Blockchain Validators

Overview

There are various Consensus Models out there to secure Distributed Ledger Technology (DLT) aka Blockchain. The two most common consensus models are Proof-of-Work (PoW) and Proof-of-Stake (PoS). In this blog, we will take a look at PoS and the role of Validators in securing the DLT network.

What Is PoS in DLT?

Proof Of Stake (PoS) is one of the widely used ‘consensus model’ in Distributed Ledger Technology (DLT). PoS consensus model uses randomly selected validators to confirm transactions and create new blocks to the chain unlike Proof of Work (PoW) which uses a competitive validation method to confirm transactions and add new blocks to the blockchain.

In this PoS consensus model –

All Network nodes must stake some native coins of the Network in order to participate in the Network.
A Node is chosen by the Network Algorithm. The chosen node carries out the processing of transactions and adds the Block to the Chain.
51% of the validator nodes must validate the results of the processing the chosen node has done. In case there is no consensus met, the node is punished by taking out some staked coin from it.
There is a transaction fee charged for every transaction, which is paid to the processing node.
In order to add a malicious Block, need to have computational power of over 51% of the Network.

What Is a PoS Validator?

A blockchain validator is responsible for verifying transactions on a blockchain. Once transactions are verified, they are added to the distributed ledger. In proof of work (PoW) systems like Bitcoin, validators, also known as miners, solve complex computational math problems in order to win the right to verify transactions and receive rewards for the “work.” In proof of stake (PoS) systems like Ethereum, validators are given rewards as long as they stake the network’s coin and correctly participate in the network. This mechanism helps secure the network by imposing the need to lock up value in the network in order to participate in the consensus decisions.

Eligibility

Anyone can become a validator, there are absolutely no restrictions on who can contribute. In fact, Web3 encourages everyone to not only consume but also to contribute to the overall Blockchain which removes any middlemen. Some blockchains requires KYC for the validators and some does not.

Limit

There are two categories of chains, one that believe there should be Unlimited number of Validators and the other that believe there should be limited number of validators. The Chains with Unlimited Validators usually has a higher minimum staking requirements by the Validators. The Chains with Limited Validators usually has very nominal minimum staking requirements but that does not guarantee that your Validator will be in ‘Active’ list. You need to find Delegators to delegate enough coins to beat the last Active Validator in terms of number of coins staked.

The chains with Limited Validators, once the limit is reached set by the chain for Active Validators, the new Validators entering chain will be considered Inactive. Inactive validators does not receive blocks to be validated and signed and they won’t earn any rewards either. As said earlier, these Inactive validators needs to find Delegators who can delegate coins to beat the last Active Validator in terms of number of coins Staked to become Active Validator.

Rewards

Validators are rewarded for validating blocks and signing. Validators can also charge commission on the coins delegated to their Validator by the delegators. This is a competitive space between validators and the more staking is done on a given Validator, the more that validator will make. There is cost associated with running Validator, the primary cost is VPS, if running in Cloud. If running validator at Home Data Center, need to make sure to account for network backup, power backup, etc. in addition to the hardware costs.

Minimum Staking

The Chains with Unlimited number of Validators usually require considerable amount of minimum staking by the validator. For instance, Ethereum requires a minimum of 34 ETHs to be staked, Avalanche requires a minimum of 2000 AVAX to be staked. For the Chains with Limited number of Validators, there is hardly any minimum stake. For instance Cosmos requires a minimum stake of 1 ATOM.

Slashing

Since Validators are key for Proof-of-Stake who validate each block and sign before the blocks are permanently written to the chain, it’s important that they are AVAILABLE and ACCURATE all the time. The availability of a Validator is actively monitored by the Chain very actively and any miss of validating a Block and Signing is considered seriously. The Uptime percentage is slashed based on the average number of Blocks being missed. Malicious parties can also tamper Validator and incorrectly sign Blocks. In such malicious cases, Validators staked coins as well as the coins staked by the delegators to this particular Validator are slashed by a certain percent. Usually ‘slashing’ term is used when the coins are slashed due to unavailability or malicious activity by a Validator. There are some chains which does not believe is slashing the core coins positions by the Validators or by the delegators, rather the chain won’t pay the rewards which the Validator is supposed to receive in case of availability or malicious activities.

Technology & Skills

Generally most of the Validators are deployed on various flavors of Linux versions. So, some level of Linux proficiency is required to be technically building and managing validators. But with no or limited knowledge of Linux can also build validators if there is a proper documentation by the chain for creation and maintenance of the chain. Each chain usually has their Discord channels where there is a tremendous amount of community support provided. There is a Validator-As-A-Service offerings by some providers where you just have to pay them and they will create validator for you. But you still need to maintain once the validator is built and handed over. Web3 offers removal of middlemen - weather it is an individual or an organization. Participating in a Blockchain comes in various forms and helping chain with validating Blocks is one of them.

Page updated

Google Sites

Report abuse