Koinos Will Use Proof Of Burn Consensus Algorithm
Yesterday, Andrew Levine revealed the consensus algorithm Koinos blockchain will be implementing in his Medium article titled The Next Evolution in Consensus. Andrew does great job articulating the story behind Koinos and the reasons why they decided to go with Proof of Burn algorithm. He also included a youtube video covering everything in the article. Feel free to visit the article to read, listen, or watch the contents of the article.
I am a Koinos investor and have decent amount of Koins. For this and other reasons I would like to see the Koinos project to succeed. I am neither a blockchain expert, nor am I a financial advisor. I am someone who is interested in innovations and experimentations in blockchain space. In this post I would like to share my thoughts on two topics: announcement of Proof of Burn algorithm for Koinos, and how to prepare to claim Koins when the mainnet launches.
Proof of Burn in Koinos
The article does a great job of explaining why they decided to go with Proof of Burn and give a little bit of information how they will be implementing Proof of Burn in Koinos. I wish they focused more on explaining details of Proof of Burn. Maybe we will learn more in the future. I also do not agree with some of the reasons provided that Proof of Burn is a better consensus algorithm. But I think I do understand what the overall message is and I like it.
Koinos from the very start set very ambitious goals for themselves to build a blockchain that is capable to do all the things current top blockchains do in a more efficient manner and with more features like modular upgradability, support for commonly used programming languages, etc. To me it seems like, they want to set themselves apart from other chains and do things differently while using all the available technologies.
Andrew himself mentions in the article that Prof of Brain is not a new thing. It was originally proposed by Iain Stewart in 2012. They would like to implement Proof of Burn algorithm to make participation in block production accessible to many regardless of how rich participants are or how sophisticated their machines are. In other words they would like to make it as decentralized as possible. This is not the first time Koinos is emphasizing efforts to make blockchain participation decentralized and fair for all.
If you remember how the Koin mining started last year, they built a beautiful UI to mine Koins and made it available for everybody. Their idea that time remained to make mining available to as many people as possible and distribute initial Koins to as many people as possible without giving any advantage to founders or any other participants. However, that didn't really work out as planned, did it? Very quickly some people figured out how to mine Koins more efficiently and were able to accumulate Koins and large amounts. Miners like me who used personal computers ended up giving up after few days of mining, because buying the Koins in the market would cost the same as mining if not less.
It wasn't anybody's fault. Things just don't always work out as planned regardless how great the ideas are and how thorough preparations are. In the end, I believe it worked out just fine. Those who wanted Koins did end up with some, either by mining or by buying. In retrospect, it turned out to be a great investment.
The reasons for choosing Proof of Burn are similar to how they wanted the initial mining distribution to be. The goal is still to implement best kind of decentralization. By removing a need for Proof of Work out of the equations, they are making it accessible for all to participate regardless of how sophisticated their computers are. At the same time not relying on Proof of Stake, the network doesn't necessarily favor the rich in reaching the consensus, but rather consensus is reached by those who are willing to take the risk of burning native Koins in hopes to earn back the Koins they burnt and more.
What is burning you may ask? Burning is an action of making Koins unusable by anybody and possibly removing from the circulation. Usually, it is done by sending the Koins to special account that nobody has access to and the Koins received in that account have no way of getting back out to the circulation and essentially get destroyed. In Hive we have @null. If you want to burn some Hive or HBD, send them to @null. Don't actually do it! lol. Unless you have a good reason to.
Koinos will be using NFT mining rigs (virtual miners).
To efficiently track virtual miners, the Koinos system will manufacture miner NFTs which are acquired by aspiring block producers who submit proofs of their burns to a system-owned automated market maker contract.
As Andrew explains, in Proof of Work miners are burning capital to build infrastructure and burning energy to mine to earn rewards. Instead of doing that, in Proof of Brain miner can just burn native Koins to acquire miner NFTs. More Koins miners burn more "hash-power" they have, and more rewards they receive. It is interesting.
My questions are how many miner NFTs will the system create, is there going to be a limit on miner NFT creations, can these NFT be destroyed too?
In essence, it seems like miners will be buying miner NFTs, and proceeds will be burnt decreasing the total supply of the native Koins. But miners aren't necessarily losing capital, because these miner NFTs are virtual assets too and be traded in the market.
Miners will be earning Koins based on blocks produced and will be receive these earning at various periods of time that change based on the demand for miner NFTs.
The more demand, the more the payback period gets pushed into the future. The less demand, the shorter the payback period becomes.
Andrew concludes the article saying that this system will be deflationary. I don't quite understand it yet. I can see how burning Koins will reduce the supply. But if the inflation has no cap limit, regardless of how many Koins you burn, there will always be more Koins produced. So, not really sure it will be deflationary. Perhaps we will find out more in the future. I would like to know more about how inflation will work and what annual percentage it will be of the total Koin supplies.
