How does a mix between Proof of Work/Stake work? (Peercoin)

Question

I think I understand Proof of Stake and Proof of Work from a conceptual point now. For themselves both are good ideas for sure, but how would a crypto currency like Peercoin (PPC) combine both of them? I mean, when active clients are waiting for the stake and they are contesting against others, there are also at the same time the normal miners using Proof of Work, calculating hashes. How is it then decided who will actuallly create and publish the next block? Some kind of prioritisation must be built into the currency. But then again, when some Proof of Work is done the block will have the threshold included for calculating the next hash. What is to be included by Proof of Stake clients?

I really hope to get how that connection works, that would be brilliant if someone could explain.

Thanks

Answer 1

I am not an expert on Peercoin, but a hybrid consensus model of Proof-of-work (PoW) and Proof-of-Stake (PoS) already exists with Decred (DCR), and I know a couple of things about it.

Differences between PoW & PoS:

• PoW needs miners who use mining hardware to find blocks and verify new transactions sent to the network.
• PoS needs stakeholders who stake/lock up coins to validate blocks already mined by the miners. The stakers can vote to invalidate blocks created unfavourable PoW-mining behaviour, like mining empty blocks.

Similarities between PoW & Pos:

• Both PoW- and PoS-miners have voting power to create consensus of code changes on the blockchain.

• Both PoW- and PoS-miners gain block rewards or a percentage of the reward.

• Both PoW- and PoS-miners can use mining pools for a more consistent and stable flow of funds.

• Both PoW- and PoS-mining are methods of making the network more secure against attacks.

Decred PoS ticket system (simplified):

• Tickets have a price. e.g: 100 DCR. (see https://dcrstats.com for current ticket price.) This amount varies depending on how many tickets are are bought in total on the network. When you buy a ticket, the amount is staked/locked up and is still in your ownership.

• After a period of time (from 28 days to 142 days), if the ticket has successfully vote, then the DCR are sent back to your wallet + a portion of the block reward. This reward amount varies depends on many factors, and can be everything from 10-30% reward per year.

• Decred is developing ticket-splitting pools so stakers wouldn't need the whole ticket price to begin staking.

I looked up PeerCoin (PPC) Staking/Minting

• Staking PeerCoin is done by having the coins stay in your synced wallet. This means you are running a PeerCoin node, and this will reward you ~1% per year. This is called 'Minting'. (Read https://peercoin.net/minting for more info.) I didn't find many technical details in the Whitepaper of PPC.

I hope this clarifies some things about PoW/PoS Hybrid Consensus System, and I'm sorry I can't provide more specific info about PeerCoin.

Answer 2

According to the Peercoin whitepaper that was published (you can find a copy here),

The block chain with highest total consumed coin age is chosen as main chain.

In Bitcoin, the block with the maximum proof-of-work is selected to form the longest chain. In Peercoin, the block with the maximum trust is the one that will be added to the main chain. In case the block is validated with Proof of Stake the block trust is: 2^256/(target + 1). In case the block is validated with Proof of Work, the block trust is 1. Thus PoS wins over PoW in case of conflict. The code can be found on GitHub here:

CBigNum GetBlockTrust() const
{
    CBigNum bnTarget;
    bnTarget.SetCompact(nBits);
    if (bnTarget <= 0)
        return 0;
    return (IsProofOfStake()? (CBigNum(1)<<256) / (bnTarget+1) : 1);
}

Block "chain trust" is defined by adding new block "block trust" to prev block "chain trust". Peercoin chooses the chain with the best "chain trust".