Komodo’s dPoW Provides Double-Layered Security and Cuts Costs

Published on November 17th, 2016

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Komodo is anonymous, secure, and environmentally friendly.

In the previous post, we focused on Zcash (ZEC) and how it seeks to fix the deteriorating anonymity in bitcoin and other cryptocurrency transactions. Komodo is a fork of Zcash and therefore inherits the Zero-knowledge proof feature that protects you from businesses and government institutions snooping into your financial privacy.

The technology prevents transaction graph or taint analyses that determine the sources and destinations of coins. Two weeks after our initial coin offer (ICO), which is set for November 20, 2016, you will be able to make anonymous payments with our komodo (KMD) coin.

We’ve gone a step further, though, than just affording you privacy. We’ve designed the delayed Proof of Work (dPoW) consensus protocol, which gives Komodo two layers of security against manipulation, adversary attacks, and system failure.

In this post, we look under the Komodo hood to understand how the dPoW platform works.

So, what is dPoW?

Delayed Proof of Work is a hybrid of two consensus-forming systems. Komodo has two levels of mining and two separate proofs of work (PoW). While it would be possible to combine Proof of Stake (PoS) and PoW to form a dPoW,  we haven’t built the latter model.

In conventional cryptocurrency mining, such as that of bitcoin, nodes in a single peer-to-peer network confirm and secure the blockchain. Each of Komodo’s mining levels, however, has its own unique network with its own set of nodes.

The first network consists of what you would call common nodes. They collect transactions and record them on the Komodo blockchain through a proof-of-work consensus. The second network has 64 nodes that we’ve called notary nodes.

The notary nodes, apart from finding blocks and recording transactions on the Komodo blockchain, take the confirmed blocks on the Komodo blockchain and, as the name suggests, notarize or engrave them on the bitcoin blockchain. As we’ve explained in a post we published on Steemit, this gives our coin a second layer of security.

By using PoW as the initial consensus mechanism, it is easily ensured that in the case of a malfunction with the notary nodes, the network can make a seamless transition from dPoW to decentralised block creation via PoW.

Cost and revenue

Everyone is welcome to maintain a notary node. In order to take one of the 64 nodes that we’ve set aside, however, you need the community to vote for you. The cost of running these notary nodes includes the fees that bitcoin miners charge to enter transactions onto the bitcoin blockchain, plus electricity and bandwidth. There is also the initial cost of buying or renting the servers. To rent a server that meets the requirements of a Komodo node costs about $300 per month.

The revenue they generate includes the mining reward, KMD transaction fees, and fees that third-party coins pay to use the infrastructure—an arrangement we explain further below.

In addition to the mining reward and transaction fees the notary nodes will receive a monthly subsidy of up to $500. The exact amount will depend on how much a notary node makes from mining rewards and transaction fees.

Out of the original 100 million pre-mined Komodo coins 90 million will be available to investors to buy during the initial coin offering (ICO). We will use the funds we collect to set up the full 64 notary nodes, as well as to cover the subsidy cost for at least ten years. The remaining 10 million coins will go to the project development.

Coin holders will get a 5% annual percentage rate (APR) and miners will get block reward until we reach a cap of 200 million KMDs.

Our lead developer, jl777, has pointed out that the design of the dPoW platform is such that more blockchains can run on top of it, which creates another source of revenue for notary nodes. We’ve set up a system to support any coin or chain that wants to leverage the bitcoin blockchain infrastructure to secure its users’ value and give them privacy. jl777 says:

The code changes required are adding several calls in the existing code. Less than a day’s work to integrate the codebases

Third party chains can share the 64 notary nodes we facilitate. However they also have the option to use custom notary nodes, which they can set up themselves or rent from others.

Through the custom notary nodes anyone can set up and attach a new blockchain to the Komodo blockchain. The custom notary node then starts notarizing data from the new blockchain to the Komodo blockchain. Meanwhile, our notary nodes notarize the Komodo blockchain to the bitcoin blockchain.

More benefits

We decided to use the bitcoin blockchain because it is the most secure. It has the largest network of miners and the highest hashrate, which is about 2 million terahashes (trillions of hashes per second). From the Komodo white paper:

For other cryptocurrencies to become as secure as bitcoin they would have to secure their network with as large hashing power. However, this is not economically possible and would make the overall system, even more, energy inefficient. The solution would be to allow other cryptocurrencies to take advantage of bitcoin’s hashing power.

The notarization of data on the bitcoin blockchain ensures that even if adversaries attack the Komodo network or any other cryptocurrency on the platform, they can’t compromise the sanctity of the records.

Even more, securing many cryptocurrencies on the bitcoin blockchain is helpful to the environment. There is a claim out there that bitcoin is a huge consumer of electricity through mining. This, in turn, contributes significantly to greenhouse gas emissions.

According to an article published by Motherboard, an online technology magazine, the bitcoin network uses electricity equivalent to the amount that 280,000 households in the US consume annually. Motherboard quoted Cornell University Professor Emin Gun Sirer, who said:

That same level of security could be maintained while allowing for more transactions and therefore shrinking the cost per transaction.

While these figures can be disputed, electricity is the highest cost related to bitcoin mining. Being a source of cheap electricity has made China the global bitcoin mining centre. It therefore makes sense not to building a new network similar to that of bitcoin each time we launch a cryptocurrency.

Our technology makes it possible to support multiple cryptocurrencies with the same amount of electricity, while also affording users more privacy.

Komodo provides privacy and security

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