AOK Whitepaper (EN)

Bussiness Model

1. Block Reward

Unfortunately, In the existing PoS system, much compensation for verifying is on the basis of Coin Age, And theoretically this trying to distribute fair interest to provisional reward to nodes, aiming to maintain an even interest rate. Also, it does not provide a motive to maintain nodes online. In a distributed system, the greater amount of nodes, the stronger the security because trust moves from a single entity to the network itself.
To solve this problem, AOK provides a PoS 3.0 solution that maintains a compensation of 4 AOK per block and is designed to participate as an object of block compensation only when participating with nodes for more than a certain period of time. Using this way, it is possible to make a safe network and maintain inflation, intending decentralization by increasing participation as a node.

2. Coin-Age Problem

2.1. Security problem

Proof of Stake is the structure that has more probability of verifying the block by who got more coins - who have more stake. Prove coin retention and increase the probability of taking block rewards by the amount of coin held. This caused competition between people to receive more block rewards.
Coin Age is a theory that the longer the coin retention, the higher probability to discover the block. The original intention was to motivate people who retain coins. But it is not encouraged to keep connected online because compensation probability increases by just waiting for it. For this reason, there is room for a 51% attack by disconnecting for a long period and connecting it. The less amount of nodes, the easier it is to get most of the consenting blocks.
The number of coins needed to make these attacks effective could be calculated in advance.

2.2. Defend against ‘Stake grinding attack

Removing Coin Age block compensation as time passes, brings improvement in security. Thus, the decrease in the amount of node holding increases proportionally to the broken node. For example, when only ¼ stake in the network, expected compensation could be up to 5 times retention. The reality is that many ‘Coins’ do not have enough nodes, which is a great advantage for small holders and generally less than 20% of the holders. AOK judge increasing of incentive is valuable to maintain the competitiveness of node and defend “Stake Grinding Attack”.
A good analysis of the probabilities of this attack was performed in Neucoin. Neucoin's argument is that It is impossible to attack even with the use of every hashing power in the Bitcoin network. However, after a few minutes of roll-back, new users are not sure which chain to connect to the network. but the Stake system uses "checkpointing" to control the chain to attempt this work by the main developer at the center. Of course, it's not an ideal solution. Removing the Coin Age was typically a safe decision. By performing a hybrid system that checks the time server, it is able to compute drift and requires nodes to synchronize closely with normal time consensus. The addition of other random factors based on the blockchain itself may also be a consideration.

2.3. Solution

Coin Age is calculated by the amount and retention time of unused coins, a concept introduced by PeerCoin, the first PoS coins, in which the chain is registered as a block by multiplying the number of unused coins and the length of time held.
It was previously explained that an attack to save Coin Age was impossible because it is very difficult to perform a series of double expenditures because it is reset after receiving the first block reward.
However, this is not clear because the input can be split into numerous outputs, and it could give the possibility of a continuous double-spending attack, which is still a challenging problem as the attacker requires a significant amount of funding to maintain a larger share than the network. In theory, it can be considered very reasonable.
The amount of forks in systems using AOK and other popular PoS methods shows that the amount of nodes is significantly smaller, which means that there is a large weight in smaller nodes. Those who own large amounts of coins may not want to carry out this attack because they can seriously reduce the value of the coin. This concept was removed from PoS 2.0 because Coin Age is still a critical attack-enabled root and coins are issued every time a new block is created, making it essential to connect as many nodes as possible for security purposes. So, AOK is free from attack through Coin Age.
Last modified 8mo ago