Casper- The Ghost Protocol
Notice before we begin! (You can skip this section)
First and foremost I want to apologise for the inconsistency in my blog posts, it's been a while since I last posted (I think the last one was in August). When I first started writing these blogs I had made it my main goal to write at least once a month, and I think as I've progressed with writing these blogs I didn't realise how much energy it took to focus my attention solely on writing and researching. I am aiming to at least do better in that regard as I try to balance crypto and my personal life.
If you are interested in anything I have to say or want to know about the people I admire in the cryptocurrency space and what they have to say, do check out my social media accounts. I'm very active on twitter (at this point addicted), tweeting practically every day. There you'll find threads on things that interest me at the time, or me retweeting people I've come to follow over the last six months. If you have any questions again feel free to ask, I try to respond as quickly as I can, and if you have any disagreements with anything I write please feel free to mention this to me, I'm always ready for a debate (some of you already know this lol) and keen to learn something new.
Over the last month I happened to tweet about three projects that had blown my mind since entering the cryptocurrency space. Many of you following me were kind enough to list in the tweet (here) recommendations of other projects you found mind blowing. I decided to write this blog as a thank you, and part of a series of overviews of some of the projects I found personally interesting that you mentioned to me. I am not intentionally shilling these projects, please take the opportunity to decide for yourselves if you would like to invest. Any project I have invested in I will outline as of the time of writing in both the blog or tweet.
What to expect in this blog?
- A brief outline of what the project is for those who have never heard about it before.
- Where you can buy (as of the time of writing)
- Overall thoughts on the project
What is it?
This is a network that provides an alteration to the Byzantine fault tolerance consensus mechanism (a consensus mechanism to solve the Byzantine General fault problem) through the usage of the DAG protocol framework... and quite frankly it's brilliant.
It is perhaps easier to explain the Byzantine fault tolerance mechanism (I wrote a blog based on consensus mechanisms a few months ago you can find here) to understand Casper at the very basic layer and what the network is trying to enact.
The Byzantine General Fault problem dates as far back as the early 1980s written in a Microsoft research paper. For a modernised explanation - Nodes (blockchain servers) can validate information submitted to a network and allow it to be added in the form of a block, hence a blockchain - but only if the information submitted is deemed correct. However some node operators may be bad actors and submit incorrect information. Now what would happen to a network if it was unknown how many nodes were bad actors; if some nodes regardless of being a bad or good actor were unable to respond with a correct result; or bad actors were deliberately submitting incorrect information to a network; and finally there was multiple different responses were being submitted to the network... in short... you would be having a bad time.
Well in the late 90s, Miguel Castro and Barbara Liskov solved the problem by coming up with this solution:
Not all nodes were required to have submitted the correct information. The network would need to tolerate a certain percentage of incorrect responses set by the user of the network for the information to be validated. If for example the threshold for tolerance of bad actors on a network was 6/10, then it would be fine if only 4 nodes returned the correct information required. However if only 3 were able to return the desired information then the transaction would not go through as there would be more bad actors than acceptable. It is worth noting that the information sent by the validator is matched against the information sent by the user.
Now currently over the last 30 years there have been adaptions to this solution (which was termed the Practical Byzantine Fault Tolerance mechanism), most commonly utilised in Zilliqa.
Casper dissected the Byzantine solution and concluded in their whitepaper (please give it a read), that there was issues with it's application in relation to blockchain finality. This refers to a blockchains ability to assure that a transaction can not be reversed, altered, or tampered with once submitted to a blockchain. The current Byzantine mechanisms however were only able to give a binary finality, this in a sense refers to faulty nodes being able to submit incorrect information or reverse transactions if they became the majority as this is how proof of work consensus mechanisms operate.
The second issue with current models that utilised the proof of work concept, was there was no method to incentives the good behaviour of node operators. This of course all changes, with the usage of proof of stake.
I present to you Casper's revised Byzantine consensus mechanism.
Validators (Think of these as virtual servers) will exchange messages between each other relating to transactions sent across the network so that they can reach a consensus (agreement). For a transaction on Casper's network to be validated (confirmed), only a few validators need to come to an agreed consensus, what ever the network threshold will tolerate. Just like the Byzantine fault tolerance mechanism... however there's an interesting twist.
Casper has adopted the Constellation Network (DAG) consensus framework. This thus means Casper has adopted a different distributed ledger technology i.e. meaning they are not using blockchain per say.
The way validation history is recorded on a blockchain network is in a linear manner, in which you read from left to right. From start to finish. That is a blockchain. A new block must reference the previous block on the chain for the blockchain to continue to grow in size.
However DAG's consensus framework allows for transactions and their history to be layered on top of each other, which means blocks don't just look like a chain stretching across in a straight line, they look kind of like towers that all interconnect with each other. A new block that gets added to the top of the tower of already formed blocks can reference multiple previous blocks all at the same time, this because one tower of blocks accounts for a single transaction.
Every block in the tower contains a sender ID as well as citations (signatures) from all the validators that agreed to the validation of that specific block. The beauty of this is that it allows us to trace the history of validators that are showing to be faulty and see if there were other blocks affected.
Now you might be thinking... DAG?.... Validators?....Byzantine....? What does this have to do with Casper? Why are they even called Casper???
I had to explain all that context to explain the beautiful concept of Casper Network's protocol.
