LiskUSA Followup Response to Lip21

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We thank everyone for the discussion going on around LIP 21 and improving the DPoS system. However, we believe that these following issues have not been addressed.

By having the same number of votes as active delegates, the DPoS system creates an inherent monetary cost for voting for a standby delegate.

In the case of 1 vote, if a voting account wishes to give their full support to a standby delegate, they will lose all of their potential rewards. That is a 100% loss in vote sharing rewards for supporting a standby delegate.

We use our basic economic principles already submitted and; additionally, submit Ark as a primary example of a chain that has one vote per account. You will notice that standby delegates are almost non existent.

Having the ability to automatically eject an active delegate for being down, after a reasonable amount of time, seems like a good solution to our UndeadWhale Problem.

However, a major attack method seems to be completely missed by Lightcurve. While the idea of lowering the barrier to entry is great in theory, it fails to realize that lowering the barrier to entry allows for malicious actors to attack the system. It is very unlikely that the majority of delegates will be bought up by a single entity with the idea of severely disrupting the network.

Instead, the Parasite Attack is arguably a more dangerous attack. The Parasite delegate simply buys their positions like normal. An entity such as Oliver could easily acquire 6-7 positions themselves. An exchange could get hacked, and if the Lisk are stolen, even more positions could be acquired. However, instead of not forging, they use the forged rewards to hinder the network or siphon off the resources to develop their own competing project. No amount of slashing conditions will save you from these actors.

It is likely that many were not around during the early days of Lisk when members of Ark were performing this attack. Voters were able to eventually unvote them by voting in standby delegates. Currently, the 1 vote per account suggestion has no solution for this attack.

We believe it’s a matter of poor token distribution due to the ICO, few early market participants, and a short period of low price evaluation not giving outsiders adequate time to accumulate.

Additionally, we agree with this statement by Jan: “In my opinion, the main reason is that the voting pools have by far the largest influence on the decision of who becomes delegates.” Thus, if this opinion is so strong, then we suggest focusing on solutions that affect the problem without doing damage to the average user.

The 1 vote solution seems to completely disregard the loss of value and freedom the current voters have. Instead of changing the voting dynamics, perhaps we should look at token distribution. Although, Lisk has a fairly high deflationary rate (the next reward reduction will be 33%) we could influence the distribution of tokens even more by implementing reward sharing at the protocol level. Something like 35% to even 50% would directly affect the accumulation power of the active delegates while giving more value to the average user, instead of taking power away from the user.

Let us clearly identify the problems and fix them. If large pools are the issue, let’s do something about them without penalty to the average user.

Written by Ultrafresh @ LiskUSA
In collaboration with StellarDynamic