May 14, 2019

The benefits of Veil’s PoW mining/PoS staking hybrid consensus for security and distribution

In this article, we will explore the benefits of Veil’s hybrid consensus.

As Veil users are already aware, the Veil network relies on a hybrid proof-of-work (PoW)/proof-of-stake (PoS) dual consensus setup to secure the network and distribute rewards. The PoW consensus depends on Veil’s X16RT algorithm adapted from Ravencoin’s X16R. The PoS consensus works on Veil’s Zerocoin protocol, with denominations eligible to potentially find the next block. Let’s explore the reasoning and benefits behind this dual consensus to better understand it.

Network security

Foremost in any blockchain consensus model should be the security of the network and blockchain. The consensus model in place needs to protect the network against threats like double spending—spending an unspent transaction output (UTXO) more than once—and fifty-one percent attacks—controlling a majority of mining hash to dominate the network. It also needs to ensure a sufficient number of nodes remain online to protect the integrity of the network should a large node come under a denial of service or distributed denial of service attack (DOS attack/DDOS attack respectively) or otherwise be compromised.

In traditional PoW networks, vulnerabilities exist in the hashing power available being sufficiently low that a bad actor wishing to hijack the network for a time could potentially do so. Such an actor could achieve this by renting out ample hashing power at a low enough cost to be feasible. In such cases, the bad actor has sufficient say over block validation—a fifty-one percent controlling share—to ensure only those blocks containing transactions they desire are accepted onto the chain. This hashing dominance problem is compounded by the existence of Application Specific Integrated Circuits (ASICs)—specially designed hardware focused on excelling at mining a particular algorithm.

Veil, with its XR16T PoW mechanism, resists ASIC mining as each block and its difficulty shifts randomly between 16 different algorithms, neutering the usefulness of the ASIC’s specialization. More importantly, the chain has a maximum reorganization depth, and demands at least every sixth block be discovered not by mining, but by staking. This means the six confirmation requirement standard must include a PoS block checking for illegal blockchain activity. In this way, as long as veil are widely distributed across many nodes, no fifty-one percent attack can be successful. In the event the attacker controls a sufficient share of the supply to overcome this PoS barrier, they’d effectively control the network anyway, and Veil would have long since failed to retain use and value.


The scenario in which an attacker could achieve control over the network is no longer practically possible. The wider distribution of veil across many nodes, which PoS rewards active nodes with sporadically, ensures not only that those without the ability to mine can also earn rewards, but that a good portion of miners will hold onto their mined veil in hopes of earning PoS rewards. This incentive to hold at least a portion of what is mined protects against the majority of mined coins landing on exchanges where any one party could scoop them all up.

As previously mentioned, at least one-in-six blocks must be found by PoS. At the time of publication, the ratio of PoW to PoS rewards is around equal with some minor variation. With an introduction of more hashing power, this can at most reach a 5:1 ratio in favor of PoW, but never exceed it.

Lastly, as a further incentive to promote staking for security and distribution purposes, Veil will reward users opting to run a full-node— the storing of the entire blockchain on their local machine—with fees accrued since the last successful full-node stake. This feature will accompany wallet chain pruning in the not-too-distant future.

Hopefully this exploration of Veil’s consensus model helps you appreciate the care that went into ensuring the Veil network remains as secure and stable as possible. We take the responsibility of securing the finances of Veil users very seriously, and will continue to adapt to protect against threats whenever necessary.