Delayed Proof of Work (dPoW): The Solution to Blockchain Foundational Security Issues

Introduction

Delayed Proof of Work (dPoW) is a security protocol developed by Komodo, an open-source technology provider. This security mechanism builds upon Proof of Work (PoW), which is the most advanced security protocol within the blockchain ecosystem, as evidenced by its application in highly secure networks such as Bitcoin and Litecoin.

To grasp the significance and core principles of delayed Proof of Work (dPoW), one must first understand the workings of Proof of Work (PoW) and the reasons behind its recognition as the foremost method for safeguarding decentralized blockchains. Additionally, a thorough examination of the drawbacks and constraints associated with Proof of Work as a security approach is necessary to fully appreciate the rationale behind introducing delayed Proof of Work (dPoW) and the advantages it offers.

Understanding Delayed Proof of Work (dPoW)

Source: GitBook

Delayed Proof of Work (dPoW) is a secondary security consensus mechanism designed to enhance the conventional Proof of Work mechanism employed by several blockchains, including notable examples like Bitcoin.

dPoW is designed to safeguard the blockchain against 51% attacks that pose a threat to the network’s integrity. It is achieved by integrating the hash rate of an external Proof of Work (PoW) network into the existing consensus mechanism of another network with a lower hash rate, making it harder economically to attack the network.

Komodo is the first blockchain platform to introduce the use of Delayed Proof of Work as a consensus mechanism. To learn more, check out our previous article on Delayed Proof of Work. The current article takes a closer look at the technical aspect of DPoW.

A Foundational Discussion of Blockchain Security

The strength of blockchain lies in its rigid security measures, a fundamental aspect that supports its decentralized structure.

Blockchain employs cryptographic methods to safeguard transactions and uphold an immutable ledger. However, a critical factor in ensuring blockchain security is its consensus mechanism. And to thoroughly discuss blockchain security, it is crucial to have a clear understanding of consensus mechanisms.

What is a Consensus Mechanism?

Source: C# Corner

Blockchain operates as a decentralized peer-to-peer system that requires decisions to be made without a central leader or authoritative figure. The key to achieving this lies in the “Consensus Mechanism.”

Unlike centralized systems, where a central administrator oversees database management and updates, decentralized systems distribute this responsibility among multiple nodes. These nodes must collectively reach a concession, agreeing on the validity of transactions—hence the term “consensus.”

The need for consensus arises from blockchain independence on a single source of truth. The consensus mechanism ensures that all nodes agree on the legitimacy of a transaction. Once this transaction is approved by all the nodes, it will then be recorded on the blockchain.

Blockchain networks employ various consensus, all serving the common purpose of ensuring the accuracy and honesty of records. Among the most prevalent options are the Proof of Work and Proof of Stake consensus mechanisms.

The Proof of Work (PoW) Consensus Mechanism

Source: SpringerLink — An analysis of how the Proof of Work mechanism operates

Proof of Work operates as an algorithm or a system that demands significant computational effort to deter or eliminate fraudulent users of computing power. Within this system, transaction data is stored in blocks. To validate a transaction, one has to solve a complex mathematical problem linked to each block. This process commonly referred to as “mining” is usually carried out by powerful computers. The miner who first successfully solves the problem receives a cryptocurrency reward.

The implementation of Proof of Work serves as a means to ensure a consistent database across a blockchain network. Cryptocurrencies like Bitcoin and Litecoin rely on the Proof of Work mechanism. However, its greatest limitation is the high computational power required to mine blocks.

When it was introduced in 2009, Proof of Work was specifically designed to address the issue of Double Spending.

What is Double Spending?

Source: Bitpanda — The double spend problem and how Bitcoin protocol addresses it

The “Double Spend” problem refers to the ability of computers to endlessly duplicate information. This issue is particularly relevant when dealing with financial value, which involves recording the owner, the time of ownership, and the wallet where the value is stored. It is crucial that when transferring financial value from Person A to Person B, Person A cannot duplicate the money and send it to Person C.

