To understand our new mechanism in greater detail, here are some answers to commonly asked questions…

What are blockchain nodes?

Blockchain nodes are instances of the blockchain specific software, which store and maintain a replica copy of the blockchain data (or ledger). Blockchains rely on nodes to keep track of transactions that have occurred and provide up-to-date information about the ledger state (such as account balances).

Own’s public blockchain network recognises two types of nodes:

Client nodes

Validator nodes (or just Validators)

Client nodes​ serve as an entry point to the network by providing an API for transaction submission, as well as for getting the information about current blockchain state (e.g. address balance, account holding, transaction status, block info, etc.). ​They propagate received transactions and blocks to other nodes and apply received blocks to their local state.​

Validators are a special subset of nodes on the network. In addition to the client node functionality, validators also participate in consensus protocol, which is the process of creating new blocks. Only validators can create new blocks — client nodes just apply received blocks to their state.

How are Validators rewarded?

Own’s public blockchain rewards validators using transaction fees. This means that the reward for validators depends on the number of transactions processed on the blockchain and is not fixed or time-based.

Every transaction must specify an amount of CHX they are willing to pay for execution of the actions contained within it. The transaction fee helps us to protect against Denial of Service (DoS) attacks, prioritise transactions and reward validators.

Transaction fees incentivise validators to do the work on processing transactions, producing new blocks and keeping the network alive and progressing. To collect rewards from the block, validators must be online and respond within a certain time frame. If they don’t propose a block before time out, a new consensus round will start and be offered to a new proposer.

If a proposed block is accepted by more than two thirds of active validators, voters who delegated CHX to the proposing validator will receive a percentage of the reward.

Why do we operate a BFT-based consensus protocol?

For the new blocks to be accepted as the new state of the whole network, more than two thirds of validators need to vote for it. Assuming no more than a third of validators fail, BFT-protocol guarantees that safety will never be violated, as validators will never commit conflicting blocks at the same height. Therefore, a BFT-based blockchain never forks in normal circumstances.

Due to the way validators exchange messages in the voting process (multicast), the network traffic between them increases significantly with every new validator. It is therefore necessary to limit the number of validators to make sure the protocol works efficiently.

This limitation does not apply to client nodes though. There can be as many client nodes as needed, because client nodes communicate over gossip protocol and do not participate in consensus.​

For security purposes, we require a minimum amount of CHX to be held by anyone running a validator node. There is a minimum percentage — or quorum supply — that must be locked in stakes when the network runs with its maximum number of nodes to secure our network. We aim to set the quorum supply at around 30%.

How does the Delegated Proof of Stake (DPoS) work?

Own uses a Delegated Proof of Stake (DPoS) approach to select the top 100 validators over the validator threshold, which will participate in the block creation process. Anyone with CHX can stake their CHX against a validator and benefit from a percentage of the rewards collected by that validator — proportional to their delegated stake.

With this model, multiple CHX holders that might not have enough CHX to run a validator alone can unite and run a validator for mutual benefit.

The validator decides what percentage of the reward will be shared with voters. Some large stakeholders may choose not to share any reward, if they have enough at stake. Smaller stakeholders may choose to share a percentage of their transaction reward, motivating others to delegate CHX and enabling them to become validators. Take a look at the diagram below for a visual explanation: