Please describe your proposed solution.
Cardano seeks to achieve the most decentralized, secure blockchain network as the foundation for an antifragile financial operating system. To achieve this goal, it is essential that the SPOs are acting independently. If a multipool or a consortium of SPOs were to share slot leader selection information, that knowledge could be used to strategically withhold block production for the purpose of creating blockchain segments controlled by these Byzantine actors. Figure 1 shows the global block production predictions and experimental measurements. Collusion is difficult to detect because it can “hide” in the inherent uncertainty of Nakamoto proof-of-stake and result in smaller pools failing to mint their block assignments to the broader network.
Figure 1: Block Production
The SPO community needs tools and educational materials to locally monitor the accuracy of the slot leader probabilities. Local alerts are needed when the accuracy of the probabilities drops below historic trends. Furthermore, analytical tools are necessary to identify which cluster of nodes are attempting a Byzantine attack.
Photrek and its partners will develop a Risk Monitor that provides Cardano SPOs with
- A histogram of the probability forecasts of the selected slot leader;
- An accuracy metric of the forecasts based on the geometric mean of the forecasted probabilities;
- Robustness and Decisiveness metrics that indicate the degree of variability in the forecasts
- Educational resources to enhance knowledge within the SPO community regarding Byzantine attacks and how the Risk Monitor can mitigate the threat.
Figure 2 shows an example of the Risk Monitor plot. This example was of an image generator algorithm. The histogram can show the distributional character of the forecasts. The Accuracy shows the central-tendency on a log scale; the Robustness shows the outlier performance; and the Decisiveness shows the ability to forecast the correct class (slot leader).
Cardano SPOs will be able to utilize the Risk Monitor to actively track the accuracy and robustness of the slot leader forecasts. This information can provide an early warning if slot leader selection and thus block production is being manipulated via block withholding or similar network distribution based attacks. The analysis will be completed across the network nodes and for individual nodes. By developing historical records of the R-A-D metrics, alerts based on significant deviations from historical trends can be created. These alerts can for instance be used to determine whether multipool operators are withholding release of blocks in effort to increase their probability of slot leader selection.
Figure 2: Risk Monitor
<u>How we perceive the problem we are solving</u>:
The problem at hand involves ensuring accountability among SPOs based on the honest behavior outlined by the theoretical predictions in the Ouroboros Praos paper. This involves enabling real-time analysis of each party's data dissemination across the network. The introduction of a numerical risk model would empower each SPO to conduct an empirical analysis of network health, thereby swiftly identifying any Byzantine behavior.
- Another concern that needs addressing is the possibility of multiple pool operators leveraging their size to impact the network negatively. An example of this issue can be found in an article on <https://adapulse.io/multiple-stakepool-operators-are-harming-cardano/>
- Furthermore, an enhancement we are considering is the provision of an "active" local calculation mechanism for block creation probability. This feature would greatly aid in monitoring the performance of the network.
<u>Our reasons for approaching it in the way that we have</u>:
- This approach takes into account real world network behaviour instead of theoretical estimates. Nakamoto proof-of-stake allows for a larger validator set (due to being more bandwidth efficient) at the cost of short-term statistical uncertainty. This probabilistic approach coupled with a dynamically available distributed network provides a path for dishonest SPOs to accrue greater than their fair share of rewards.
- Such an effect would be small and would be more easily found by having multiple SPOs analyzing the network concurrently, in real-time
<u>Who our project will engage:</u>
- The SPO community will be the primary target for engagement within this project. The team plans to connect with the community through dedicated SPO chat groups on Telegram and Discord, as well as by hosting breakout rooms. The team will introduce the proposed solution and reach out to SPOs who express interest, with the aim of collaborating on testing and validation of the solution.
<u>How we will demonstrate or prove our impact</u>:
- The impact of this solution will be evidenced through several steps:
- A complete testnet experiment to gauge the impact on probability accuracy. This will provide an understanding of how accurate the solution works in real-world conditions.
- A demonstration of the sensitivity of the model to the accumulation of stake. This will provide insights on the model’s ability to handle changes in stake distribution and their impact on the network.
<u>Explanation of our unique solution, who will benefit, and why this should be important to Cardano</u>:
- Our solution is unique because of its localized approach to pool performance evaluation. Ouroboros is unique among proof of stake blockchains by virtue of its probabilistic nature. Local calculation of the relevant statistics for a pool are vital to understand pool performance.
- Complex model due to a combination of network topology, game theory of information propagation, and leader election process is well suited to a (multi-vectored) risk analysis.
- This comprehensive approach will benefit all participating in the network, particularly SPOs by providing a more robust and transparent understanding of network health and performance. Underscoring why this should be of significant importance to the Cardano community.
How does your proposed solution address the challenge and what benefits will this bring to the Cardano ecosystem?
This project will have a significant impact on and value for the Cardano ecosystem by
- providing a tool that promotes and ensures honest behaviour of SPO operators. This results in enhancements to the overall decentralization, trustworthiness and health of the network, thus adding value to the entire Cardano ecosystem.
The project will provide significant impact through various ways:
- By enabling empirical network analysis, it can optimize the propagation of information throughout the network, leading to enhanced efficiency and reliability.
- Helping ensure fair and honest block production which is essential for the ecosystem’s growth and strength and will attract both existing and new users to engage more deeply with the Cardano ecosystem.
- Providing real-time analysis of the likelihood that a string of events has occurred. This can be instrumental in identifying irregularities or potential issues within the system.
- Ex. what are the odds that pool A has created 10 out of the last 20 blocks?
How do you intend to measure the success of your project?
Describe, and where possible measure, the benefits from the project to the Cardano ecosystem and why the measures are realistic in your opinion.
- We will aim to have 3 SPOs compare local measurements of network health using the Risk Monitor. These measures will demonstrate to the Cardano community the feasibility of having a decentralized measure of network health.
How will the innovation affect Cardano’s productivity and growth, in both the short and the long term?
- This tool will promote honest SPO block creation behaviours through the community accountability afforded by introducing locally computed probability metrics. In the short term, this may lead to improved trust within the community, as SPOs can be better held accountable. This could result in higher engagement and active participation within the network. In the long term, this will enhance the level of decentralization within the ecosystem, thus strengthening the reputation and integrity of the Cardano network, attracting more users and developers.
The metrics you measure do not necessarily have to be KPIs, which are numerical performance indicators - you can also measure qualitative things, such as the opinions of your users.
- The Risk Monitor will be tested with existing SPOs whose feedback will be incorporated into iterative refinements to both improve functionality and facilitate understanding of the Risk Monitor metrics’ meaning and utility.
Please describe your plans to share the outputs and results of your project?
What are your plans to spread the project’s outputs over a reasonable timescale? How and with whom will you share the outputs/impact and opportunities that will occur as a result of your completed project?
- Risk monitoring tools and educational materials will be uploaded to a publicly available repository readily accessible to SPO operators.
- Photrek will host Catalyst After Town Hall meetings to discuss project results.
How do you expect to use the results generated from the project in further research and development activities?
- The metrics produced in this effort provide immediate insight into empirical vs. forecasted block production probabilities in stake pools. These form the basis for extensions such as identifying questionable parties present among multiple stake pools or identifying susceptibilities arising from network topology.
- Our SPO Risk Monitor is part of a larger effort to provide Risk Assessment services. Photrek is hosting the general service on the SingularityNET AI Marketplace: https://beta.singularitynet.io/servicedetails/org/Photrek/service/risk-aware-assessment