Rangers Protocol VRF+BLS Сonsensus Mechanism: Solving the Problem of High-Frequency Trading

In the previous Rangers Protocol Virtual Machine Technology article series, we have introduced REVM optimised functions based on compatibility with EVM. In short, they are adding standard library and tool kits to reduce the difficulty of development and improve coding and operating efficiency.

When the development threshold is lowered, and many developers enter the Rangers Protocol for ecological construction, high-frequency transactions will inevitably occur. This requires Rangers Protocol to ensure the efficiency, fairness and security of data through a suitable mechanism to guarantee stable high-frequency transactions.

The means to ensure this is the consensus mechanism of Rangers Protocol that this article will analyse in detail.

What Is Consensus Mechanism

In a nutshell, the consensus mechanism is a means that “allows event participants to reach the same opinion on the same event”. In the blockchain network, the decentralised database is called the “ledger”, and each node can have a complete ledger. The consensus mechanism can determine which node is responsible for writing new data in the ledger and maintaining the unification of the ledger. Therefore, the consensus mechanism allows distributed systems (computer networks) to work together and maintain security.

The Importance of Consensus Mechanism

Ledgers of the blockchain are kept by nodes, and the ledger contents of all nodes are precisely the same. Each node can add transactions to the ledger or find transactions based on its own local ledger. This mechanism has risks: when some nodes record a transfer, and some do not, the system cannot determine the authenticity of the transfer. At this time, the existence of a consensus mechanism is essential. The consensus mechanism allows organizations to complete large-scale cluster collaboration and ensure data security without relying on any centralized organization.

Technology Selection of Consensus Mechanism

With the emergence of various public chains, the consensus mechanism has also been developed to deal with multiple security issues accordingly. Now, a variety of technology options have been available in the industry. The following analysis will focus on PoW, PoS, and DPOS.

PoW

PoW — Proof of Work — is a proof of workload mechanism. Workload refers to the computing power of the miners. Miners use their computing power to mine, and the miners’ computing power concentrated for mining is called pool mining. The essence of PoW mining is a process of competing for bookkeeping rights. Whether it’s separate miners or mining pools, all they are fighting for is computing power. The greater the computing power (workload), the faster the calculation of the hash value of the block and the more bookkeeping rights and income earned.

PoW can guarantee the security and fairness of the network. First of all, it has no other application scenarios other than mining, which ensures network security to a certain extent. Secondly, the attacker must invest more than 51% of the computing power in tampering with the result. That ratio is too much to support, which means PoW can counter DoS attacks. At the same time, since the miners obtain bookkeeping rights only related to the computing power, it also guarantees the fairness of the block production to a certain extent.

However, PoW’s computing power mechanism leads to the wasting of resources. Miners need to pass many repeated calculations to obtain the required hash value to prove the workload since the hash function is random. That will consume tons of power resources and computing equipment, which is not environmentally friendly. In addition, the calculation process of the PoW mechanism allows two miners to calculate the result simultaneously so that the soft fork will appear. Suppose miners continue to perform operations on different chains that have been forked. The chain with more robust computing power will become longer. In that case, miners’ mining time will also last longer while the other fork chain is lost.

PoS

PoS — Proof of Stake — refers to the proof of stake mechanism, where the difficulty of mining is proportional to the share of a node in the network — aka the number of cryptocurrencies. This PoS mechanism does not require mining, nor does it consume tons of energy. The miner’s income is related to the amount of cryptocurrency held by the individual and the holding time. The higher the percentage of staking equity and the longer the holding time, the greater the probability of successful mining. The emergence of PoS is to reduce the resource consumption of mining and solve the soft fork problem of PoW.

But PoS can result in Matthew effect and security issues. Since it determines the efficiency by the number of tokens held, the more people who own more tokens, the easier it is to gain more benefits. It will cause the “the stronger becomes stronger, weaker become weaker” phenomenon, meaning smaller users’ would lose their right to speak. Worse, they wouldn’t care about voting governance and ecological construction, contrary to the original intention of decentralization. Moreover, under the PoS mechanism, if someone wants to counterfeit the tokens, it would be easy to implement by holding a large amount of cryptocurrency. There is no need to invest in any complicated calculations. Compared to PoW, PoS has a lower cost when counterfeiting, and the security of PoS cannot be guaranteed.

DPOS

DPOS — Delegated Proof of Stake — is an authorized equity proof mechanism proposed by EOS. It is a consensus algorithm based on voting. There are two roles in DOS-notary and witness. The notary can vote to elect the block producer, the “authorized” party, and the witness refers to the selected node and authorized to conduct block production and verify transactions. The advantage of this mechanism is that when a node with a large number of coins does not have enough expertise to meet the requirements of a high-performance node, the notary can take advantages to vote for high-performance nodes for block verification and transactions. This ensures the efficient operation and block generation of the chain, which is more efficient than POS. However, DPOS is currently unable to solve the dilemma caused by POS.

