What is Proof-of-Stake Leased (LPoS) Consensus?

The Synergistic Integration of LPOS Consensus Algorithm with the Waves-NG Protocol

In the core operational mechanics of the Waves network, the Leased Proof-of-Stake (LPOS) consensus algorithm plays a pivotal role. This innovative algorithm enables network participants to engage in block generation by leasing their token holdings' staking rights, thereby achieving decentralized consensus formation and maintaining network security. When LPOS is synergistically combined with the Waves-NG protocol, a remarkable synergy emerges, significantly enhancing the network's scalability and transaction processing capabilities.

Specifically, LPOS not only lowers the barrier for participating in transaction validation but also facilitates efficient resource allocation through a lease market mechanism. Concurrently, the Waves-NG protocol introduces an optimized block confirmation process that rapidly processes and confirms a large volume of transactions, enabling the network to maintain high-speed operation even under heavy loads, effectively addressing the prevalent scaling challenges faced by traditional blockchain networks. This cohesive integration ensures enhanced transaction throughput for the Waves network while preserving security, laying a solid foundation for large-scale commercial applications.

The Waves Network and Its Comprehensive Blockchain Ecosystem

In 2016, the Waves network was officially launched through a successful ICO that raised 30,000 bitcoins (worth approximately $16 million at the time), with a vision to build a comprehensive and highly practical blockchain ecosystem catering to the diverse needs of business transaction processes. This meticulously designed platform not only offers a user-friendly, low-barrier environment that makes creating custom digital currency tokens as effortless as clicking a button, but also supports direct smart contract coding, ensuring complex business logic can be executed on-chain.

One of the core components of the Waves ecosystem is its built-in decentralized exchange (DEX), which seamlessly facilitates peer-to-peer transactions, greatly streamlining the circulation and exchange of digital assets. Moreover, the system boasts high compatibility with various distributed applications (dApps), ensuring users can interact securely and conveniently, vividly demonstrating the disruptive innovation potential of blockchain technology for traditional business models.

To further enhance user experience, Waves introduced the Keeper browser plugin. This tool provides a robust security layer for web services, ensuring users' private keys remain under constant encryption protection while enabling them to smoothly perform a series of authorization operations without directly managing their keys. Thus, with its distinctive array of integrated functionalities, the Waves network is steadily emerging as a globally prominent blockchain solutions provider.

Prioritizing and Implementing On-chain Scalability in Waves

From its inception, Waves recognized that for blockchain technology to achieve widespread adoption, the paramount challenge to overcome is its scalability bottleneck. Bitcoin, as a trailblazer, has set industry standards in security, yet its capacity to process approximately 7 transactions per second (TPS) significantly hampers its global payment circulation efficiency. To break free from this constraint, the Bitcoin community introduced secondary layer solutions like the Lightning Network to enhance transaction speeds.

However, Waves has adopted a more direct and fundamental approach to addressing scalability issues. Rather than solely relying on additional layers built atop the existing blockchain, it first focuses on optimizing and upgrading the underlying chain itself. By employing the Leased Proof-of-Stake (LPOS) consensus algorithm, complemented by the Waves-NG protocol, Waves aims to fundamentally enhance the base performance of its blockchain network, enabling it to accommodate larger-scale commercial applications and potentially achieve transaction throughput far surpassing that of conventional blockchains.

Through this strategy, Waves not only attends to the immediate alleviation of performance bottlenecks but also strategically positions itself for long-term growth. It strives to construct a blockchain infrastructure that preserves decentralized security features while fulfilling the demands for fast and efficient transactions, thereby offering a more convenient and practical value transfer service to users worldwide.

Lease Proof-of-Stake (LPoS) System and Its Enhancement of Waves Network Security

Within the Waves blockchain ecosystem, the innovative Lease Proof-of-Stake (LPoS) mechanism plays a pivotal role. Unlike traditional Proof-of-Stake (PoS), LPoS enables users holding WAVES tokens to participate in network consensus without running a full node, solely through the Waves lite client. Given that the 100 million fixed-supply WAVES tokens offer no additional block rewards, block validators – colloquially known as "miners" – derive income solely from transaction fees.

In May 2017, Waves officially introduced the LPoS system, providing a convenient path for non-technical or resource-constrained users to indirectly engage in network maintenance and block generation by leasing their held WAVES tokens to mining nodes. During the lease period, users' tokens remain securely locked within their accounts, preventing transfer or trading while maintaining control at all times, with the ability to terminate the lease agreement at will.

By leasing WAVES tokens, ordinary users bolster the weight of miner nodes, thereby increasing their likelihood of discovering and validating new blocks. This not only incentivizes broader community involvement in network security but significantly enhances overall system security:

Firstly, increased use of WAVES tokens for network protection necessitates attackers to accumulate a much larger token supply to launch a 51% attack, substantially raising the attack barrier. Secondly, storing large amounts of WAVES tokens in cold wallets and leasing them out effectively reduces the risk of online storage being hacked, as these leased funds do not actually transfer to miners but instead serve as computational weight.

