Clear DefinitionsProof-of-Importance
1 min read
Pronunciation
[proof uhv im-pawr-tuhns]
Analogy
Imagine a community deciding who gets to manage the town's record book. Instead of just picking the wealthiest person (like simple PoS), they consider multiple factors: how much money someone has invested in the town (vested stake), how actively they participate in the local economy by trading with others (transaction activity), and how long they've been a productive member. This overall 'importance score' determines their chance of being chosen.
Definition
A consensus algorithm, notably used by NEM (New Economy Movement), that determines a user's eligibility to harvest blocks (create new blocks) based on a multi-faceted 'importance score.' This score considers not only the amount of vested stake but also the number and size of transactions made to and from other users on the network over time.
Key Points Intro
Proof-of-Importance aims to reward active network participation alongside stake.
Key Points
Used by NEM (XEM).
Assigns an 'importance score' to accounts.
The score is influenced by the amount of staked (vested) currency, the number of transactions an account makes, and who they transact with.
Aims to prevent hoarding and encourage active use of the network, as only active participation contributes positively to the importance score.
Block harvesters are chosen based on their importance scores.
Example
In the NEM network, users need to have a certain minimum amount of XEM vested (held for a period) to be eligible for an importance score. Their ongoing transaction activity with other active accounts then contributes to this score, influencing their chances of harvesting blocks and earning rewards.
Technical Deep Dive
The importance score in NEM is calculated using an iterative algorithm that considers an account's vested balance, its out-degree (number of distinct accounts it has sent transactions to), and the importance scores of those accounts it interacts with (similar to how PageRank works). This means transacting with other important accounts can boost one's own importance. This mechanism attempts to create a more holistic measure of an account's contribution to the network than pure stake alone.
Caveat
The complexity of the importance calculation can make it less transparent than simpler PoS models. It can also potentially be gamed if users create artificial transaction patterns to boost their scores, though the algorithm attempts to mitigate this.
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