 3) the public. Semada uses balanced incentives between these three branches to create a positive feedback loop which incentivizes beneficial contributions from all members.