Ethereum uncle inclusion
In- stead of restricting the ancestors of a block to one, Ethereum follows an inclusive approach  where main chain miners can reference uncle blocks. INDEX TERMS Ethereum, uncle block, selfish mining,  Y. Lewenberg, Y. Sompolinsky, and A. Zohar, ''Inclusive block chain. The sum of native units rewarded to miners for creating and including uncle blocks in thatinterval. This includes the uncle inclusion reward. FOREX BROKER NEWS TRADING MARKET
One important fact is that the more transactions a block contains or the more gas a block uses , the longer it will take to propagate through the network. In the Bitcoin network, one seminal study on this was Decker and Wattenhofer , which found that the average propagation time of a block was about 2 seconds plus another 0.
In Ethereum, we can make a similar analysis, except that thanks to Ethereum's "uncle" mechanic we have very solid data to analyze from. This mechanic was originally introduced to reduce centralization pressures, by reducing the advantage that well-connected miners have over poorly connected miners, but it also has several side benefits, one of which is that stale blocks are tracked for all time in a very easily searchable database - the blockchain itself.
We can take a data dump of blocks 1 to before the Sep attacks as a source of data for analysis. In general, the uncle rate is consistently around 0. Because we have the gas consumed of both blocks and uncles, we run a linear regression to estimate of how much 1 unit of gas adds to the probability that a given block will be an uncle. The coefficients turn out to be as follows: Block 0 to k: 3. The "base" ie. For now, we will leave this result as it is and not make further conclusions; there is one further complication that I will discuss later at least with regard to the effect that this finding has on gas limit policy.
Gas pricing Another issue that touches uncle rates and transaction propagation is gas pricing. In Bitcoin development discussions, a common argument is that block size limits are unnecessary because miners already have a natural incentive to limit their block sizes, which is that every kilobyte they add increases the stale rate and hence threatens their block reward. However, there are modifications that can be made to the protocol to limit this coefficient.
In Ethereum's current environment, block rewards are 5 ETH and will stay that way until the algorithm is changed. Accepting 1 million gas means a 1. Fortunately, Ethereum's uncle mechanism has a happy side effect here: the average uncle reward is recently around 3. The simplest way to push the equilibrium gasprice down further is to improve uncle inclusion mechanics and try to get uncles included in blocks as quickly as possible perhaps by separately propagating every block as a "potential uncle header" ; at the limit, if every uncle is included as quickly as possible, the equilibrium gas price would go down to about 11 shannon.
Is Data Underpriced? All words and definitions related to Blockchain and Ethereum. Blockchains Blockchain In Ethereum, a blockchain is a sequence of blocks validated by the proof-of-work system, each linking to its predecessor all the way to the genesis block. This varies from the Bitcoin protocol in that it does not have a block size limit; it instead uses varying gas limits.
Address An address is the representation of a public key belonging to a particular user. Addresses are essentially contracts that can receive or send transactions on the blockchain. Note that in practice, the address is technically the hash of a public key the rightmost bits of a Keccak hash of an ECDSA public key. Transaction A transaction is a digitally signed message authorizing some particular action associated with the blockchain. In a currency, the dominant transaction type is sending currency units or tokens to someone else; in other systems, actions like registering domain names, making and fulfilling trade offers and entering into contracts are also valid transaction types.
State A state is the set of data that represents information currently relevant to applications on the chain. A blockchain network strictly needs to keep track of the state of the chain. In a currency, this is simply balances; in more complex applications this could refer to other data structures that the application in question needs to keep track of e.
Consensus When numerous nodes—usually most nodes on the network—all have the same blocks in their locally validated best blockchain they have achieved consensus. Post-state The post-state of a block is the state after executing all transactions in the ancestors of the block, starting from the genesis going up to and including the transactions in that block itself. History The history is the past transactions and blocks.
Note that the state is a deterministic function of the history. Account An account is an object containing an address, balance, nonce, optional storage, and code. It can be a contract account or an externally owned account EOA. Proof of Work Proof of Work is the concept of requiring a non-insignificant but feasible amount of effort to produce some result.
In Bitcoin, Ethereum, and many other crypto-ledgers, this means finding a hash that is smaller than some target value. The reason this is necessary is that in a decentralized system anyone can produce blocks, so in order to prevent the network from being flooded with blocks, and to provide a way of measuring consensus behind a particular version of the blockchain, it must in some way be hard to produce a block. Because hashes are pseudorandom, finding a block whose hash is less than takes an average of 4.