What are you thoughts about Proof of Burn? Does it sound interesting to you? Would this make you more interesting in getting involved in mining Koins? Let me know in the comments.
Claiming Koins When Mainnet Launches
Another piece of information Koinos recently has made available is how one can claim Koins in the mainnet when it launches. It seems like Koinos mainnet will launch sometime in Q1/Q2 of 2022 or maybe even later. In any case, if you have some ERC-20 Koins, it is always good to be prepared when the time comes to claim the real Koins.
Currently, Koins are only available in ERC-20 Koin form and are traded only on Uniswap. If you have these Koins, you need to make sure to keep private keys or 12/24 word recovery phrases secure. Depending on which wallet you used to store your Koins, you may want to double check you have all the private keys, and recover phrases available to you.
Sometime in the future Koinos Group will announce a date when the snapshot of the ERC-20 token contract will be taken. The Koinos main net will replicate this snap shot on a one to one (1:1) basis. Since Koinos mainnet will use Ethereum compatible addresses, we will be able to use same private keys to access funds in Koin wallets.
They highly recommend for Koin LPs to remove their tokens from Uniswap, after they announce the snapshot date. Not removing them may result in losing these funds. After the snapshot and mainnet launch, ERC-20 Koins will have no purpose and will/may end up losing all the value. So be prepared, if you are invested in Koins. Join Koinos discord server or sign up to their email newsletter to stay updated on the latest progress.
Thank you @bluerobo for always sharing the latest information on Koinos and sharing the article on Proof of Burn.
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BEERKING.No limit on miner NFT´s, it will share some % of inflation between then as far i know from twitter.
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Wow am just knowing about the koinos I hope it will be a better investment.
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Amazing ❤️
Yeee it is
that's a type of coin

Its a good one
Well if your just looking at Koin as a deflationary asset, I think price will at least do well. However what else is Koin used for in their blockchain? After all deflationary tends to reduce people from spending.
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It's not really as much if a cryptocurrency meant for spending as it is a resource meant for using.
I am not looking at it as deflationary asset. Will be interesting experiment though how people will compete to mine Koins by burning more Koins.
Staked KOIN is required to be able to transact on the KOINOS network. The more KOIN staked, the more MANA one gets. MANA is more or less the equivalent to RC at HIVE. That doesnt mean everybody consuming services on the KOINOS chain will need to buy and stake KOIN, since the team is advocating the idea of the dApps to provide the required MANA for a transactions. KOINOS will support MANA delegations as well, something we dont have at HIVE. This MANA delegation will be the feature that allows a dApp to 'pay' for a users transaction. At least, that is what I understood from listening in a whole set of voice chats Andrew does at Twitter.
Thanks that is kind of similar to HIVE and the MANA delegations seems similar to the talks about RC delegations too.
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In a way indeed, as far as I understand the discussions regarding RC delegations.
I do wonder where that discussion came from. Did HIVE copy what Koinos is doing, or the other way around. Well, it doesnt matter really.
I can imagine how excited you are inside, these two hours of waiting ... I wish you success!
waiting for what?
Thanks for providing a very simple meaning of "burning," which is easy to understand. As for Proof of Burn, I am glad to add another vocabulary to my list of blockchain protocols. Yes, it appears interesting, but not to the point of getting involved in it. How it works still remains a "mystery" to me. Thanks anyway for sharing about Koinos. Is this their website? https://koinos.io/ Downloaded its whitepaper and will read it as my time allows.
Yes, that is their website. I don't fully understand how it will work. I will start learning more once the mainnet launches.
I'm glad to have joined when it all started!
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I don't understand why these coinschave too much circulating supply that it needs to be burnt to make it better. I think it is just a marketing strategy that will develop the hype of price skyrocketing at burn. May be you can enlighten me more on this concept.
Oh Btw, I am never going to burn hive that I will have in coming weeks and months.
I dont think its a marketing strategy at all. The KOINOS team is not one of those teams that go by hype. When so, they would've made sure they released mainnet right now and done a lot of hype marketing last year, and would also created a KOIN trading solution. They did none of that. FYI: The KOIN/ETH LP was setup by the community.
