Scaling Blockchains at the Network and Consensus Layers

Emin Gun Sirer

Blockchain is becoming a big deal.
Every finance company is developing a "blockchain strategy."
$5B invested in startups, $10B invested in ICOs.
Big gap between what's been sold to users, and what current technology is capable of.
Doesn't scale to being a payment system.
What about a store of value?
- Consumes more than two nuclear power plant's worth of electricity
- Alternatively, costs as much energy as the country of Denmark
- $300M annually in value leaking out of Bitcoin
A decentralized system?
- ~19 mining pools in BTC, ~11 in ETH, 21 BPs in EOS

The systems we have cannot sale, cannot implement things like micropayments.
BTC is around 3 TPS, Ethereum about 10 TPS, credit cards around 5K TPS, Alibaba is around 325K TPS.
Scalability only gets worse as the system gets more popular.
- Many bullshit techniques for artificially increasing throughput on a testnet
  - Bundling transactions, such as into 1TB blocks and making decisions on those
  - Centralizing through a single actor/machine/committee

All blockchains fundamentally depend on quick dissemination of data
The techniques they use for this are still rudimentary
- Store and forward networks
- Similar to primitive computer networking in the 1980s
BloXroute addresses scaling at the network layer
- By disseminating information quickly from sources to sinks
- Like Akamai, but for small, timely, high-value data with many sources and sinks
BloXroute democratizes the playing field for miners, stakers, and validators
- Is a block distribution network, regardless of the underlying blockchain

Miners send and receive blocks to the BloXroute network through open source gateways
Uses 100x less data using internal caching
Propagates this data 10-100x faster using cut-through routing
Maintains neutrality via end-to-end encryption
As tokens use BloXroute to route blocks, BloXroute takes a small fee, and BloXroute's token entitles all token holders to a portion of those accrued fees

On May 19, 2018, a group calling itself Team Rocket dropped a PDF describing a new consensus protocol family
- Called Avalanche
- Achieves an entirely new type of consensus
Traditionally, two categories of consensus protocols:
- Classical (Lamport-Liskov)
  - Quick finality, but does not scale
  - Quadratic message complexity
  - Precise membership, permissioned
- Nakamoto Consensus
  - Robust, no need for precise membership
  - High latency
  - Low throughput
  - Does not scale
  - Wastes energy, not green, not sustainable

Goals: best of all worlds
- Quick finality, low latency (~2 seconds)
- High throughput (1k - 10k TPS)
- Scales (10K to 10M nodes)
- Robust, no need for precise membership
- No energy waste
Inspired by epidemic protocols and gossip networks
- Security guarantees controlled by the system designer
- Easy to understand the basis for security
New idea: deliberately metastable
- Randomly sample a small number of peers, ask them their current state
- If you observe a majority winner, change your state to that
- Then re-sample again
- Should take a constant number of re-sampling until the whole system converges
Properties:
- Efficient and scalable
- Can tolerate a large fraction of Byzantine participants, even with imprecise membership
- Egalitarian ecosystem, no mining
- Can participate via cell phone
- Maximal concurrency—constructs a DAG in parallel

Multiple virtual machines
- Ava, the native token
- Additional tokens can be created
- Ava-BTC, Ava-ETH, Ava-Zcash, etc
Sybil deterrence via stake
- Staking nodes receive interest via minting
- No slashing, no fund loss
Economic governance via voting
- Can modify system parameters, within bounds
- Crowd oracle for economic decisions, to sidestep central planning

Serves as payment rail
People talk about "consensus" process in Bitcoin as if it were a way to sample opinions of participants
- In Ava, it actually is
Transaction fees paid in Ava
Governed through repeated sampled voting
- Ava interest rate for staking between 0-5%
Adding smart contracts layer, supports EVM-style smart contracts, 1000X better improvement over Ethereum

BloXroute optimizes and tokenizes data transmission on blockchains
Avalanche is a new platform that uses a novel consensus scheme to produce a more efficient, scalable, decentralized smart contract platform.