Index of importance simply explained
One month ago, Dan Larimer @dan, a man for whom we have great respect, published an explanation of consensus algorithms using radio stations as an example. Here's the quote:
A blockchain can be viewed as a radio station that everyone in the world subscribes to and records. On this radio station, anyone can broadcast cryptographic statements and everyone will process these statements via a deterministic state machine to arrive at consensus.
Dan’s metaphor likens blockchain protocol to the airwaves, with different protocols having different models for who gets to broadcast.
To recap: In PoW, everyone buys airtime from the radio stations which are both on the air more often and who have loudest transmitters.
In PoS, however, everyone buys airtime from those who have more money and have the hardware to broadcast 24/7 as and when their turn comes.
In DPoS, the system is a bit more complex. Here, the audience votes with their stake to elect those who operate transmitters. Having the largest stake, however, is not enough to get elected and going against wishes of the voters may remove or reduce one’s ability to transmit. On the other hand, the weight of the participant's vote directly depends on the amount of money in his/her account. So, by and large, those who have more money have more sway in terms of who gets to broadcast.
While we agree that DPoS is the fairest and most logically sound of those three systems, we believe that it is possible to improve upon it.
One week ago we have published the first document (Blueprint) of the Gravity Protocol blockchain, where introduced a few new definitions to the crypto-economic vocabulary, such as:
- Delegated Proof of Importance
- Gravity Index of Importance
- Dynamic Emission
They were explained with the formulas and calculations done by the Russian mathematician Alexey Prokopov but since not everyone is familiar with advanced mathematics, it is best to instead use simple examples to explain how those concepts work.
Let’s start with the Index of Importance and DPoI:
Index of Importance (or Gravity Index) is a score of each Gravity network account, considering the account’s stake and (here is the main difference with PoS/DPoS) the account’s ACTIVITY.
To make it simple: Importance = Activity + Stake
(All respective calculations can be found in Gravity’s Blueprint.)
To a certain extent, this idea correlates with the NEM blockchain, though there is a significant difference in formulas calculating the index as well as the idea of dynamic emission that we have introduced.
Index of Importance has various impacts on the blockchain. Firstly, protocol’s emission is spread among all active network users depending on their Index of Importance. Secondly, Index of Importance modifies the weight during the vote, so the more active an account is, the higher their voting weight. Therefore, Index of Importance indirectly addresses the problem of DPoS Voter Apathy. Users that are deeply engaged with the network, are more weight of vote than the ones who hold passive stakes.
Another problem addressed by Index of Importance is the fact that there is no incentive for the economic use of cryptocurrencies. This is due to the fact that most of them are deflationary in nature and there are no costs associated with holding them indefinitely (as opposed to other currencies and assets, which either have associated storage costs or inflation). Gravity’s Importance Index is based on economic factors, such as the number of financial transactions in the system, thus the creation of market multiplier.
Let us return to the radio station example. In Delegated Proof of Importance more weight is given to people who actually use the radio. In the case where the stake is equal, higher usage will result in greater Index of Importance value, and thus the user gains more weight in the system.
Since Index of Importance also affects dynamic emission, those who are more active on the network will over time accrue more influence, thus incentivizing economic usage of the network and fostering organic growth. Further view of this topic will be discussed in a future publication.
by Yuri Parsamov
See the previous articles
Gravity Protocol Intro
Gravity Protocol Roadmap
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