The Proof of Work consensus algorithm was crafted to address the double-spend challenge. In the Bitcoin network, miners execute proof of work each time a new block is added to the blockchain. In order to add a new block to the chain of blocks, miners all over the world would need to engage in a random guessing game to find the block password for verification.

This password is unpredictable and can only be guessed. To crack this difficult password, the consensus mechanism forces miners to compete for the right to mine a new valid block. Therefore in a PoW network, a miner cannot immediately create a new valid block and claim a reward; they must compete by performing the necessary work first. This competitive process is what led to the title of the Bitcoin protocol’s consensus mechanism, Proof of Work (PoW).

Features of the PoW Consensus Mechanism

Source: Investopedia — The features of the PoW network and how it verifies transactions on the blockchain network

• A central feature of the Proof of Work (PoW) mechanism is its emphasis on security. This system is incorporated into cryptocurrency projects with the primary goal of providing a dependable, secure, permanent, fair, and transparent framework that establishes consensus based on participants’ contributions within the network. As of now, Proof of Work stands out as the most secure consensus mechanism in the blockchain ecosystem.
• In the context of Proof of Work, any misbehavior by a miner may lead to being barred from attempting to add new blocks in the future. Moreover, it is highly challenging for a miner to attack the PoW system. For instance, attempting to create fraudulent transactions would necessitate that a miner control over 51% of the network’s power, equivalent to hundreds of billions of dollars in hardware today. And this is practically impossible.
• Within the Proof of Work mechanism, miners disseminate transaction details when adding new blocks to the network. Subsequently, other nodes in the network independently verify the transaction to ensure that the assets being transferred have not been double-spent.

These features represent just a few of the contributions that the Proof of Work mechanism has made to the Bitcoin network. Nevertheless, despite being acknowledged as the most secure mechanism in the blockchain space, it is not without its drawbacks, which we will delve into later in this article.

What is Delayed Proof of Work (dPoW)?

The Delayed Proof of Work (dPoW) is a consensus mechanism innovated by Komodo to address inherent challenges in the Proof of Work network. It is an enhanced version of the PoW consensus mechanism that leverages the hash power of the Bitcoin blockchain to elevate its network security. This advancement not only fortifies Komodo’s own network but also extends its protective capabilities to any third-party chain participating in the Komodo ecosystem in the future.

It is important to note that dPoW is not confined to a specific network; it can be implemented for any project that wants to develop an independent blockchain using a UTXO model.

How Does dPoW Work?

Let’s consider Komodo as a case study.

Source: FPX Russia on X App — A detailed analysis of how the Komodo Security Service protects against 51% attacks

Komodo developed and implemented the dPoW security mechanism into the code of Zcash(ZEC), a cryptocurrency emphasizing user privacy and anonymity. The integration of dPoW empowers Zcash to leverage both zero-knowledge privacy and heightened network security, capitalizing on the potent hash rate of the Bitcoin blockchain.

Every ten minutes, the Komodo system takes a snapshot of its own blockchain. The snapshot would then be written into a block on the Bitcoin’s network through a process referred to as notarization.

Notarization occurs when information is recorded and secured by transferring it from one blockchain to another with a resilient security infrastructure. Hence, when a snapshot of the Komodo blockchain is captured, a comprehensive backup of the entire Komodo system will be created and preserved within the Bitcoin blockchain.

In a technical sense, the notary nodes elected by the community in Komodo engage in an activity where they record a block hash from each blockchain protected by dPoW onto the Komodo ledger. This process is achieved by executing a transaction on the Komodo blockchain. The notary nodes use the OP_RETURN command, a special scripting opcode found in Bitcoin and its derivatives, to store a single block hash on the Komodo blockchain. The stored block hash serves as a reference or proof of the state of the protected blockchains at a specific point in time.

