“Trust us, we have everything under control” or “You are in full control of your privacy and data” are some of the promises made on a daily basis by service providers and companies who, in a bid to push their products and services, are constantly trying to convince us, the users, to place our blind fate into their ability to guarantee trust and have an ethical approach to privacy. This top-down approach to trust and privacy dominated the Web 2.0 era, during which people were relegated to a position of shortsighted observers who couldn’t see what was happening behind the scenes or take an active role in the trust mechanism.
As we are nearing the Web 3.0 era, the paradigm is slowly shifting, turning old outdated models upside down by focusing on a decentralized and more user-focused approach where the latter is no longer just an observer, expected to place their trust in others, but a participant who takes an active role in helping ensure trust.
Humans.ai is speeding up the adoption of this mindset in the field of artificial intelligence by involving people directly in the governance of AI. Dubbed ‘Heart Driven AI’, our approach distances itself from the outdated centralized model used in the past, focusing instead on humans, placing them at the forefront of the AI revolution.
The pre-staking AI program through which $HEART owners can stake their tokens to help manage their AI of choice and be rewarded for it will be launched starting February. Situated at the confluence between AI and Blockchain, Humans.ai leverages these two innovative technologies to enable people to manage AI requests by becoming human validators responsible for approving or denying usage requests. For their work, the early adopters who steward the good use of AI applications within the Humans.ai ecosystem will receive a series of benefits and incentives.
Staking is the process through which you put your cryptocurrency to work and earn rewards on it. Exclusive to systems that operate on Proof of Stake models, or a variation of it, staking involves locking some of your cryptocurrency assets in your wallet in order to support a blockchain network and help in its governance. Through staking, new transactions are added to the blockchain, and the user who helped in this process is rewarded with the transaction fees. Keep in mind that while staked, you cannot use that currency. Users are always free to unstake their cryptocurrency later if they want to trade them. Depending on the system, the unstaking process may not be immediate, and some cryptocurrencies may require users to stake coins for a minimum time frame.
$HEART pre-staking by Humans.ai
As we are on the brink of the trust era, Humans.ai opens the opportunity to stake.We wanted to stay away from long staking periods at first. In order to prevent people from having their tokens locked up for too long, losing on potential accumulating periods in the future, we have tailored 3 different staking options, as follows:
Blockchain, a foundation of trust for heart driven AI
In order to understand concepts like staking, validators and consensus mechanisms, we first need to dial back a bit and turn our attention to blockchain, the technology that makes everything possible.
Whether it was by pure coincidence or perfect timing, blockchain appeared at an interesting point in time, when people started to lose faith in traditional, centralized payment systems and banks. We are referring, of course to the financial crisis of 2008, a period of economic instability that still remains a vivid memory and a grim reminder of the shortcomings and failures of the traditional financial system. At that time blockchain was a lesser-known term, being outshined by its initial use case, Bitcoin, the first truly decentralized cryptocurrency that consolidated itself over the years as a point of reference for other cryptocurrencies and a store of value, being the most valuable digital currency.
But what was the recipe for success for Bitcoin? How did this digital asset that was initially a point of interest only for tech guys and geeks evolve from something that was awarded as a prize to people that won fifth place in StarCraft tournaments to one of the most sought after and valuable digital assets in the world? The answer was never hidden from us, frankly, it was in plain view all along, but it never got the attention it deserves until relatively recently, blockchain.
What makes blockchain so special? It’s a technology that dared to challenge our perception of traditional financial systems in which a trusted central authority is responsible for verifying and approving transactions, managing to provide a viable alternative to the status quo. Simply put, it is a technology capable of ensuring trust in an ecosystem in which participants do not necessarily trust each other. From a more technical point of view, blockchain is the first to provide a solution to the Byzantine General’s Problem, an allegory that describes the difficulty decentralized systems composed of unknown and untrustworthy actors face when trying to reach consensus on a single truth.
