[Research] DFINITY - a16z

Executive Summary

Trust between humans is difficult to scale, which has led to users to rely on centralized, data-harvesting web platforms like Google, Facebook, and Twitter. Crypto networks offer a potential alternative as their consensus mechanisms reinforce trust within the rules of the network. As a result, crypto networks can be owned and operated by their respective communities of users and developers instead of centralized intermediaries.

There are multiple approaches to achieving consensus within a crypto network. One popular method is to require miners in the network to execute every computation, otherwise known as Proof-of-Work (Pow). An alternative is for participants to select a group of delegates to execute computations, an effort commonly used in delegated Proof-of-Stake (DPoS). Both approaches exhibit limitations in terms of scalability and robustness, respectively.

DFINITY is a project that is aiming to build a new internet backbone to support the next generation of trust-minimized applications and autonomous programs (i.e. smart contracts). As part of this effort, the project has proposed a new consensus model (an upgraded version of Proof-of-Stake (PoS)) that attempts “to strike the right balance” between mass computation (PoW) and vote delegation (DPoS). Like DPoS, the next DFINITY block is determined by a small subset of miners selected by the network. But, instead of a human selection process, the miner subset is determined by a random number generator that is built into the base protocol. This random number generator (dubbed the “Random Beacon”) relies on cryptographic schemes, such as Boneh-Lynn-Shacham (BLS) signatures, to ensure outputs cannot be predicted or exploited.

The delegation of computation responsibilities to a small group of miners theoretically improves network performance by reducing both execution costs and transaction latency. Moreover, the removal of a human voting process may eliminate the common problems seen in PoS or DPoS models, like voter manipulation (i.e. cartels) or low voter participation.