Thus, Waves' LPoS system fosters resource sharing and collaboration among network participants while ingeniously reinforcing the network's resilience against malicious attacks, ensuring the secure and stable operation of the blockchain.

Economic Incentives & Participant Roles in LPOS

In the Leased Proof-of-Stake (LPOS) consensus algorithm, the design of economic incentives is paramount to ensuring the stable operation of the network and active contributions from all participants. The LPOS system categorizes blockchain network participants into two primary roles: Token Holders (Tenants) and Block Producers (Forgers or Node Operators).

1. Token Holders (Tenants): These individuals possess WAVES tokens but may lack the technical expertise or resources to run a full node. Through the leasing system, such users can temporarily lock their held WAVES tokens and lease them to capable and willing Block Producers who maintain the network. In return, tenants receive a share of the transaction fees earned by Block Producers, thereby achieving asset appreciation while contributing to network security.

2. Block Producers (Forgers or Node Operators): Comprising professional teams or individuals with technical prowess and hardware infrastructure, they are responsible for validating transactions, packaging blocks, and maintaining the network's normal functioning. To increase the likelihood of generating new blocks, Node Operators must accumulate sufficient stake (i.e., leased WAVES tokens from tenants). Upon successfully generating a block, they receive a proportional share of transaction fees based on their stake weight. Additionally, to attract more token holders to lease tokens to them, Forgers must offer competitive rental distribution schemes, fostering a healthy market competition.

In summary, the LPOS consensus algorithm ingeniously employs economic incentives to establish an ecosystem that both encourages token holders to actively engage in the network consensus process and motivates professional node operators to continually optimize service quality and safeguard network security. This mechanism not only ensures the efficient operation of the blockchain but also fosters robust growth within the entire community.

Waves-NG Protocol: An Efficient Scaling Solution Based on Bitcoin-NG

In December 2017, the WAVES network underwent a significant innovation within its existing Leased Proof-of-Stake (LPOS) consensus mechanism by introducing the groundbreaking Waves-NG consensus protocol. Drawing inspiration from Cornell IT Professor Emin Gün Sirer's Bitcoin-NG proposal, this novel agreement aims to address the issues of slow transaction confirmation speeds and poor scalability prevalent in traditional blockchain systems.

Under the conventional Bitcoin protocol, miners compete to find the next block's valid hash value while temporarily holding new pending transactions in a memory pool until one miner bundles them into a new block. This approach, however, constrains the system's concurrent processing capacity, leading to lengthy transaction confirmation times.

By contrast, Bitcoin-NG introduces an innovative workflow. It predetermines a "lead miner" for the next cycle, who first generates an empty key block and then rapidly adds multiple-transaction "microblocks" to it almost in real-time. This process is akin to placing an empty cart at a checkout counter and swiftly filling it with multiple shopping bags (microblocks). Such a design dramatically enhances transaction confirmation speed, enabling transactions to be added to the blockchain in mere seconds, subject only to inherent network latency.

Waves ingeniously integrates the core principles of Bitcoin-NG with its native LPOS mechanism, resulting in the distinct Waves-NG protocol. This upgrade not only significantly boosts the transaction throughput of the WAVES network but also introduces an innovative feature called "MassTransfers." Users can execute up to 100 transfers simultaneously using MassTransfer, effectively reducing transaction fee costs. Although each MassTransfer is limited to 100 recipients, bulk address information can be imported via JSON or CSV files, facilitating large-scale payment scenarios such as token airdrops or regular payments to users leasing their tokens to mining nodes.

To substantiate the actual performance of the Waves-NG protocol, the WAVES team conducted rigorous stress tests on MainNet. In a major stress test held in October 2018, results demonstrated that the WAVES network could support over 6.1 million transactions within a 24-hour period, averaging 4,200 transactions per minute, with peak throughput reaching hundreds of transactions per second. This resoundingly confirms the ability of the Waves-NG protocol to successfully withstand high-capacity challenges while maintaining decentralization and security, achieving unprecedented scalability and transaction efficiency enhancements.

Conclusion

In summary, the Waves network has effectively enhanced blockchain technology's scalability and transaction processing efficiency by integrating the Leased Proof-of-Stake (LPOS) consensus algorithm with the innovative Waves-NG protocol. This efficient fusion not only lowers the barrier for user participation in block generation and validation, but also addresses traditional blockchain networks' scaling issues through optimized block confirmation processes.

As the Waves ecosystem continues to evolve and mature, its comprehensive blockchain solutions lay a solid foundation for global business applications, demonstrating the immense potential of blockchain technology in large-scale, high-concurrency scenarios. Looking ahead, such deep integration and ongoing technological iterations will further propel Waves towards becoming a pivotal infrastructure within the decentralized finance domain, empowering more enterprises and individuals to leverage blockchain technology for more efficient and secure value exchange.