Initializing Proof-of-Stake — Becoming a Part of the Cosmos Validator Working Group

What are Cosmos Validators?

Role

Validators are responsible for committing new blocks in the blockchain. These validators participate in the consensus protocol by broadcasting votes which contain cryptographic signatures signed by each validator’s private key. Validators have a cryptographic key-pair for signing and have some amount of “voting power” in proportion to the number of staked ATOMs.

Some Proof-of-Stake consensus algorithms aim to create a completely decentralized system where all stakeholders — even those who are not always online — participate in committing blocks. Tendermint has a different approach to block creation — Cosmos validator nodes need to be able to demonstrate 100% uptime. Maintaining high availability potentially involves multiple ISPs, redundant server power, and backup hosting locations.

Economics

Validators can bond their own ATOMs or have ATOMs “delegated,” or staked, to them by holders of the token. The Cosmos Hub will have 100 validators, but over time this will increase to 300 validators according to a predefined schedule. The validators are determined by who has the most stake delegated to them — the top 100 full nodes with the most stake will become Cosmos validators.

Validators and the parties that delegate stake to them will earn ATOMs as transaction fees and block rewards through execution of the Tendermint consensus protocol. If validators double sign, are frequently offline or are compromised in some arbitrary way, their staked ATOMs can be slashed.

Nuts and bolts of validator economics about bonding period, slashing conditions, etc. will be finalized come late October/early November.

Ethos

The validator bears the burden of securing the Cosmos network and is in return rewarded for “good” behavior as defined by protocol rules. The philosophy of acting as responsible stewards to the network is a goal that Tendermint seeks to meet through well-defined economic incentives for rational actors.

While validator candidacy is determined by the weight of their staked tokens, in Tendermint Proof-of-Stake, the incentives for whales and users alike are more closely aligned than in Proof-of-Work blockchains because whales with staked tokens now hold stake in the network security itself, not just in the value of the token. Pumping a token for the sake of inflating the price becomes a disincentive for the staked token holder because: 1) a significant portion of their tokens are bonded for a long period of time (weeks to months), and 2) introducing unstable growth to the network will make their work of securing the network more difficult.

A Community-driven Effort

A Cosmos Validator Working Group (VWG) can become a resource and source of support for those running validating nodes on a full-time basis. The learning curve for setting up secure validating full nodes and monitoring the infrastructure around it can be steep and the pitfalls deep. To bootstrap initial validators and provide ongoing support, a community-driven effort is critical for a self-sustaining ecosystem of expert validators securing the Cosmos network.

Tendermint team and a few independent security experts will lead weekly roundtables where validators can share their hard lessons, best practices and experiences. Since this is an open-source community, validators are encouraged to create pull requests to the Cosmos Validator Guide repository where best practices are pooled.

Remote roundtables where the VWG convenes will be held in Matrix Chat (channel: #cosmos-validators:matrix.org).

Independent Attestation

Cosmos stakeholders should have as much information as possible when selecting validators to delegate their stake to. We encourage interested validators to work with independent security industry experts within our Working Group to build up best in class services.

• Documentation — maintain a high-quality set of documented procedures on how they’ve set up their validation node.
• High Availability — ability to demonstrate near 100% uptime.
• Technical Support — operators are needed to continuously monitor their nodes and respond to issues on a 24/7 basis.
• General Attack Mitigation — as the Cosmos network becomes more valuable, the risk of attacks increases. Validators need to be vigilant of zero day attacks and build patches to prevent such attempts to undermine the network’s security.
• Denial-of-Service Mitigation — if a validator is DoS’d and is prevented from committing blocks, this poses significant risk to the liveness of the network. Thus, the protocol can slash a validator’s staked tokens.
• Secure Hardware — introducing hardware into the validator network requires those hardware to be undeniably secure. Taking measures like purchasing server components in person, observing hardware assembly and auditing of hardware by security experts are expected.
• Physical Attack Mitigation — servers should be located in physically secure facilities with access controls.

Phases

Phase 1 — Onboarding

• Release of the Delegation Game Testnet (Gaia)
• Onboarding of candidates to Cosmos testnet
• Early drafts of best practices in GitHub repo

Phase 2 — Pre-production

• Finalizing Validator Economics
• Deployment of pre-production systems on testnet
• Publication of best practices and recommendation criteria

Phase 3 — Launch

• Security audits of Validator Working Group (VWG) participants
• Support and final recommendations for Genesis Validators and Staking (delegated) participants
• Cosmos network launches

Post Launch

After launch in Q4 2017, ATOM holders will select a group of a dynamic set of validators to execute the Tendermint consensus protocol in the Cosmos Hub. The design of the Cosmos network is to strongly incentivize every ATOM holder to play an active and ongoing role as critical participants in the Cosmos universe.