Rangers Protocol’s Consensus Mechanism and Its Advantages

Rangers Protocol’s Consensus Mechanism

Unlike mainstream consensus mechanisms, Rangers Protocol uses a more efficient and safer VRF+BLS consensus mechanism.

VRF, aka the Verifiable Random Function, is an algorithm for generating random numbers. This third-generation consensus algorithm was born when the POW, PoS, and DPoS were unable to effectively solve security and efficiency issues. With the help of the latest algorithm, verifying the legitimacy of VRF has become fast, so it is an efficient consensus algorithm. In Rangers Protocol, the VRF algorithm selects candidate block packagers and candidate block verification groups.

Three scientists proposed the BLS signature algorithm from the Department of Computer Science at Stanford University: Dan Boneh, Ben Lynn and Hovav Shacham. The main idea of BLS is to hash the message to be signed to a point on an elliptic curve and use the exchange property of the bilinear mapping E function to verify the signature without revealing the private key. BLS in Rangers Protocol is mainly used to aggregate the signature of each member in the verification group for candidate blocks to generate the verification group signature.

Based on the VRF+BLS mechanism, Rangers Protocol also adopts high-concurrency writing, preprocessing and other technologies from the distributed system. Although both VRF+BLS and PoW mechanism have randomness, the randomness of PoW leads to significant computing power consumption, resulting in waste of resources. The VRF+BLS mechanism is the opposite of PoW, and it allows true random numbers to be generated at the millisecond level. Cooperation between nodes helps to ensure complete decentralization, data security, and fairness to solve high-frequency trading issues.

Advantages:

1） Speaking of decentralization, VRF+BLS uses a node grouping consensus mechanism, allowing nodes to increase throughput. Joined nodes need to be divided into proposal nodes and verification nodes. Any networked device can obtain the qualification to become a proposal node and a verification node by staking tokens to guarantee decentralization. At the same time, Rangers Protocol has also added a penalty mechanism to ensure that nodes are trustworthy, whilst inaction or malicious behaviour will be punished. Rather than relying on the user’s currency holdings, the community would jointly vote to determine whether the inaction or evil node is disqualified from the proposal or verification. The degree of decentralisation is further guaranteed;

2） In terms of transaction and data fairness, Rangers Protocol adopts a random selection method to generate unpredictable proposal groups, and are sent to the verification group in multiple channels in parallel during the proposal, which limits the joint evil actions during the proposal and verification process, guaranteeing transactions and data Fairness;

3） In terms of improving efficiency, the efficiency of block generation and verification determines the system’s processing performance. Under the VRF mechanism, the block generation speed of the proposal node is one block per second. From the perspective of communication complexity, signature length, and performance, the verification group’s BLS threshold signature performance is more substantial than Byzantine fault tolerance. Therefore, this is an efficient consensus algorithm that can generate blocks and verify the legitimacy of VRF quite quickly.

4） In terms of security, VRF selects groups by true random numbers to ensure that the working group is unique at a certain altitude. The periodic checkpoint mechanism ensures that the state data is “final” and eliminates problems such as long-range attacks. Simultaneously, the attacker needs to control more than 51% of the nodes to launch a 51% attack on recent data — the state after the checkpoint, which is similar to Bitcoin.

5） In terms of performance, the TPS is 5000 without optimizations such as fragmentation.

Summary

The VRF+BLS consensus guarantees the fairness of transactions by randomly generating proposal nodes and verification groups, avoiding the Matthew effect and ensuring the security of transactions by verifying multi-signatures. For developers and users, the infrastructure based on the VRF+BLS consensus mechanism can effectively solve the problem of high-frequency trading, and developers do not need to worry about fraudulent transactions. Maintaining stable high-frequency trading is a prerequisite for asset cross-chain transactions. Asset cross-chain transactions are inseparable from cross-chain technology.

The following article of the series will describe another significant innovation of Rangers Protocol — the heterogeneous cross-chain relay chain technology.

About Rangers Protocol

Rangers Protocol is the backbone of a Web3 Engine for creating immersive Web3 applications. It minimizes the development difficulty for Web3 developers and maximizes the user experience of its Web3 applications. Rangers Protocol provides comprehensive infrastructures for efficient complex-app development, successful cross-chain and mass distribution, diverse in-app NFT and DeFi features, and more. Through its full EVM-compatibility, strategic industry partnerships and its curated all-in-one IDE, Rangers Protocol supports AAA and indie developers to succeed in the Web3 world.