Based on the design principles above, the consensus mechanism of the Rails Network aims to accomplish and sustain the following goals/metrics:
- An average block time of 3-5s
- Transactions should be final within 1 minute
- Consist of a healthy inflation rate (1-3%)
- Address most common issues with PoW
- Allow for seamless enhancements in the future such as further incentivizing Node Operators
Although Proof-of-Work (PoW) has been established as a practical mechanism to implement a decentralized network, it is not the friendliest option for the environment and requires multiple participants to maintain the security of the blockchain. Furthermore, the drive for more hashing power can lead to mining pool domination and even security risks (51%)
The Rails Network combines PoW and Authority for consensus, so that 3 fundamentals are addressed (Security, Balance, and Ease of Entry):
- 1.Blocks are produced by a known and verified set of validators (Security)
- 2.Miners can be discouraged from producing a vast number of consecutive blocks (Balance)
- 3.Anyone can contribute to validator pools and earn rewards (Ease of Entry)
We recognize the trilemma of blockchain properties: Scalability, Decentralization, and Security. The Rails Network is a private blockchain which leaves minimal concern over decentralization allowing Steam Exchange to focus on scalability, and security.
The Proof-of-Work-by-Authority (PoWbA) consensus mechanism maintains the usual advantages of the typical PoW approach such as easy entry, proven & tested security, (relatively) easy implementation and at the same time addresses many of the shortcomings such as high energy consumption, 51% attack, specialized/expensive hardware requirement (to be competitive).