In all such systems, the target value self-adjusts so that on average one node in the network finds a block every N minutes eg. If a miner gets lucky and produces a valid block, they are granted a certain number of coins as a reward as well as all of the transaction fees in the block. Once the valid block is found, all miners start trying to create a new block containing the hash of the newly generated block as their parent.
Stale A stale is a block that is created when there is already another block with the same parent out there; stales typically get discarded and are wasted effort. Fork A fork occurs when two blocks are generated pointing to the same block as their parent, and some portion of miners see one block first and some see the other. This may lead to two blockchains growing at the same time.
Generally, it is mathematically near-certain that a fork will resolve itself within four blocks as miners on one chain will eventually get lucky and that chain will grow longer and all miners switch to it; however, forks may last longer if miners disagree on whether or not a particular block is valid.
Double Spend A double spend is a deliberate fork, where a user with a large amount of mining power sends a transaction to purchase some product, then after receiving the product creates another transaction sending the same coins to themselves. The attacker then creates a block, at the same level as the block containing the original transaction but containing the second transaction instead, and starts mining on the fork.
Light Client A Light client is a client that downloads only a small part of the blockchain, allowing users of low-power or low-storage hardware like smartphones and laptops to maintain almost the same guarantee of security by selectively downloading small parts of the state without needing to spend megabytes of bandwidth and gigabytes of storage on full blockchain validation and maintenance. Web3 The third version of the web.
First proposed by Dr. Gavin Wood, Web3 represents a new vision and focus for web applications: from centrally owned and managed applications, to applications built on decentralized protocols. Wallet Software that holds secret keys. Used to access and control Ethereum accounts and interact with smart contracts. Keys need not be stored in a wallet, and can instead be retrieved from offline storage e.
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Now we present the uncle mining pattern in figure 4. Figure 4: Uncle mining pattern In this pattern the block B1 is a sibling of the block A1, and it is referenced by a child block A2 of the best chain in orange. Because B1 does not count in the difficulty calculation for establishing mining target difficulty, and because we assume the blockchain is in a stable state, the difficulty of this blockchain state must be lower than of the average state.
Also we can easily see that the pattern repeats every 3 blocks of the best chain, not 4. Note that the GHOST blockchain weight does not vary from the average pattern to the uncle mining pattern, but the GHOST weight is not what drives the mining difficulty in Ethereum, but block timestamps are.
So the uncle mining strategy provides 0. In other words, this strategy should be selected by any rational miner if his hashing power is greater than But the dishonest miners have also increased the honest miners revenue! Why would they do that? This is because mining in Ethereum is not a zero-sum game , miners in Ethereum are not competing, but incentivized to form an organization. One may argue against the benefit of the strategy of uncle mining by noting that by increasing the money supply, dishonest miners are increasing the monetary inflation rate, which indirectly makes their recently earned coins less valuable.
But this an indirect and much weaker effect. If the dishonest miner is not a mining pool but a private miner, and the strategy of the dishonest miner is to increase the percentage of ether owned over the total ether in existence compared to other miners, over a long period of mining, and assuming the other miners are also private miners hoarding their rewards, all in order to be able to have higher returns when Casper proof-of-stake mining is in effect, then maybe behaving honestly is better.
Honest mining keeps the balance between miners stakes. But the efficient market hypothesis implies that proof-of-stake mining will not be profitable, because the entry barrier to Casper mining is low just buy enough ether and create a bond. Therefore, dishonest PoW mining seems the best plan now. Now we can see how some of the conditions and assumptions affect the uncle mining strategy. What if the remaining miners are dishonest and also follow the uncle mining strategy? If all remaining miners are also dishonest, and if there is no limit in the number of uncles to reference in a block, then clearly we can reach a tragedy of the commons and the network would stall.
But Ethereum limits the number of uncles per block to at most 2. Note that the best strategy for a miner turning dishonest is not to switch completely and instantaneously to uncle mining, but to do it gradually so that the best chain keeps increasing while the difficulty drops. If the uncle rate is high enough so that uncle mining strategies compete with each other, then a modification of the previous strategy can prevent competition and assure a steady revenue from uncle mining as shown by figure 5.
