Proof of Stake Velocity (PoSV) Summary [Cryptocurrency consensus mechanisms]

As the name implies, Proof of Stake Velocity is a variation on traditional PoS.

It was developed for the Reddcoin project, which abandoned Proof of Work in favor of the more energy efficient PoS (with slight variations).

PoSV changes the way PoS works by giving incentives for users to keep their wallets online and to move the coins and stake often instead of hoarding and leaving the coins inert for long periods.

To achieve this PoSV users a non-linear function to compute coin age.

In the first 7 days age is computed quickly. After that, a logarithmic function reduces the coin age computation until time no longer plays a significant part in rewards.

This is an incentive for users to move the coins or stake more, thus promoting more velocity and liquidity.

The analogy stems from the concept of velocity of money, which is a measure of the liquidity of a currency and how much of it is transacted daily.

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Links

Reddcoin Wiki Entry

Redd Paper

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