Already for some weeks I have this task open to connect with the Koinos community again, but so far failed to do so. As you, I was one of the first day miners of KOIN and stopped like after 2 or 3 days. Subsequently I started to buy some KOIN since I felt this team will create something super good. Not financial advise, but if these guys can deliver what they promise and if they do play the business game well, this KOINOS chain will be part of the top 10 tokens, at some point in time. Through a Twitter chat I already understood mainnet will not be delivered this year. You say: Q2 or even Q3 2022? I do hope more like Q2, or even sooner, but the launch of mainnet must be flawless, so when that takes longer to reach that, than it'll take longer :)
Proof of Burn. Need to read the article, but I suppose anything that allows peeps to participate in mining that isn't related to the amount of money invested upfront (PoW and PoS), is a good method. I like to see a super decentralised chain for KOINOS since I believe this will set KOINOS apart from all the other general purpose smart contract chains. Not sure how the chain itself works when mining is gonna be through NFTs. NFTs doesnt give any compute power that is required to run a KOINOS node processing and validating transactions. Something and more than someones need to do that. Anyways, will read the article.
Deflationary KOIN token. Not looking at details, I can imagine the statement from Andrew on KOIN to be deflationary has to do with the idea that the amount of KOIN printed will be less to the amount of KOIN being burnt. However, if we take the case that the printed KOIN is solely meant for rewarding the miners, and KOIN will only be burned by the miners, deflationary basically means the overall mining network makes a loss. Somehow this feels not the right solution. That said, casino's work on exactly the same model, and they make good money and see the usage of their service growing instead of slowing down.
Though I/we don't know all the details, I'm super confident that the team will come up with something rock solid.
Hi @edje.
You bring up an interesting explanation how deflation would work. I didn't even consider that for some block producers mining will be a losing game. That makes more sense now. I guess we will find out more in the future. It is an interesting project indeed and I can't complain for investing in it. If you say it can become one of the top 10 coins, then I may need to hodl them for longer time. :) Thank you.
Don't take my word for Koin to be sitting with the top coins at some point in time. It may happen.But it may not happen as well. After the relauch of Koin token, it may not even get any traction. We dont know. The crypto universe is quite unpredictable. Other projects and chains maybe favoured. In the end the value of a token is determined by its usage. Though Koinos chain has good cards to build an ecosystem, the development/crypto business market have to see the benefit in adopting the Koinos chain. Speed and cost to Ethereum, and Ethereum-likes may not be an issue anymore with the L2 solutions in and coming to the market, hence a reason less to adopt yet another none-Ethereum like chain. But that said, Koinos has good cards in my honest opinion. Therefore HODLing a bit of tokens maybe not be that bad... NOT FINANCIAL ADVISE, JUSTMY PERSONAL OPINION {have some gamble like part that plays a role in previous statement}
Finally, I got around to reading the Koinos Consensus Algorithm white paper. It holds this small paragraph about deflationary characteristics for Koinos. Though, in this paragraph, it is explained that under certain conditions, Koinos is deflationary. However, when such conditions are not met, Koinos can be inflationary.
In my own words and to my own understanding, Koinos will be deflationary when the demand for miners is increasing over time, ie increasingly more Koin will be spent/burned per the same amount of time to acquire the miners. With a set limit to the amount of Koin being printed per time period, the system ends up burning more Koin to Koin being printed. Hence Deflationary. I believe, to reach such a situation, the value of Koin needs to increase as well. Something that may happen intrinsically since those who want to produce blocks needs to buy Koin to pay for the Koinos Miners.
However, when said conditions are not met, Koin can become inflationary. And to be honest, Koinos must allow inflationary mode. Hints of the reasons are given in the white paper as well.
A question I had was: "What happens when the interest in mining is so low that the network will break, ie an increasingly lower amount of peeps willing to become block producers?" I believe the chain will have to rely on at least enough peeps that are willing to take the risk to recoup their pre-invested money to acquire the virtual miners, in an undefined time period, which is in kinda worst-case scenario's months to years and in most worst-case scenario infinite.
Though my question was more or less answered by the white paper, at least to my understanding, I will address this part in the Koinos community. Hopefully, sometime soon I'll have a Koinos Group answer instead of my own :)
The white paper also answered my question on the software nodes that are required to run the blockchain. It's not enough to hold the virtual miners to be rewarded as block producers, but one also needs to run the Koinos blockchain node software. At least, that is my takeaway from the white paper. Also this I'll confirm with them.
Not sure about what I'm now gonna state, but maybe SPK network is gonna use something similar regarding virtual miners. Wondering who come up with the idea first: SPK team or Koinos team. Or both independently. Anyways, doesn't matter too much. Koinos will be the first general-purpose blockchain adopting such a consensus algorithm, which is a huge plus imho. I just hope the crypto developers and dApp market, will think the same :)
I am surprised that the same recovery key that I use in my wallet will be able to be used in the future in my KOIN wallet. Also, I am anxious that I will miss the launch and my tokens will lose their value! Crypto can be so stressful in some ways! Still, it's an exciting project.
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