Proof-of-Storage (PoS) is a novel consensus mechanism being explored for blockchain networks. Similar to Proof-of-Work and Proof-of-Stake, it aims to secure decentralized networks through cryptoeconomic incentives. However, instead of computation or staking, Proof-of-Storage uses available disk space as the scarce resource. Participants earn rewards by providing storage capacity to the network.
How Proof-of-Storage Works
Here is an overview of how Proof-of-Storage systems function:
Network participants install storage provider software allowing them to allocate spare disk space to the network. This earns them storage tokens over time.
Periodic audits are conducted to verify providers are allocating the promised resources. Providers lose tokens if audits fail.
Native tokens issued as rewards for providing storage. Tokens grant voting power in governance and can be traded on exchanges.
Files are divided into encrypted shards and distributed across multiple providers for redundancy.
Users pay tiny fees in storage tokens to retrieve their files when needed. Fees are distributed to the providers storing the shards.
Providers vote on network upgrades, parameters and transaction validity based on storage token balances.
Benefits Over Other Consensus Models
Proof-of-Storage has some potential benefits compared to alternatives:
- Energy efficiency — Avoids energy intensive computing required by Proof-of-Work. More environmentally friendly.
- Accessibility — Anyone with spare disk space can participate, unlike Proof-of-Stake which requires large token holdings.
- Sybil resistance — Identity verification and resource testing make it harder to spin up fake identities.
- Collusion resistance — File sharding across random providers prevents storage cartels.
- Usage aligns incentives — Rewards directly correlate with actual storage resources provided.
However, PoS is still hypothetical and faces challenges around effective resource testing and preventing various attacks.
Use Cases for Proof-of-Storage
Some potential use cases that leverage the properties of Proof-of-Storage include:
- Decentralized file storage — Storing personal and application data across a peer-to-peer network instead of centralized servers.
- Archival storage — Long-term preservation of historical records and scientific data.
- Sybil resistance — Limiting fake identities by imposing storage costs on creating new nodes.
- Spam prevention — Requiring storage deposits to send emails or messages to deter spamming.
- CDNs — Decentralized content delivery networks to distribute websites and videos.
- Computational storage — Using allocated resources for parallelized computing like machine learning.
Implementations of Proof-of-Storage
There are several projects implementing and experimenting with Proof-of-Storage:
- Filecoin — One of the earliest and largest PoS networks with over 1 exabyte of storage capacity provided.
- Storj — Uses PoS for decentralized file storage and supports partnerships with major companies.
- MaidSafe — Building decentralized data networks using PoS alongside other mechanisms.
- Arweave — A novel “blockweave” model that permanently stores transaction data using PoS.
- Lambda — PoS sidechains to provide data availability guarantees to the Lambda smart contract platform.
- Proof — Y Combinator startup using PoS to build mining infrastructure for Filecoin and other clients.
Storage Tokens and Cryptoeconomics
As with other blockchain consensus models, well designed token cryptoeconomics are crucial for aligning incentives in Proof-of-Storage networks:
- Issuance model — New token supply issued to reward storage providers over time. Balances security and inflation.
- Capital costs — Requiring upfront investment in tokens helps deter sybil attacks.
- Slashing conditions — Penalizing providers via token slashing for failed audits and downtime prevents faults.
- Token bonding — Locking up tokens over long periods to participate in consensus voting.
- Market liquidity — Ensuring active trading and exchange availability so earned tokens hold value.
- Velocity sinks — Encouraging long-term holding of tokens by users via staking yields.
Limitations and Challenges
Despite its promise, Proof-of-Storage still faces some limitations and obstacles:
- Sybil resistance — Preventing cheap mass coordination for majority attacks is difficult.
- Auditing — Effective cryptographic auditing of allocated disk space remains complex and expensive.
- Hardware failures — Provider hardware failures can still disrupt data availability. Redundancy is critical.
- Centralization risks — Data center providers with huge capacity may dominate networks.
- Legal compliance — Right to be forgotten and data privacy laws may create challenges for immutable data.
Proof-of-Storage presents an interesting alternative to other blockchain consensus models by aligning incentives around available disk space. It has some advantages but also complex technical and incentive challenges to overcome. As projects continue innovating, PoS holds promise to enable novel applications with decentralized data storage and management as a core component.