Blockchain technology is widely known for the transparency it creates. A blockchain is just like a ledger that records all transactions and displays them publicly. This transparency is blockchain’s way of ensuring fair practices in financial systems. However, it raises concerns of privacy among regular users. Not everyone enjoys having the entire history of their transactions published on a public ledger after all.
To counter this problem, we’ve seen a variety of privacy protocols with varying degrees of usability emerge in recent years. One such protocol is X-Cash.
What is X-Cash?
X-Cash is an open-source protocol launched in 2018 for developing a privacy-focused cryptocurrency. X-Cash’s blockchain is a fork of Monero and it has evolved over time to bring new features and innovations into the world of privacy-focused cryptocurrencies. Even though X-Cash started out with a proof-of-work (PoW) consensus mechanism, it ditched mining and moved to staking over time. When compared to other privacy protocols, X-Cash has developped a unique differentiating feature: FlexPrivacy. It gives users full control over their privacy. They are free to choose if they want a particular transaction to be private or public. This means that users can have full anonymity when and if they need it. The best part is that both the private and public transactions are carried out on the same blockchain.
In early 2021, X-Cash launched version 2.0.0 of its protocol. It eliminates the need for mining and implements the new delegated-proof-of-private-stake consensus mechanism. So, what’s this new form of consensus mechanism? Let’s take a look.
DPoPS Consensus Mechanism
Delegated-proof-of-stake (DPoS) is a very popular, efficient, and widely used consensus mechanism across blockchain networks. However, DPoS is not easy to implement on a privacy-focused network. This is why X-Cash developed the customized delegated-proof-of-private-stake (DPoPS) mechanism that can be used for private crypto networks (notably Cryptonote coins and Monero forks) while still having all the advantages of the DPoS mechanism.
The DPoPS mechanism is implemented along with DBFT (Delegated Byzantine Fault Tolerance) with the use of Verifiable Random Functions (VRF) for electing block producers.
In the DPoPS consensus mechanism, the network is secured by a group of Top 50 delegates. To enter the top 50 of elected, one must own a consequential amount of tokens (a minimum of approximately 500 M XCASH) or gain a majority by vote delegation.
Token holders stake their X-CASH tokens to vote for their desired delegates who best represent them, or provide a service aligned with their needs. At the end of the election, candidates with the most number of votes are elected to be delegates. These elected delegates become the block verifiers. The election process is conducted for every new block, and new votes are taken into account every hours.
Verifiable Random Functions are used to select block producers. VRFs ensure that while the block producers are selected at random, the “randomness” is still verifiable. The block producer is given a certain time frame to produce a block, which is five minutes in the case of X-Cash 2.0.0. In case of faulty block production, the next block producer is selected again at random.
Delegated Byzantine Fault Tolerance (DBFT) is the method employed to verify blocks on this network. This method requires 67% of verifiers to reach a consensus for the addition of a new block. DBFT allows for block addition even if the other 33% of verifiers turn out to be faulty.
Delegates receive rewards when they are selected as block verifier and the block is added to the network. a block they verify gets added to the network. They share these rewards with the voters who trusted them. In the new version, the block reward is two times the previously awarded reward.
To vote for a delegate, token holders must stake a minimum of 2M XCASH. The staked tokens always remain in token holders’ wallets because of cryptographic reserve proofs. This process is called cold staking. However, moving these tokens from the wallet will result in cancellation of the entire stake.
Advantages of DPoPS
- Scalability: The shift from mining to staking will improve the scalability of the X-Cash network above all. Mining requires a lot of computational resources and the entire process reduces the throughput of the network. But staking, especially DPoPS reduces the load on the network and improves scalability. Developers will be able to deploy scalable sidechains and the network itself will be able to cater to a large number of users.
- DPoPS can be used for other blockchains: The framework of DPoPS is designed in such a way that it can be deployed on any other blockchain network. Additionally, it is open sourced and freely accessible. With blockchain networks looking for more sustainable alternatives to proof-of-work (PoW), DPoPs could be the go-to option for all these networks.
- Fully decentralized: The main problem with the proof-of-work mechanism is that it is not fully decentralized. But, with DPoPS, the network can achieve a more than satisfying decentralization. As the network evolves, the X-Cash could progress to 100 elected delegates which increases the level of decentralization even further.
With its FlexPrivacy and other standout features, X-Cash is a promising privacy protocol for DeFi users. By implementing DPoPS, X-cash can vastly improve its scalability, sustainability and cater to a wide range of users across the globe.