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Library > Account Management and Stake Pools in Proof of Stake Ledgers

Account Management and Stake Pools in Proof of Stake Ledgers

August/2018, IOHK


Blockchain protocols based on the Proof of Stake (PoS) paradigm are dependent on the active participation of the owners of the assets maintained in the ledger. This suggests a duality of the functionality related to assets that typifies PoS ledgers: on one hand, assets may be transferred between entities, on the other, assets need to be involved in the protocol execution as part of PoS. As a result, PoS account management should be able to offer both functionalities, something that has not been thoroughly investigated so far from a security perspective. Furthermore, it is the case that not all stakeholders may consistently take part in the protocol execution and engage in PoS. Given that this reduces security, a countermeasure is to allow stake representation, giving the stakeholders the option to delegate their “staking” rights to other participants who form “stake pools.” The idea is that stake pool leaders will be online and perform the required actions without actually owning the assets that the pool acts on behalf of. Although this is a seemingly simple solution, the inner workings of such a mechanism have yet to be fully investigated. Our work fills these gaps by thoroughly presenting all desiderata for account management and stake pools in the PoS setting. We formalize requirements and present a framework and concrete constructions over which stake pools to be implemented for PoS protocols. We introduce the first ideal functionality for a PoS wallet core, which captures the capabilities that a PoS wallet should possess and show how it can be realised based on standard cryptographic primitives. We then describe constructions for addresses and staking actions based on our framework, as well as concrete implementations of novel wallet operation modes, which allow for different levels of security and efficiency.