Proof of Stake with Casper the Friendly Finality Gadget Protocol for Fair Validation Consensus in Ethereum

Abstract

Blockchain technology has expanded from being an unchangeable log of transactions for cryptocurrencies to a programmable collective environment for developing distributed dependable Applications (Ethereum). Nevertheless, blockchain technology has handled various challenges, presumably none of the earlier work focused on using blockchain to develop a secure data transaction system using only proof of stake. Ever since Ethereum first announced its intentions to make a switch from a Proof of Work based system to a Proof of Stake based system, it has had everyone guessing how such a bold move would take place. Ethereum’s answer to the question is Casper-the Friendly Finality Gadget protocol, which works as a hybrid of PoW and PoS. Many questions could be raised against the working of Casper and we try to raise a few questions of our own. In this paper, we study about Byzantine’s Problem, the Nothing At Stake problem, Proof of Work and Proof of Stake based system. We look into why Ethereum wants to shift from a PoW based blockchain to a PoS based blockchain, how Casper has solved the Nothing At Stake problem through its consensus mechanism and whether or not this consensus mechanism is fair. We study about how the validation in Casper could be exploited and propose a system that could prevent such an exploitation, which may prove to be instrumental in ensuring fair validation.