Proof Of Stake (POS)
IEP uses a system where each “token” in an account can be thought of as a tiny mining rig. The more tokens that are held in the account, the greater the chance that account will earn the right to generate a block. The total “reward” received as a result of block generation is the sum of the transaction fees located within the block. IEP does not generate any new tokens as a result of block creation. Redistribution of IEP takes place as a result of block generators receiving transaction fees, so the term “forging” (meaning in this context “to create a relationship or new conditions“) is used instead of“mining”. Subsequent blocks are generated based on verifiable, unique, and almost unpredictable information from the preceding block.
Blocks are linked by virtue of these connections, creating a chain of blocks (and transactions) that can be traced all the way back to the genesis block. Block generation time is targeted at 60 seconds, but variations in probabilities have resulted in an average block generation time of 80 seconds, with occasionally longer block intervals. The security of the blockchain is always of concern in Proof of Stake systems. The following basic principles apply to IEP Proof of Stake algorithm:
- A cumulative difficulty value is stored as a parameter in each block, and each subsequent block derives its new “difficulty” from the previous block’s value. In case of ambiguity, the network achieves consensus by selecting the block or chain fragment with the highest cumulative difficulty.
- To prevent account holders from moving their stake from one account to another as a means of manipulating their probability of block generation, tokens must be stationary within an account for 1,440 blocks before they can contribute to the block generation process. Tokens that meet this criterion contribute to an account’s effective balance, and this balance is used to determine forging probability.
- To keep an attacker from generating a new chain all the way from the genesis block, the network only allows chain reorganization 720 blocks behind the current block height. Any block submitted at a height lower than this threshold is rejected. This moving threshold may be viewed as IEP only fixed checkpoint.
- Due to the extremely low probability of any account taking control of the blockchain by generating its own chain of blocks, transactions are deemed safe once they are encoded into a block that is 10 blocks behind the current block height.