Zubair Bukhari

25th June 2018

The Kinesis Consensus Model and Trusted Nodes

It is often asked of us at Kinesis how our blockchain network, forked from Stellar, differs from the Bitcoin and Ethereum networks and what it means that these networks are built with different blockchain models.

Kinesis Blockchain Network (KBN) is a fork of the Stellar network which utilises a consensus model to persist its transactions, known as its ledger. In KBN, 5 Trusted nodes are needed to reach consensus to have a new transaction persisted to the network. This means that 5 separate nodes, trusted by the network, need to agree that the new transaction has been arrived at by following the network’s cryptographic algorithm and has not been artificially created. Every node in the network is aware of which other nodes are Trusted nodes.

Since the KBN is a public network it does mean that nodes can be added to the network by external parties. These nodes can legitimately hold the network’s transactions and historical data, but none of the existing Trusted nodes will recognise this new node as Trusted and hence it will never participate in consensus and hence it will be unable to contribute new changes to the network. This is the consensus model of the KBN, and Stellar, blockchain networks.
In this model, the fees are placed on individual transactions and are accumulated by the network, rather than with individuals.

This is different to the mining network models of Bitcoin and Ethereum, where any number of transactions (blocks of transactions) can be added to the network through ‘mining’ activities, ie through running the cryptographic algorithm using vast amounts of processing power to arrive at the new chain data. Fees are earned by those performing this processing. It is in this way that the demand for transaction propagation can increase fees to extraordinary levels in order to earn more for the mining activities.

This is the primary difference between these blockchain models. In consensus models trusted nodes in KBN can reach consensus about the propagation of change to the network transactions. Transactions are not added through the mining of new blocks of transactions that are added to the network. Mining also has no concept in the KBN consensus model, meaning that there is no risk of run-away fee escalation, and additionally the fees in the KBN, as per Stellar, are accumulated in a fee accumulation calculation that can then be distributed to participants. In the mining model, this would not be possible because fees are paid directly to the miner who works to add the transactions.

In the context of an actual currency that anticipates large usage and high velocity of usage, the mining model would be prohibitive. The fee structure would not support a linear fee accumulation based on this velocity and would lead to processing challenges which in turn would slow the network down. The Stellar consensus model was selected to Kinesis because it allows the linear and central accumulation of fees per velocity and use of the actual currency and not per cryptographic process, it also allows for significantly higher speeds in-network propagation.