While developing DMDv4, we aimed to tackle several of the most pressing blockchain challenges, from the excessive use of energy to lost coins. The result is an elegantly balanced framework that is fair, efficient and decentralized.
Blockchains constantly have to balance efficiency and decentralization. Having thousands of validators who all have to come to agreement does make it difficult to attack a network, but it also creates huge overhead costs and bottlenecks. Having very few validators allows to process transactions much faster, but the network can end up under the control of a small group of stakeholders.
Binance Smart Chain is a good example: its 21 validators are all selected by the tiny board of 11 Binance Chain validators. It’s likely that all those 21 node operators are connected to the exchange in one way or another, making BSC highly centralized.
By contrast, DMDv4 will have a pool of max 438 candidates (likely between 50 and 75), out of which 25 will be selected every 12 hours. The network uses dPoS-based node election mechanics, and the validators share up to 70% of the rewards with their delegators. Most importantly, since no more than 50,000 DMD can be staked on a single validator, a single node will not be able to concentrate too much power.
Many Ethereum-based projects, especially in the DeFi space, have tested the DAO model, where users vote using tokens. While the idea of giving everyone a voice is good, the implementation is inefficient, since users have to pay gas fees whenever they interact with the voting contract. As a result, many don’t vote at all, and all the decisions end up being taken by the large stakeholders.
In DMDv4, all DMD coin holders will be able to participate in the discussion on the proposals without paying any fees, and then validator candidates will vote, both on their own behalf and on behalf of those who have staked on them. If users see that their chosen candidates often change their opinion, they can always switch to a different validator. This model has the best of both worlds: democratic participation and economic efficiency.
Waste of resources
While Proof-of-Stake is often touted as the solution to the energy waste problem, it’s still competitive and requires a lot of energy. DMDv4 uses the HBBFT (Honey Badger Byzantine Fault Tolerant) cooperative consensus model, which is superior to both the wasteful and slow Proof-of-Work and the marginally better Proof-of-Stake.
In DMDv4, there is no need for all the validators to agree: only 2/3 +1 need to reach a consensus, so transactions are approved virtually instantly. There are no forks, no empty blocks, and no orphan chains; a new block can start forming just one second after the previous one. As a result, energy consumption across the network will be extremely low.
We’ve already covered the issue of lost and abandoned coins in one of our previous articles. In a network where new coins are minted all the time and there’s no limit on the supply (like Ethereum), lost coins represent a waste: they took resources to create, and when a coin is abandoned, those resources have been spent for nothing.
In the networks with a finite supply, losing coins results in excessive scarcity and deflation. A healthy blockchain economy needs a reasonable supply of coins to run smoothly.
DMDv4 has a clever system of vaults, or ‘pots’, where coins are reinserted if they aren’t claimed or if they are staked on inactive validators. Thanks to this system, all DMD will eventually re-enter circulation (though it can take years).
There is a growing number of smart contract platforms trying to solve the same issues as DMDv4, including Solana, Elrond, Avalanche, etc. Like them, DMD Diamond supports smart contracts and will eventually be connected to other blockchains via bridges. However, DMDv4 stands out among those chains thanks to its focus on the crucial fundamentals: stable coin supply, efficiency, decentralization. For more information, check out our White Paper and follow us on Twitter.