the Tezos Block validators, the so-called “Baker”, seem to have a capacity limit is reached. This is problematic, as users, have deposited their Proof-of-Stake-Token in the case of overmatched Baker, can’t get the promised Reward. In the last consequence of an increasing centralization threatens the network.

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13. November 2018 share Facebook Twitter LinkedIn xing mail

The Tezos algorithm is based on Proof of Stake. This means that the transactions of the qualified entities, the so-called Baker’s, to be verified and published. Baker can be only those who deposited at least 10,000 XTZ. The chances to qualify as a Block-Validator, rise, however, with the amount of the deposited Stakes. Now the Baker can also rely on a Token, the other XTZ users you have stored, in order to increase their Stake again. And here lies the Problem.

Because of the amount of XTZ and can delegate users to the Baker, is limited. As shown here, is reached, the capacity of a variety of Block-validators already.

centralization as a result of

a number of problems. Because on the one hand, overloaded Baker are not able to Pro-rata Rewards to be paid. On the other hand, can result from the crisis, an increasing centralisation. This is because the large Baker such as TF and Polychain can perform so-called Steals. On Reddit jonaslamis, one of the validators commented as follows on the case:

“the Problem of over-delegation is always ugly. If many of the Baker are not over-delegated, the impact on the Blockchain. A threat to decentralisation is that our largest Baker (TF, Polychain and probably Draper) will start to earn a lot of Steals. Because they are beacons for themselves, they have a major Stake available to all the Steals take, and miss, the public Delegation service.“

automation as a solution

A little hope shines through anyway. It is that Tezos is already working on an automated solution to the Problem. Because, in essence, an algorithm must only ensure that no more tokens are delegated to the Baker to the capacity limit. If the Funds distribute evenly, it also increases the network security.

the risks and side effects of Proof of Stake as a consensus mechanism, you can in episode 13 of the BTC-ECHO Podcasts.