Introducing Casper “the Friendly Ghost”
The Dawn of a New Era: Introducing Casper, the Friendly Ghost
In the world of blockchain technology, consensus protocols are the backbone of any decentralized network. They ensure that all nodes on the network agree on the state of the blockchain, thereby maintaining its integrity and security. For years, proof-of-work (PoW) has been the dominant consensus protocol, but its limitations have led to the development of alternative solutions. One such solution is Casper, a proof-of-stake (PoS) consensus protocol that promises to revolutionize the way we think about blockchain governance.
Security-Deposit Based Security and Authentication
Casper is a security-deposit based economic consensus protocol. This means that nodes, or "bonded validators," have to place a security deposit (an action we call "bonding") in order to serve the consensus by producing blocks. The protocol's direct control of these security deposits is the primary way in which Casper affects the incentives of validators. Specifically, if a validator produces anything that Casper considers "invalid," their deposit is forfeited along with the privilege of participating in the consensus process.
The use of security deposits addresses the "nothing at stake" problem; that behaving badly is not expensive. There is something at stake, and bonded validators who misbehave in an objectively verifiable manner will lose it. Very notably, a validator's signature is only economically meaningful so long as that validator currently has a deposit. This means that clients can only rely on signatures from validators that they know are currently bonded.
Gambling on Consensus
Casper makes validators bet a large part of their security deposits on how the consensus process will turn out. Moreover, the consensus process "turns out" in the manner in which they bet: validators are made to bet their deposits on how they expect everyone else to be betting their deposits. If they bet correctly, they earn their deposit back with transaction fees and possibly token issuance upon it – if on the other hand they do not quickly agree, they re-earn less of their deposit.
Through iterated rounds of betting, validator bets converge. Moreover, if validators change their bets too dramatically, for example by voting with a high probability on one block after voting with a very high probability on another, then they are severely punished. This guarantees that validators bet with very high probabilities only when they are confident that the other validators will also produce high probability bets.
By-Height Consensus
Validators bet independently on blocks at every height (i.e. block number) by assigning it a probability and publishing it as a bet. Through iterative betting, the validators elect exactly one block at every height, and this process determines the order in which transactions are executed. Notably, if a validator ever places bets with probabilities summing to more than 100% at a time for a given height, or if any are less than 0%, or if they bet with more than 0% on an invalid block, then Casper forfeits their security deposit.
Transaction Finality
When every member of a supermajority of bonded validators (a set of validators who meet a protocol-defined threshold somewhere between 67% and 90% of bonds) bets on a block with a very high (say, > 99.9%) probability, the fork-choice rule never accepts a fork where this block does not win, and we say that the block is final. Additionally, when a client sees that every block lower than some height H is final, then the client will never choose a fork that has a different application state at height H - 1 than the one that results from the execution of transactions in these finalized blocks. In this eventuality, we say that this state is finalized.
Censorship Resistance
One of the largest risks to consensus protocols is the formation of coalitions that aim to maximize the profits of their members at the expense of non-members. If Casper's validators' revenues are to be made up primarily of transaction fees, for example, a majority coalition could censor the remaining nodes in order to earn an increased share of transaction fees. Additionally, an attacker could bribe nodes to exclude transactions affecting particular addresses – and so long as a majority of nodes are rational, they can censor the blocks created by nodes who include these transactions.
Will There Be More Transactions Per Second?
Most probably, yes, although this is due to the economics of Casper rather than due to its blockchain architecture. However, Casper's blockchain does allow for faster block times than is possible with proof-of-work consensus. Validators will likely be earning only transaction fees, so they have a direct incentive to increase the gas limit, if their validation server can handle the load.
Recovery from Netsplits
Casper is able to recover from network partitions because transactions in non-finalized blocks can be reverted. After a partition reconnects, Casper executes transactions from blocks that received bets on the partition with higher validator participation. In this manner, nodes from either side of the partition agree on the state of the consensus after a reconnection and before validators are able to replace their bets.
Recovery from Mass Crash-Failure
Casper is able to recover from the crash-failure of all but one node. Bonded validators can always produce and place bets on blocks on their own, although they always make higher returns by coordinating on the production of blocks with a larger set of validators. In any case, a validator makes higher returns from producing blocks than from not producing blocks at all.
What is Casper, in Non-Economic Terms?
Casper is an eventually-consistent blockchain-based consensus protocol. It favors availability over consistency (see the CAP theorem). It is always available, and consistent whenever possible. It is robust to unpredictable message delivery times because nodes come to consensus via re-organization of transactions, after delayed messages are eventually received.
What is it Like to be a Bonded Validator?
As a bonded validator, you will need to securely sign blocks and place bets on the consensus process. If you have a very large deposit, you will probably have a handful of servers in a custom multisig arrangement for validation, to minimize the chance of your server misbehaving or being hacked. This will require experimentation and technical expertise.
What is it Like to be an Application or a User?
Applications and their users benefit a lot from the change from proof-of-work consensus to Casper. Lower latency significantly improves the user's experience. In normal conditions transactions finalize very quickly. In the event of network partitions, on the other hand, transactions are still executed, but the fact that they can potentially still be reverted is reported clearly to the application and end-user.
When Can We Hear More?
Stay tuned! We'll be sure to let you know more of Casper's specification over the next months, as we come to consensus on the protocol's details. In addition, you can look forward to seeing simulations, informal and formal specification, formal verification, and implementations of Casper! But please, be patient: R&D can take an unpredictable amount of time!
Source: https://blog.ethereum.org/en/2015/08/01/introducing-casper-friendly-ghost
