What is nothing at stake?

Assalamualaikum

Greetings to you all!
Staking is another name that can be used for investment and we all are aware of this term almost but my title is nothing at stake so definitely I am going to discuss about it here starting from its basics, going into its depth.

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"Nothing at Stake" is an idea in crypto and blockchain technology world which refers to a condition in which a validator or miner has no power in economic incentive for acting with honesty, but rather than this they can take advantage from this kind of malicious behavior without facing outcome.

In proof-of-stake (PoS) consensus algorithms, validators have role in creation of new blocks depending upon the amount of tokens or coins they have which called their "stake". The primary concept is that validators that have large stake,then they have more probability to lose if they act with dishonesty, as they would forfeit their stake.

Meanwhile there are some cases in which validators may have "nothing at stake" and some of their reasons I am explaining below;

1. Validators may have a less amount of tokens holdings or coins at risk of manipulation.
2. Validators may quickly acquire significant amount of tokens or coins for replacement of any that might be forfeited.
3. Validators are also part of a collusion in which multiple validators work with each other for manipulating the network.

Practical Example

Imagine there's a PoS blockchain which contains a token referred to as "XYZ". Validator "A" has a less amount of XYZ tokens (such as just 100) and he is creating a new block. More than this, Validator "A" also has approach to a significant numbers of XYZ tokens through a another account so in this case, Validator "A" has "nothing at stake" due to following reasons I'm explaining:

• Validators don't have required number of tokens at risk (as I have explained above also these are just 100).
• Validators may quickly acquire significant tokens for replacement of any other that might be forfeited (through their second account).

As an outcome Validator "A" may act with less honesty (like, creation of a new block with fraudulent or illicit transactions) without facing any particular outcomes. In this way they can also compromise with safety and integrity of blockchain.

For mitigation of "nothing at stake" like challanges, blockchain implement additional mechanisms which involves;

Minimum requirements of staking.

Penalties for malicious behaviour or any illicit or fraudulent activity so these are slashing conditions related things

Random selection of validators

Enhanced economic incentives for those who shows their honest behavior

These are some significant and essential measures that have motive to giving surety of that validators have a meaningful economic stake in the network which in return make it much expensive for them to act with less honesty.

That was all about nothing at stake and some of the conditions that where and why it occurs so hopefully the topic is now easy to understand....

Have a blessed day