The notary nodes select a block hash that is ten minutes old to ensure there is a unanimous agreement within the entire network that a block is still valid. In the dPoW system of Komodo, although each blockchain network independently reaches a consensus for every block, the notary nodes do not directly participate in the consensus process. Instead, they simply record a block hash from an already mined block.

Source: Steemit — A detailed description of how the dPoW functions

Following the recording of block hashes from various Komodo chains, the notary nodes would proceed to write a block hash from the Komodo blockchain onto the Bitcoin ledger. In order to perform this activity, a Bitcoin transaction is executed, and the OP_RETURN command is employed to integrate the relevant data into a block on the Bitcoin chain.

After the notarization process to Bitcoin is completed, the notary nodes in Komodo transfer the block data from the Bitcoin chain back to the blockchain of every other protected chain within the Komodo system. Following this step, the network becomes resistant to any attempts to modify or reorganize blocks that have undergone notarization.

This process endows the Komodo system with resilience against attacks, enabling it to reconstruct itself even if the chosen PoW network were to face adversities.

The Difference Between PoW and dPoW

The Proof of Work algorithm is widely acknowledged as the most secure network within the blockchain ecosystem. Its structure plays a significant role in deterring potential attacks, including Distributed Denial of Service attacks (DDoS). Although the production of Proof of Work involves substantial costs, its verification process is straightforward, as explained in the mining process described earlier.

The robust security inherent in the Proof of Work framework stems from the considerable financial investment and computational power associated with the mining process. PoW relies exclusively on network consensus for transaction validation.

However, these very attributes also pose a disadvantage to the PoW consensus algorithm. The security of PoW is directly correlated with the amount of computational power dedicated to it. This means that smaller blockchain networks are inherently less secure than their larger counterparts.

In contrast to PoW, dPoW serves a different purpose—it is not employed to reach consensus on new blocks, and therefore, it is not classified as a consensus algorithm. Rather, it functions as a security algorithm. Once a dPoW network undergoes notarization, it becomes resistant to any attempts at modifying or reorganizing blocks. This characteristic significantly enhances its security, making it more resilient against 51% attacks and Genesis attacks.

Within the delayed Proof of Work consensus mechanism, there is a notable feature that relates to transaction validation. Unlike regular PoW networks, where the Longest Chain Rule is a standard for confirming transactions, dPoW does not apply this rule to transactions older than the most recent “backup” of the blockchain network. Therefore, in the event of conflicts, the dPoW consensus mechanism does not rely on the Longest Chain Rule; instead, it references the backups stored in the chosen PoW blockchain to accurately ascertain the transaction history. This approach introduces an additional layer of security and reliability to transaction validation within the blockchain network.

To compromise a small blockchain within Komodo’s system, an attacker would need to destroy:

• All copies of Komodo’s blockchain
• All copies of the dPoW blockchain
• The security network of the chosen PoW blockchain where backups are stored

This configuration provides a security surpassing even that of Bitcoin, all without incurring excessive financial and environmental costs. The utilization of Delayed Proof of Work not only enhances security but also introduces a more flexible security approach compared to the PoW mechanism. Security in this network is managed by notary nodes, selected through a weighted vote. These nodes have the capability to switch to another PoW if necessary, providing adaptability in scenarios such as changes in global mining power or if notarization costs on the current network become excessively high. This flexibility ensures that dPoW maintains security while being more adaptable than the traditional PoW mechanism.

Here’s a highlight of the differences between PoW and dPoW:

Conclusion

Delayed Proof of Work (dPoW), one of the variants of the Proof of Work mechanism, is a step further towards enhancing blockchain security. It is a security method that uses a secondary blockchain to validate another chain through the notarization process. The network is such that it resists any attempt to modify or reorganize the blocks after they have been notarized.

Additionally, the dPoW security mechanism enables blockchains to benefit from the security of a secondary blockchain, offering a practical solution to foundational security issues, particularly for newly established blockchains with increased vulnerability due to their low hash rate. Consequently, the introduction of dPoW has served as a step towards advancing and reinforcing the security of blockchain networks in the blockchain space.