The IOTA Foundation recently presented a research paper with a novel algorithm for improving the network’s ability to combat spam attacks and congestion. The algorithm takes elements from proof-of-work algorithms, like Bitcoin’s, and proof-of-stake algorithms, like that being developed for Ethereum.
Improving the IOTA algorithm
The paper, “Achieving Fairness in the Tangle through an Adaptive Rate Control Algorithm,” co-authored by Dr. Luigi Vigneri, the senior research scientist at the IOTA Foundation and member of the Coordicide team, proposed three main changes to the network’s algorithm:
- Each transaction requires a computer to expend resources on a proof-of-work puzzle.
- The difficulty of the puzzle increases with the number of transactions sent over a given time period.
- Senders can stake IOTA as collateral to reduce the overall difficulty of these puzzles.
The research was presented at the May IEEE International Conference on Blockchain and Cryptocurrency.
Dr. Luigi Vigneri at ICBC 2019, source: IOTA Foundation
Inspiration from other cryptocurrencies
One of the main challenges for IOTA is building a system with small, resource-constrained IoT devices in mind.
In proof-of-work, people develop specialized hardware (ASICs) solely for cryptocurrency mining. These devices are often millions, and sometimes billions, of times more efficient than general purpose computer hardware. Those leveraging ASIC technology exert a disproportionate amount of control over proof-of-work networks.
In a proof-of-stake system, centralization occurs because the “rich” have a disproportionate amount of power over the system, oftentimes allowing early-adopters to hijack the governance of a platform.
Collateral requirements for participation are not a novel concept, either. Block producers in EOS and masternodes in DASH requires hundreds of thousands of dollars worth of cryptocurrency to become a validator.