S-PAY

The innovative Basis of  S-Pay Coins: Proof of Stake (PoS)

Within the proof of stake (PoS) algorithms, an inequality is created/modified depending on the credit of a user's specific PoS cryptocurrency and not on the basis of block properties or calculations. Consider a user with address A and a balance of bal(A). Widely used PoS algorithms are based on these values using the following condition:

hash(hash(Bprev); A; t) ⩽ bal(A)M/D

where,

• Bprev describes the Block that the user is currently computing
• t represents the current UTC timestamp

Unlike PoW (proof of work), the only variable that the user can change/influence is the time stamp t in the left half of the equation above. The credit of the active address is blocked by the protocol; e.g. The protocol can calculate the balance based on the deposits on this account that were not moved/transferred for one day. Alternatively, a PoS cryptocurrency may use undelivered transaction outputs, similar to Bitcoin; in this case the credit will be automatically blocked. A PoS protocol limits the possible values t can take. For example, if t is not allowed to deviate from the UTC time on the network nodes for more than 1 hour, a user cannot test more than 7200 possible values of t. Therefore compared to Proof of Work (PoW), no resource-intensive computing power is required.

Together with a valid address A and a sufficient time stamp t, the user must provide evidence of ownership to this address A. To accomplish this, the user can sign a newly generated block with his digital signature; in order to create a valid digital signature the user must own the address A private key.

The time to find a block for address A is exponentially distributed at the rate bal(A)/D. It follows that the use of Proof of Stake (PoS) is fair: the probability of producing a valid block equals the share of the user's credit in the total amount of coins in circulation. The time to find a block for the entire network is distributed at the rate ∑abal(a)/D.

Therefore, if the amount of available coins ∑abal(a) is fixed or increases at a predictable rate, the difficulty D should be known in advance:

where Tex represents the expected time between blocks. In practice, D must be adjusted based on the last blocks since not all users/ coin owners participate in block mining.