Our architecture is carefully designed to optimize efficiency, security, and decentralization, fostering a dynamic and balanced ecosystem.
Trusted Initial Mining Pool Set (MPS): Following the initialization of our MainNet, a small number of trusted nodes, typically 2-3, will comprise the initial Mining Pool Set (MPS). Research has shown that Byzantine tolerant permission blockchains have scalability limitations [Li, W., Sforzin, A., Fedorov, S., Karame, G.O.: Towards scalable and private industrial blockchains. In: Workshop on Blockchain, Cryptocurrencies and Contracts, BCC 2017, pp. 9–14. ACM (2017)]. The Rails Network's architecture is fine-tuned to optimize efficiency and security, making an initial MPS of 2-3 nodes suitable for our short-term goals.
Inclusive Participation: Joining one of these mining pools is open to all, utilizing the same base equipment (hardware and software) commonly used for currency mining with basic GPUs. We encourage widespread participation, ensuring a diverse and decentralized network.
Balancing Pools and Discouraging Arms Races: To discourage a hashrate arms race and promote balanced pools, the Rails Network's consensus mechanism implements penalties for mining consecutive blocks. Initially, the penalty rate will be set to 0% for the first 7 consecutive blocks, incentivizing early participation and rewarding early miners. In the future, the penalty rates can be adjusted based on the best interests of the Rails/Steam Exchange community, at the discretion of Steam Exchange.
Fair Distribution and Governance: When and if native coin staking is implemented and enabled, the penalty rates will be subject to on-chain governance. The collected penalties will be distributed evenly among other validators and pools, ensuring fairness and promoting a balanced ecosystem. Additionally, individual rewards within a pool are capped at 50% during launch, with the possibility of reducing them to as low as 5% in the future, irrespective of contributed hashrate. Once staking is launched, the value will be subject to on-chain governance.
Advantages of Balance and Minimal Concentration: Significantly increasing individual mining hashrate provides no advantage within the Rails Network. Our mechanisms prevent concentration of hashrate within specific pools by capping individual contributions and implementing penalties that favor competing pools. This ensures fairness and equal opportunities for pools of all sizes, eliminating the advantage of more powerful pools over smaller ones.
(*) Penalties are determined on a situational basis. The numbers above are for example purposes.