Rails Network
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Validators
After our MainNet initialization, a few (2-3) trusted nodes will run the initial Mining Pool Set (MPS); research shows that Byzantine tolerant permission blockchains only scale to a limited number of nodes [Li, W., Sforzin, A., Fedorov, S., Karame, G.O.: Towards scalable and private industrial blockchains. In: Workshop on Blockchain, Cryptocurrencies and Contracts, BCC 2017, pp. 9–14. ACM (2017)]. The Rails Network architecture is fine-tuned to optimize efficiency and security making an initial MPS of 2-3 nodes adequate for our short-term goals.
Anyone can join one of these mining pools using the same base equipment (hardware and software) as is currently used to mine currency utilizing basic GPU's.
To discourage a hashrate arms race and to encourage balanced pools the Rails Network consensus mechanism implements a penalty for mining consecutive blocks.
At launch the penalty will be set to 0% (for the first 7 consecutive blocks) to encourage participation and to reward early miners. Up to the discretion of Steam Exchange, in the future, the penalty rates can be adjusted based on what is best for the Rails/Steam Exchange community.
When/if native coin staking is implemented and enabled, the penalty rates will be subject to on chain governance.

Penalties*:

On Launch:

Consecutive Blocks
Penalty
1
0%
2
0%
3
0%
4
0%
5
0%
6
0%
7
0%
>7
100%

Example of Future State:

Consecutive Blocks
Penalty
1
0%
2
0%
3
50%
4
80%
5
96%
6
99%
7+
100%
The collected penalty will be distributed evenly to all other validators/pools.
Launch Pool Cap
Future Pool Cap
50%
5%
Furthermore, individual rewards in a pool are capped at 50% at launch and could be reduced to as low as 5% in the future (regardless of the contributed hashrate). Once again, if/when staking is launched, the value will be subject to on chain governance.
There is no advantage to significantly increasing individual mining hashrate as:
  • There is a 5% cap on any single pool contributor
  • Doing so increases the reward penalty (advantageous to competing pools)
The hashrate differences between individual pools should be minimal preventing a concentration of hashrate within specific pools. This solves the problem of more powerful pools having an advantage over smaller pools.
(*) Penalties are determined on a situational basis. The numbers above are for example purposes.
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