Blockchain is a digital, decentralized and distributed ledger that can be designed to record a wide range of data. The innovation behind blockchain technology stems from its ability to ensure trust and in-depth traceability to the information it stores, while also providing guarantees concerning the integrity of the records. On closer inspection, the name of this technology, blockchain, reveals a great deal about its design and inner workings. Block refers to the type of data structures the information is stored in and chain denotes the fact that each block of information is linked with the previous block through its hash and metadata to form a chain of data blocks, namely blockchain. Due to this design feature, blockchain is an append-only structure, which means that data can only be added to a blockchain, but not deleted. Any new information added to the blockchain is added to a new block which is appended to the chain. Given the fact that each block is interconnected down the chain, modifying the information from a block will invalidate all the blocks that follow because the hashes will no longer match. This is what gives blockchain its tamper-resistant characteristic.
Consensus algorithms, blockchain’s trump card
As we have previously stated, blockchain’s crowning achievement is the fact that it provided a solution to the Byzantine General’s Problem, namely, it managed to ensure trust in a distributed system in which participants do not trust each other. The way it managed to achieve this is through a consensus algorithm that enabled users, also known as nodes, to coordinate with each other and agree on a single source of truth, even if some nodes fail. In a cryptocurrency use case, it is imperative that each node maintains an identical copy of the information, a single source of truth as conflicting records would undermine the goal of the cryptocurrency network, rendering it redundant.
Since Bitcoin hit the market, there have been a plethora of blockchain projects, each of them tackling the issue of consensus differently, depending on their needs and how the network is designed. Even so, every consensus algorithm shares a set of general principles and traits related to how a user should behave in a blockchain and how the network should incentivize or discourage certain behaviours.
We defined blockchain as an interconnected structure that stores information in containers called blocks. In order for the blockchain to expand, additional information needs to be collected into new blocks which will be added to the blockchain. This is usually done by validator nodes who compete with each other to win the right to verify transactions and be the ones to add a new block of information to the blockchain. To be eligible to compete for the role of validator, nodes are required to stake something of value like computing power or cryptocurrency. This acts as a failsafe mechanism that deters any potentially dishonest behaviour, because if users try to cheat, they will lose the stake and depending on the consensus mechanism used, they are not allowed to act as a validator again.
If validators perform their duties, they are awarded by the system and allowed to participate in the governance of the network. Rewards are usually in the form of the blockchain’s native currency which is composed of fees paid by other users whose transactions are validated or newly minted cryptocurrency or in some cases, both. The last element needed to make the system work is transparency, more precisely to make the system verifiable by making block generation (the creation of new blocks) expensive, but maintaining validation accessible, as to allow regular users to keep validators in check.
The first consensus algorithm to successfully implement this formula is Proof of Work (PoW) which was first implemented by Bitcoin. In PoW, validators also known as miners compete with each other to solve a complex mathematical problem. The first miner who manages to reach the result of the problem, also known as a nonce, an abbreviation for “number only used once”, wins the right to create a new block of transactions and add it to the blockchain. The major issue with PoW is that it was purposely designed to be resource-intensive. The mathematical problem in question can only be solved through a brute force approach (it tries different results until it meets one that fits the nonce) which requires a significant amount of computational power. As time passes, the complexity of the problem that needs to be solved in PoW increases. We have already reached a point in which common hardware is no longer capable of handling mining, instead, application-specific integrated circuits (ASICs) are used to mine cryptocurrencies like Bitcoin that still use PoW. The bottom line is that PoW still remains one of the most secure consensus algorithms, but the fact that it takes a brute force approach makes it time-consuming and resource-intensive.
Proof of Stake (PoS) a more energy-efficient consensus mechanism
One of the first mentions of PoS can be found in the Peercoin paper from 2012 in which its authors, Sunny King and Scott Nadal, proposed a new type of consensus mechanism that distanced itself from the energy-intensive approach of PoW. Their approach to Peercoin was to use a hybrid PoW/PoS mechanism, where PoW was only used to mint the initial supply of coins, after which the network gradually transitioned to PoS for long term sustainability.
The main advantage of a PoS system is that it does not rely on mining which requires specialized hardware that consumes massive amounts of energy. Instead of putting forward external resources like computational power and expensive hardware, users who want to participate in the forging process (the creation of new blocks of transactions) need to stake an internal resource, namely the governing currency of the platform in order to become eligible to become validators. Simply put, staking is the process through which users lock some of their funds in their wallets. While staked, the funds in question cannot be moved or transacted. The higher the amount of cryptocurrency staked, the higher the chances of the user being selected by the network to be a validator. Each network imposes a minimum amount of funds a user needs to hold in order to become eligible for staking. Ethereum 2.0 for example will require users to have a minimum of 32 ETH in order to participate in the staking process.
