Research Collaboration: Albatross

An optimistic consensus algorithm

Team Nimiq is proud to present Albatross, the outcome of our research collaboration with Trinkler Software. Albatross is a Proof-of-Stake consensus algorithm that is able to achieve a performance close to the theoretical maximum for single-chain Proof-of-Stake consensus algorithms. While a technical description of the protocol has been published, this blog post strives for a lighter and easy-to-understand overview.

It is important to stress that Albatross is a consensus algorithm only. As such, it does not define the functionality built on top of it, but is only a single building block of a blockchain protocol. While Nimiq is evaluating the use of Albatross for its next generation protocol, no decisions have been made. More details about our plans for Albatross are available at the end of this post.

What is Proof-of-Stake?

In a Proof-of-Stake (PoS) based consensus algorithm, the node eligible to append the next block is chosen proportional to the stake it has in the system. That makes block production very cheap compared to Proof-of-Work (PoW) based algorithms. Misbehavior (e.g. in the form of forks) is often punished by slashing the stake of the misbehaving node and burning or redistributing it.

The three most important benefits of PoS over PoW are:

a drastically reduced energy consumption: there is no need to perform labor that is highly energy consuming to secure the blockchain,

reduced risk of centralization: specifically, economies of scale are less of an issue in PoS, and

the equivalent of 51% attacks being more expensive: misbehaving nodes permanently lose their stake, compared to reusable hardware in PoW.

What does “optimistic consensus algorithm” mean?

We describe Albatross — our novel blockchain consensus algorithm — to be optimistic.

This term does not mean that we sacrifice any security but means that it is inspired by speculative Byzantine-fault-tolerant (BFT) algorithms.

Classical BFT algorithms provide consensus in distributed systems while considering a limited number of malicious or Byzantine actors. One of the most prominent examples of such an algorithm is PBFT, which, e.g., the Tendermint cryptocurrency is leveraging at its core.

Speculative BFT algorithms are an advancement over standard BFT algorithms. They allow for drastic performance increases in the case of no malicious actors being present. This is the so-called optimistic case and where our description finds its origin. In case Byzantine actors are present and try tampering with the protocol, others can notice and switch the protocol into its slower and more conservative mode, offering the same security guarantees as standard BFT protocols.

Hence, in the best case, optimistic consensus algorithms are able to perform much better than classical ones. During an attack case, optimistic algorithms still have a performance similar to standard ones.

The Albatross protocol

In Albatross, those nodes that are responsible for producing new blocks are called validators. Anyone who has a stake in the system can volunteer as a validator by depositing his/her stake as security that can be slashed.

Block production in Albatross is divided into epochs. As the following figure shows, each epoch consists of a constant number of micro blocks (four micro blocks in the example below) followed by a macro block. Micro blocks contain the transactions and have a single block producer that is randomly chosen from the validators. While anyone can volunteer to be a validator, the actual set of validators in a given epoch (the active validators) is chosen by the macro block of the preceding epoch.