How Does a Limited Validator Set Impact the Security Model of the Chain?
A limited validator set centralizes trust but can enhance security against external attacks, provided the validators are highly trusted and geographically distributed. The security model shifts from relying on economic incentives (like PoW/PoS) to relying on the reputation and legal contracts of the member organizations.
However, it increases the risk of collusion among the validators. The chain is secure if the collective members' trust is maintained and they adhere to the network rules.
Glossar
Economic Incentives
Catalyst ⎊ Economic incentives, within the realms of cryptocurrency, options trading, and financial derivatives, fundamentally act as catalysts driving participant behavior and shaping market dynamics.
Limited Validator Set Impact
Concentration ⎊ A restricted validator set inherently leads to a higher concentration of staking power or block production authority within a smaller group of entities.
Limited Validator Set
Decentralization Concern ⎊ A limited validator set, characteristic of some Proof-of-Stake variants, concentrates block production and validation authority among a small number of entities, raising centralization risks.
Validator
Role ⎊ A validator is a critical network participant in a Proof-of-Stake blockchain responsible for proposing, verifying, and attesting to new blocks of transactions to maintain consensus and secure the distributed ledger.
Legal Contracts
Documentation ⎊ The written agreements that define the rights, obligations, and recourse mechanisms associated with a financial derivative, which must be translated into executable smart contract code.
Cryptographic Security
Foundation ⎊ Cryptographic security, within the context of cryptocurrency, options trading, and financial derivatives, represents the application of mathematical algorithms to safeguard the integrity and confidentiality of digital assets and transactional data.