At a first glance, PoS presents itself as a mechanism that favours only the wealthiest users in the network. To combat this, PoS was designed to incorporate additional methods like the “Randomized Block Selection” and the “Coin Age Selection”. In the Randomized Block Selection method, the system will select the next validator node based on what node has the lowest hash value and the highest stake. Since the size of the stakes is made public, users are usually able to predict which node will be selected to forge the next block. In contrast, the Coin Age Selection method selects nodes based on how long their tokens have been staked for. The coin age is calculated by multiplying the number of days the cryptocurrency has been held as stake by the total number of cryptocurrencies that are staked. In the Coin Age Selection algorithm, users who have staked larger sets of coins for longer periods of time have a greater chance of being assigned to forge the next block. Once a user forges a block, their coin age is reset to zero and they must wait a certain period of time to be able to forge another block. This is done to prevent users with larger stakes from dominating the blockchain.
Once selected as validators, users will check with other validators if the transactions that will go into the next block are valid, sign the new block and add it to the blockchain. For helping maintain the network, validators are rewarded with the transaction fees associated with the transactions from the block they forged. Staking works as a financial motivation for the forger node to remain honest and not validate fraudulent transactions. If a user tries to propose invalid transactions or doesn’t manage to fulfil their role as validator they will lose the amount of cryptocurrency they staked through a process known as slashing. Usually, the cryptocurrency staked surpasses the potential reward, meaning the validator stands to lose more coins than they would gain in case of attempting fraud. When a user wants to stop being a forger, its stake along with the rewards they earned will be released after a certain period of time, during which the network checks that there are no fraudulent blocks added to the blockchain by that user.
Proof of Stake is slowly gaining traction for its ability to enhance scalability, security and decentralization. Furthermore, because it is less energy-intensive and it doesn’t require expensive hardware like PoW, PoS is more inclusive as it has a lower entry barrier. Even so, PoS is not perfect as users who hold a large amount of cryptocurrency can have an outsized influence on the consensus process. Also, PoS is susceptible to the nothing at stake problem which can occur when a fork is created in the blockchain either because of a malicious action or accidentally when two honest validators propose blocks simultaneously.
Delegated Proof of Stake (DPoS)
Delegated Proof of Stake was created in 2014 by Daniel Larimer as an alternative version of the PoS consensus mechanism. Bitshares, Steem, EOS, Ark, and Lisk are some cryptocurrency projects that rely on the DPoS consensus algorithm.
In DPoS systems, users can stake their cryptocurrency as votes which are used to elect delegates, also known as witnesses or block producers, who manage the blockchain and validate new blocks, ensuring consensus and network security. Voting power is directly proportional to the amount of cryptocurrency staked in the election process. To promote diversity, most systems choose between 20 to 100 delegates, so the delegates of one block might not be the delegates of the next one. After validating the new block, the delegates receive the transaction fees from the validated block and share them with the users who used their voting power to elect the delegates. Users who commit a higher stake are rewarded proportionally to their amount staked.
DPoS acts as a more democratic method of choosing who verifies the next block of transactions, enabling a wider range of users to participate in the process since it is a system that doesn’t focus on the overall wealth of a user, but on reputation. If an elected delegate acts maliciously or doesn’t fulfil its role, it is swiftly expelled and replaced with another one.
Staking pools allow multiple stakeholders to merge their resources, as a way to increase their probability to be selected as the next validator. Stakeholders who decide to join a staking pool need to lock their cryptocurrency in a specific blockchain wallet. Staking pools are usually ideal for new users because they lower the barrier of entry, giving stakeholders the chance to earn a passive income without having to worry about the technical implementation and maintenance of setting up and running a validating node. Because they are managed as a service by a third-party provider, staking pools charge a fee from the staking rewards that are distributed to participants which result in diminishing rewards for stakeholders but offer instead more predictable and frequent staking rewards.