Cartesi is a layer-2 platform for the development and deployment of scalable decentralized applications. It provides a bridge between Linux and blockchains like Ethereum, allowing developers to build their dApps off-chain in a familiar Linux environment, without compromising on-chain decentralization and security.
Whether you’re interested in Cartesi’s tech stack as a developer or a user, there are a few things to know about the PoS system it’s pioneered. Cartesi is doing things a little differently from other projects – and for good reason.
ZERO ASSUMPTIONS STAKING
A popular solution is to mint new tokens and distribute them to stakers. Stakers gain extra tokens, and the resulting inflation punishes non-participants. A balance is required, however, between setting an appropriate reward to achieve target participation and avoiding excessively high inflation rates. Unfortunately, existing solutions result in the following issues:
- Strong assumptions about users’ risk tolerance are required;
- Users struggle to calculate staking rewards as it depends on the total funds staked;
- The one-size-fits-all approach does not cater to different preferences;
- It is hard to determine a balanced inflation target.
Cartesi provides an alternative “zero assumptions staking” system based on a novel mechanism called Staking Rights.
SOLVING PROOF-OF-STAKE ISSUES WITH STAKING RIGHTS
New Staking Rights can then be acquired through periodic auctions of optional lengths and give the owner rights to execute rewarded mining tasks until their expiration date and so on. Without Staking Rights, operators cannot get selected in the lottery that chooses the node that will generate the next block.
Cartesi Staking Rights provide three incentives, provided the owner remains active on the network:
- Staking Rights CTSI value on cycle expiry;
- Mining Reserve rewards;
- Fees paid by Cartesi Side Chain users.
Staking Rights always have a final value of 1 CTSI on expiration. When users buy a Staking Right for less than 1 CTSI, the difference is proportional to their perceived opportunity of the Staking Right. In that case, the difference is minted and locked in staking together with the price paid, totaling 1 CTSI staked per Staking Right sold.
This system means that users know exactly how much mining income they will make from their staked tokens, independent of how many Staking Rights get sold or how many other stakers exist.
Finally, Staking Rights guarantee a maximum cap on inflation to protect users by dynamically controlling the auction reserve price and the number of issued tokens at varying participation rates.
In the long run, mining rewards should be close to zero, and inflation should no longer be necessary to maintain the infrastructure since network fees become more relevant as the project evolves and the usage increases.
Cartesi Core infrastructure comprises Cartesi Nodes and Cartesi Machines to improve computational scalability alongside the Cartesi Side Chain for data availability.
The Cartesi Side Chain is powered by Node Operators and addresses the data availability issue of layer-2 solutions when parties may drop offline. dApps can use the proof-of-stake solution to store data off-chain temporarily, with the side chain hashes serving as receipts that can later be verified by the respective blockchain.
Miners with the highest staked collateral are more likely to be selected to generate the next block, receiving the block rewards and the fees paid by users adding data to the side chain.
DRIVING THE CARTESI NETWORK FORWARD
The advantage brought by the Staking Rights system is in maximizing participation while limiting inflation and allowing participants to express their economic preferences. Cartesi’s team is confident that it’s zero assumptions staking makes for a fairer and more secure PoS framework. As more developers release dApps supported by Cartesi’s side chain, the theory underpinning zero assumptions staking will be proven in a live environment.