Stage 2: Hashrate Validators

Stage 2 moves the task of hashrate validation away from a centralized Oracle, and distributes it among a federated group of validators. These validators will stake a bounty as collateral to incentivize good behavior. As payment for their services, validators will receive a small fee from each hashing contract they monitor.

At this stage, anyone who stakes one million Titan tokens can become a validator. This stake is a disincentive against malicious validators, making it unprofitable to validate bad transactions. However, this centralized solution is still not ideal and will be replaced by proxy nodes in Stage 3.

In one sense, proving that hashpower exists is a non-issue: any miner that solves the hashing problem has proved that it has hashpower. Proving that this hashpower will be provided to a buyer, in a way the buyer trusts, is a more difficult question. In Stage 1, we tackle this with a trusted central authority, but decentralizing it requires some game-theoretic tricks to block bad actors.

In Stage 2, if a validator is suspected of colluding with a malicious seller to validate bogus hashpower, a whistleblower can force a check of their validation work. If the whistleblower's suspicions are confirmed, the malicious validator is punished by losing their stake, and the whistleblower and contract participants are rewarded this stake. This system allows the network to verify whether validators are fulfilling their duty without resorting to a central authority.