KIRA Fondamentales

"In the dynamic world of blockchain technology, economic models underpinning these systems are as diverse and volatile as international markets. Unlike traditional nation-states, where economic stability is often a gradual process, the blockchain landscape is fluid and rapidly evolving. New blockchains can emerge almost overnight, each vying for a slice of the capital pie. This intense competition for staked capital, essential for the security of Proof of Stake systems, introduces a precarious element. Capital in the crypto realm is inherently fickle, constantly shifting in response to market incentives and disruptive innovations. Consequently, the security and stability promised by blockchain technology face continuous tests, not just from within individual systems, but from the relentless pressure of an ever-expanding universe of competing chains. This relentless competition underscores a fundamental vulnerability in blockchain economics – the challenge of maintaining security and stability in an environment where capital allegiance is transient and new players can disrupt the status quo at a moment's notice.”

In the blockchain arena, the scenario is markedly different from the world of nation-states. While new countries emerging is a rarity, the creation of new blockchains is a common, swift phenomenon, unrestricted in number. This landscape, ever-expanding and rapidly evolving, brings unique challenges. Capital, the linchpin of blockchain security, especially in PoS systems, is perpetually in flux, lured by the promise of new, potentially disruptive chains. This fluidity, highlighted in the critique by Ford and Böhme, reveals a critical vulnerability: the assumptions underpinning blockchain security can be exploited in a multi-chain ecosystem, where the stability and loyalty of capital is constantly tested, making the system's foundational security a complex, ever-shifting puzzle

The distinction between PoW and PoS in the context of the vulnerabilities discussed in the article by Ford and Böhme is indeed significant. In PoS systems, the staked capital introduces different dynamics and potential vulnerabilities compared to PoW. In PoS, the staked capital directly influences a participant's power in the network, and the loss of this capital can be a significant deterrent against harmful actions. However, this also means that if there are external economic incentives or mechanisms that can compensate for or outweigh the potential losses from staking, the system becomes vulnerable.

In contrast, in PoW, the investment is in the form of computational resources and ongoing energy costs. While these resources represent sunk costs and ongoing expenses, they do not tie the miner's immediate economic incentives to the network's well-being in the same way staked capital in PoS does. The nature of these investments and the absence of locked-in capital in PoW might lead to different security considerations compared to PoS.

The KIRA network's permissioned governance system is the foundation of all its operations. It is specifically designed to address the fundamental limitations of permissionless systems that rely on assumptions about the rationality of its participants which is fundamentally insecure. In an open, permissionless system, it is impossible to guarantee that all participants will be either Byzantine or rational: A rational attacker can always find ways to profit from breaking the assumptions of the system*, even if their behavior appears irrational in the context of the system itself, which makes it challenging to ensure the security of the system. And this is even more true as we shift towards a multi-chain “Internet of Blockchains” paradigm. To overcome this, on top of its in-house Multi-Bonded Proof of Stake mechanism which allows to use multiple digital assets as staking collateral, KIRA has implemented a permissioned system where Consensus nodes and participants must be granted permission to join the network and participate in governance.

The KIRA governance system utilizes a combination of Roles & Permissions to create a multi-layered governance structure that enables a diverse range of members, a.k.a Councilors, to participate and contribute to the network's decision-making processes. This governance structure is modular and can be tailored to fit specific network conditions and requirements. For example, a multicameral system can be created where subsets of councilors specialize in creating and voting on specific subsets of proposals. This can be useful in scenarios where certain proposals require more expertise or specialized knowledge. Alternatively, a separation of power through checks and balances can be implemented, preventing a single governance branch from achieving a privileged position. This can be useful in scenarios where there is a risk of collusion or centralization. Overall, the KIRA governance system is designed to be flexible and adaptable, allowing it to constantly improve its efficiency and decentralization without relying on factors such as wealth or stake distribution. This makes it an effective tool for ensuring that network actors are motivated and aligned towards common goals, which is crucial for achieving consensus within the network while avoiding the potential pitfalls of permissionless systems. By allowing careful selection and monitoring of its participants, KIRA network is able to maintain a strong and secure network that is well-suited for building decentralized applications.

In Proof of Stake (PoS) networks, users must stake their assets to vouch for the honesty of individual consensus nodes, so that other network participants can trust the network to secure their assets. If consensus nodes are found to be malicious, the tokens they have staked must be slashed to prevent consensus node collusion and the "nothing at stake" problem that can arise in proof-of-stake systems. In most PoS networks, operators and their delegators are penalized if they are frequently offline or double-sign. This is because their consensus node sets are permissionless, meaning anyone can join with enough stake and cannot be evicted. These rules are baked in the automated consensus mechanism and expose delegators to risks such as consensus node misconfiguration, as well as software or hardware failures. This contradicts the Byzantine nature of Tendermint's consensus mechanism, which, by definition, should account for and accommodate failures. In fact, in most cases, these faults do not impact the network's operation and can arise from circumstances beyond the operators' control. Consequently, due to most of these slashing conditions being unrelated to actual security concerns, slashing does not add any security to the network and has negative consequences. By forcing consensus nodes to be online 24/7 and immediately slashing their stake for any mistake or human error, it discourages delegators from staking their assets and makes it impossible to run a node in a home environment, driving network operators towards centralized cloud service providers like AWS.

Unlike other PoS chains, KIRA uses a unique approach to managing uptime and downtime for its consensus nodes. Instead of penalizing delegators through "slashing" when their selected nodes go offline, KIRA uses a system of "ranks" to incentivize uptime and create a friendly, competitive environment. KIRA does not expect 100% uptime from its consensus nodes and therefore does not penalize their delegators for downtime. This is possible because the consensus node set is governance-curated and every node maintains equal voting power in the consensus, making it possible to quickly evict any malicious operators. Additionally, not penalizing for downtime allows network operators to host their nodes in home environments rather than in large data centers, reducing costs and increasing decentralization. The expected minimum uptime for validators is outlined in the off-chain Code of Conduct agreement, which is accessible through the data registry. Consensus nodes that do not comply with this agreement can be evicted by the governance, which enforces its own network operation rules. To protect against double-spend attacks, KIRA uses a single slashing condition related to double-signing, which is only triggered in specific situations.

Tendermint uses a flavor of consensus protocol called Practical Byzantine Fault Tolerance (PBFT) which has a communication complexity of O(n²). This means that as the number of consensus nodes increases, the amount of network communication required to obtain a supermajority approval during all voting phases of the protocol in order to finalize blocks will increase quadratically. This can cause non-negligible overhead and slow down the time it takes for blocks to be finalized. Therefore, there is a practical limit to how decentralized a blockchain with PBFT-based consensus can be. Most Tendermint-based blockchains have set thresholds between 100 and 150 nodes to strike a balance between time to finality and decentralization. To mitigate the communication overhead, Tendermint allows consensus nodes to configure bounds on the number of peers they can be connected with. However, it does not provide an efficient method for network discovery, which can lead to multiple latency problems as the consensus node set increases.

For this reason, KIRA has developed INTERX, a middleware that is run by all consensus nodes. INTERX optimizes network discovery by keeping track of the connection status of each node. This makes it possible to increase the practical limit of the node set. Additionally, INTERX is a decentralized API that allows users to query KIRA's state without having to depend on third-party service providers like Infura. This also makes it easy to maintain frontend applications.