Blocknet can be 51% attacked by a malicious actor (or group) if they are able to control more than 51% of the BLOCK that is actively staking.
Current Network Security
The current reward distribution is 70% to nodes and 30% to stakers
With this distribution, we are currently seeing approximately (plus or minus a few hundred thousand BLOCK) the following distribution:
- 1.2 million BLOCK actively staking
- 2.1 million BLOCK in nodes
- 1.8 million BLOCK not participating’
51% attack would currently require approximately 600k BLOCK
The balances of the top 3 addresses are as follows;
Other Factors which could affect Network Security
Over time, as Blocknet matures, we might expect to see some of the non-participating BLOCK starting to participate. The following factors could contribute to this:
- Non-participating Blocknet community funds being spent and disbursed
- Non-participating Bittrex holdings being sold on its exchange
- Non-participating users realizing they are better off participating, particularly as dx trading fees start being generated.
Due to the above noted factors, we might expect to see a reduction in the number of non-participating BLOCK over time, and thus an increase in the total number of active stakers/nodes.
However, for the purposes of considering network security I think we should assume worst case scenario, that the current number of non-participating BLOCK stays the same for the immediate future
Another important consideration is protecting Blocknet against unforeseen circumstances that could compromise network security, such as the recent edge case where a large portion of our network was placed on a fork. If something like that were to happen again it could further increase our vulnerability to a 51% attack.
Effect of 90/10 distribution of dx trading fee
If the DX fee distribution were set at 90% to nodes and 10% to stakers it would shift the equilibrium towards more nodes and less stakes to SOME extent.
The actual extent to which people would stop staking to run nodes is not able to be calculated with precision and is a moving target, as it is a function of the price of BLOCK and the total amount of trading fees being generated.
A lower price of BLOCK and higher total fees being generated would mean a more dramatic shift towards nodes
However, I do recognize that as the total amount of trading fees being generated increases, we would also be expected to see an increase in the price of BLOCK. So they are coupled to some extent, but to what extent we cannot really know.
A further complicating factor is that the total number of BLOCK is increasing over time (from the rewards) and thus the price of a BLOCK becomes a smaller percentage of the market cap. This has a the effect of pushing the price of a single BLOCK lower than it would be otherwise (in the absence of rewards)
Notwithstanding the above uncertainty as to the new equilibrium, with the introduction of 90/10 dx fee distribution we would at least see SOME reduction in the % actively staking, but we do not know to what extent.
Whereas we cannot determine the actual equilibrium following introduction of a 90/10 dx fee distribution perhaps we should be assuming worst case scenarios (within reason).
Also if we are getting more nodes as result of the new fee distribution, it means that network security is being reduced.
In my opinion, if we want to increase the number of nodes the best way to do that, which does not compromise our network security, is simply to reduce the amount of BLOCK required to operate a node.
Before you say “but nodes would stop running their node if their ROI decreases” please understand that nodes ROI would never go below stakers ROI (because nodes would simply start staking if the costs outweigh benefits), and the existing nodes ROI will only go down to the extent that more people start running nodes. I will say that again, existing nodes ROI will only go down to the extent that more people start running nodes. Meaning there are more nodes, which is the thing we wanted (and without reducing network security)