The Ghost concept (hence why they are called Casper):
Casper by adopting the DAG consensus framework and the Byzantine fault tolerance model, produced a network that when a block is validated, a fork (copy) of that blockchain is created (ghost chain). Think of it as the creation of a parallel universe. It is the role of the validators to vote which ghost chain is the one they should be following however that doesn't mean that the other forks of the blockchain are disregarded, nope far from it, they in turn run alongside of the chosen fork and will have ghost blocks added in real time. Now over time the validity of the other chains may increase over the previously chosen one. This means that even if a lot of validators went down the network could still run on the ghost chains.
Each validator maintains for every proposed validated block a confidence parameter (score) that calculates how likely it is that the validated block on the will either get reversed (for being faulty) and not end up on the chosen chain. Confidence parameter is proportionate to the number of validators in agreed consensus i.e. This means a certain threshold of validators must have agreed that the block validated was correct as it will be compared against the information that was submitted across all validators.
But doesn't this mean the network is susceptible to 51% attacks in which if the majority of validators on a network are bad actors then they control the confidence parameters and they can reverse and add blocks to the chain?
Casper uses the Byzantine fault tolerance to establish the threshold amount of validators that validate a block (based on the confidence parameter), so it doesn't matter if the majority are bad actors! A higher confidence parameter would mean there was less bad actors as the correct response was submitted by the majority. Casper also use their Byzantine fault tolerance alteration to incorporate finality - in which the longest uninterrupted ghost chain stored on the validator is the selected i.e. the chain with highest confidence parameter score.
Ok... but why after all of this should I care about the network, why do institutions care about developing on Casper?
Casper is a layer 1 network just as Ethereum, AVAX or Cardano. Enterprises and developers can build using their network design and functionality to build services and products. Most time when discussing Casper you will here it described as Ethereum 3.0, and there is some truthfulness to this statement. It is based on Ethereum's long term plan to scale out and enhance network security they are looking to adopt a protocol very much in line with what Casper has already built. Casper is the present status of Ethereum's future. Developers instead of utilising bloated gas fees, can take full advantage of the Casper network.
I'd like to give a shout out to Gemini who wrote a good write up explaining the benefits of the Casper Network. Click the pic below to go read the full article!
Tokenomics and Where you can buy:
Total Supply: 10.5 billion tokens
Circulating (As of writing): 2.6 billion
Market Cap (£): +400million
Exchanges (I recommend): Huobi Global
Gate.Io (Have heard good things)
In relation to the exchanges, there is good liquidity to buy the token. Huobi global is reputable and I have personally used the exchange. Gate.io i haven't personally used before but have heard that it's ok, however I would preferably choose Huobi.
As for the Tokenomics, I am not a fan, from a non participatory investment standpoint. This is a personal gripe that I have with large token supplies and is no slight against Casper network. When a token has a supply of over 1 billion then there has to be either a very high demand generated to compensate for the large float of tokens, or to maximise gains you have to be as early as possible to invest.
However I was pleasantly surprised that Casper Network had dedicated sections of their website to thoroughly explain and justify the large float they had in which was necessary to ensure functioning and longevity of the network, this is provided in the documentation of the website, but I must warn it is very uneasy on the eyes for anyone looking to research (then again I was using night mode lol).
It's again a lot of information but I will state it is very well explained.
The documentation on the website breaks down the Tokenomics into four sections. How the token supply is applied to the consensus layer of the network, how it is used in ensuring runtime of the network, how the token supply can be used to provide liquidity for developers and enterprises on the network, and finally how the token supply compares to those in the cryptocurrency market. Below is a pic of their explanation of their standing in the cryptocurrency market.
Thoughts on the Project:
Casper network is one of the top projects to invest towards going into 2022. I want it to be known that I currently have not invested and bought any tokens pertaining to Casper as of the time of writing, however it is strongly on my radar. I don't waste my time writing about projects that don't grasp my attention from either a technological point of view or an investment point of view. Technologically Casper does that. The Ghost protocol is interesting to read about, I can't imagine how developers would plan to use the platform in the future.
From a Tokenomics standpoint, though I have a personal gripe with large token floats, I love that the team didn't compromise the integrity of the network to make it deflationary and had the self awareness to understand that the network that they are building if it is to be scalable and remain active, would need to incentivise participation.
Things I will be looking out for throughout the entirety of 2022 is the number of projects building on Casper Network. At the end of the day, if no one is utilising such a great network then it really will end up as a ghost chain. With Casper being relatively new in the cryptocurrency space, we as investors need to see it escape the same issues that Cardano has gone through and projects such as Zilliqa, and that is very few if any blockchains are built on the network. What makes Ethereum daunting to many projects is that a large majority of the DeFi and blockchain networks have built their tokens and ecosystems using Ethereum to the point that if Ethereum crashes in market price half the market goes with it. AVAX and SOL have been rising as alternatives to Ethereum via projects built on their network being able to showcase why their networks are amazing.
So what would I like to see from Casper in 2022/2023, a lot of DeFi projects and NFT marketplaces. You want people to participate on the network and use the Casper network, incentivise DeFi projects and NFT marketplaces to build on your network.
If Casper is the fertile land and construction site, then DeFi/DEX and NFT marketplaces are the shopping centres and Industry plants that drives people to form communities and utilise the resources on the land to survive.
I would also like to see partnerships with other networks in the cryptocurrency industry that have strong links to the financial sectors and work on large scale projects. For example partnerships with the Hyperledger foundation, or the Web3 team will not only provide a way to showcase what the team has built to 100s of organizations, but open the doors to high skilled developers and gain exposure.