Uncle mining algorithm strategy 2 Let B be the best chain tip If at least one locally found block has not been referenced by other blocks in the best chain for a depth greater than k: Start mining a child C of B normally, referencing the missing siblings max 2 siblings.
If a solution for C is found: Broadcast the locally solved blocks if not broadcasted before Broadcast the solved block C referencing the solved blocks Remove the referenced blocks from local storage if present Go to step 1 If B is no longer the best chain tip: Go to step 1 If all locally stored valid blocks have been referenced by mined blocks: Start mining block C, being C a child of B.
If solution for block C is found: Locally store the block C but do not broadcast If most of my peers have a sibling of C in their best chain: retrieve all locally stored blocks and broadcast all of them Go to step 1 Go to step 3 This strategy does rely on some of the conditions 1 remaining miners are honest, and unlimited uncles. The best value for k has not been analyzed in this article k may be a constant but can also depend on the number of unreferenced self-mined uncles. Even if the maximum uncle reference depth in Ethereum is 7, we present a pattern having period 6 to avoid delaying uncle references too much because uncle payout depends on this.
The resulting periodic pattern that takes advantage of the strategy 2 is depicted in figure 6. Note that this back-of-the-envelope computation and the minimum pattern is only an approximation, since the best pattern depends on the value or function k. From Theory to Practice.
What is the actual practical threshold? Vitalik has raised several objections to this figure, which I list below and I try to address original Vitalik objections have been minimally edited to reduce space : Objection 1: Not all uncles immediately get included in the earliest possible block, and so they often get lower rewards than the maximum. Empirically, we see eg. Partial Refutation: Propagating a block takes 2 seconds in Ethereum. Therefore miners should be including the uncle immediately in the following block.
What is happening now is that uncle referencing is delayed because one of the following reasons: uncles are consuming more block space and that delays transmission uncles are consuming more CPU during verification uncles are being created by a minority of miners with poor connectivity mining pool management applications do not update immediately workers when a new uncle is received, but they do update their workers immediately when the best chain has been modified.
Polling for new block templates is either not done or done only at a low rate. If the reason is 4, then clearly uncles will be delayed one block unless they are sent milliseconds before the pool software ask for a new template but after the pool software has been notified of the new best chain block. Partial Refutation: While is it true that the delay in broadcasting a block makes that blocks less probable to be referenced by a nephew, the delay is much less than a rung in the ladder.
A full rung would be a delay of an average block interval 12 seconds while the current delay is comparable to the network propagation time, and the later can be reduced by the attacker by increasing its network connectivity. So the best strategy in the lucky case a miner mines two children of a parent is just to start mining a grandchild of one of the children referencing the other child as an uncle. If you find a solution to the grandchild, then publish all three.
This basically extends the best chain of the network by 2 blocks. Also the miner can probably tweak the dates to prevent difficulty adjustments. Hence, you are actually creating an incentive for miners to leave your pool. Granted: Yes. Objection 5: This analysis assumes that miners are a static set. In reality, increasing the mining reward will bring new miners in.
But not in the short term, not with current ether volatility. As an example, the price of ether now is 6 times more than in January. The peak was in March 15 times more than January. Therefore the uncle miner should not expect any change related to its behaviour before two months.
There are two main reasons for this. First of all, it decreases decentralization in Ethereum mining. Like it or not, but cryptocurrency mining is often a very centralized activity. Even though there are many different mining pools to choose from, centralization is still present Rewarding miners for producing uncles is an interesting incentive.
Not everyone wants to mine at a large pool, and this move effectively promotes solo mining to a certain degree. It is also an incentive to join smaller mining pools, as uncles will still yield some form of reward. Any miner who is not part of a big pool often has to deal with slight network delays when new blocks are discovered.
In some cases, uncles can be discovered with a split second off the official block being mined. The second purpose comes in the form of increasing overall Ethereum chain security. Uncles are still subject to the same mining work as conducted to mine the main chain blocks. This approach results in wasting less computing resources on stale blocks, which can only be beneficial for the network as a whole.
One big potential issue with this uncle system is how it can create incentives for miners -or even pools- to mine empty blocks. As we have seen on the Bitcoin network, mining empty blocks serves no real purpose whatsoever.
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