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Casper+Sharding chain v2.1

tags: `spec`, `eth2.0`, `casper`, `sharding`

WORK IN PROGRESS!!!!!!!

This is the work-in-progress document describing the specification for the Casper+Sharding (shasper) chain, version 2.1.

In this protocol, there is a central PoS chain which stores and manages the current set of active PoS validators. The only mechanism available to become a validator initially is to send a transaction on the existing PoW main chain containing 32 ETH. When you do so, as soon as the PoS chain processes that block, you will be queued, and eventually inducted as an active validator until you either voluntarily deregister or you are forcibly deregistered as a penalty for misbehavior.

The primary source of load on the PoS chain is attestations. An attestation has a double role:

It attests to some parent block in the beacon chain
It attests to a block hash in a shard (a sufficient number of such attestations create a "crosslink", confirming that shard block into the beacon chain).

Every shard (e.g. there might be 1024 shards in total) is itself a PoS chain, and the shard chains are where the transactions and accounts will be stored. The crosslinks serve to "confirm" segments of the shard chains into the beacon chain, and are also the primary way through which the different shards will be able to talk to each other.

Note that one can also consider a simpler "minimal sharding algorithm" where crosslinks are simply hashes of proposed blocks of data that are not themselves chained to each other in any way.

Note: the python code at https://github.com/ethereum/beacon_chain and an ethresear.ch post do not reflect all of the latest changes. If there is a discrepancy, this document is likely to reflect the more recent changes.

Terminology

Validator - a participant in the Casper/sharding consensus system. You can become one by depositing 32 ETH into the Casper mechanism.
Active validator set - those validators who are currently participating, and which the Casper mechanism looks to produce and attest to blocks, crosslinks and other consensus objects.
Committee - a (pseudo-) randomly sampled subset of the active validator set. When a committee is referred to collectively, as in "this committee attests to X", this is assumed to mean "some subset of that committee that contains enough validators that the protocol recognizes it as representing the committee".
Proposer - the validator that creates a block
Attester - a validator that is part of a committee that needs to sign off on a block.
Beacon chain - the central PoS chain that is the base of the sharding system.
Shard chain - one of the chains on which transactions take place and account data is stored.
Crosslink - a set of signatures from a committee attesting to a block in a shard chain, which can be included into the beacon chain. Crosslinks are the main means by which the beacon chain "learns about" the updated state of shard chains.
Slot - a period of 8 seconds, during which one proposer has the ability to create a block and some attesters have the ability to make attestations
Dynasty transition - a change of the validator set
Dynasty - the number of dynasty transitions that have happened in a given chain since genesis
Cycle - a span of blocks during which all validators get exactly one chance to make an attestation (unless a dynasty transition happens inside of one)
Finalized, justified - see Casper FFG finalization here: https://arxiv.org/abs/1710.09437

Constants

SHARD_COUNT - a constant referring to the number of shards. Currently set to 1024.
DEPOSIT_SIZE - 32 ETH
MAX_VALIDATOR_COUNT - 2²² = 4194304 # Note: this means that up to ~134 million ETH can stake at the same time
GENESIS_TIME - time of beacon chain startup (slot 0) in seconds since the Unix epoch
SLOT_DURATION - 8 seconds
CYCLE_LENGTH - 64 slots
MIN_DYNASTY_LENGTH - 256 slots
MIN_COMMITTEE_SIZE - 128 (rationale: see recommended minimum 111 here https://vitalik.ca/files/Ithaca201807_Sharding.pdf)
SQRT_E_DROP_TIME - a constant set to reflect the amount of time it will take for the quadratic leak to cut nonparticipating validators' deposits by ~39.4%. Currently set to 2**20 seconds (~12 days).
BASE_REWARD_QUOTIENT - 1/this is the per-slot interest rate assuming all validators are participating, assuming total deposits of 1 ETH. Currently set to 2**15 = 32768, corresponding to ~3.88% annual interest assuming 10 million participating ETH.
WITHDRAWAL_PERIOD - number of slots between a validator exit and the validator slot being withdrawable. Currently set to 2**19 = 524288 slots, or 2**23 seconds ~= 97 days.
MAX_VALIDATOR_CHANGE_QUOTIENT - a maximum of 1/x validators can change during each dynasty. Currently set to 32.

PoW main chain changes

This PoS/sharding proposal can be implemented separately from the existing PoW main chain. Only two changes to the PoW main chain are required (and the second one is technically not strictly necessary).

On the PoW main chain a contract is added; this contract allows you to deposit DEPOSIT_SIZE ETH; the deposit function also takes as arguments (i) pubkey (bytes), (ii) withdrawal_shard_id (int), (iii) withdrawal_addr (address), (iv) randao_commitment (bytes32), (v) bls_proof_of_possession
PoW Main chain clients will implement a method, prioritize(block_hash, value). If the block is available and has been verified, this method sets its score to the given value, and recursively adjusts the scores of all descendants. This allows the PoS beacon chain's finality gadget to also implicitly finalize PoW main chain blocks. Note that implementing this into the PoW client is a change to the PoW fork choice rule so is a sort of fork.

Beacon chain

The beacon chain is the "main chain" of the PoS system. The beacon chain's main responsibilities are:

Store and maintain the set of active, queued and exited validators
Process crosslinks (see above)
Process its own block-by-block consensus, as well as the finality gadget

Here are the fields that go into every beacon chain block:

fields = {
    # Hash of the parent block
    'parent_hash': 'hash32',
    # Slot number (for the PoS mechanism)
    'slot_number': 'int64',
    # Randao commitment reveal
    'randao_reveal': 'hash32',
    # Attestations
    'attestations': [AttestationRecord],
    # Reference to PoW chain block
    'pow_chain_ref': 'hash32',
    # Hash of the active state
    'active_state_root': 'hash32',
    # Hash of the crystallized state
    'crystallized_state_root': 'hash32',
    # Logouts, penalties, etc etc
    'specials': [SpecialObject]
}

A SpecialObject looks as follows:

fields = {
    'type': 'int8',
    'data': ['bytes']
}

The beacon chain state is split into two parts, active state and crystallized state.

Here's the ActiveState:

fields = {
    # Attestations that have not yet been processed
    'pending_attestations': [AttestationRecord],
    # Special objects that have not yet been processed
    'pending_specials': [SpecialObject],
    # Most recent 2 * CYCLE_LENGTH block hashes, older to newer
    'recent_block_hashes': ['hash32']
}

Here's the CrystallizedState:

fields = {
    # List of validators
    'validators': [ValidatorRecord],
    # Last CrystallizedState recalculation
    'last_state_recalc': 'int64',
    # What active validators are part of the attester set
    # at what slot, and in what shard. Starts at slot
    # last_state_recalc - CYCLE_LENGTH
    'shard_and_committee_for_slots': [[ShardAndCommittee]],
    # The last justified slot
    'last_justified_slot': 'int64',
    # Number of consecutive justified slots ending at this one
    'justified_streak': 'int64',
    # The last finalized slot
    'last_finalized_slot': 'int64',
    # The current dynasty
    'current_dynasty': 'int64',
    # Records about the most recent crosslink `for each shard
    'crosslink_records': [CrosslinkRecord],
    # Used to select the committees for each shard
    'dynasty_seed': 'hash32',
    # Start of the current dynasty
    'dynasty_start': 'int64',
    # Number of validators penalized in the given withdrawal period
    'penalized_in_wp': ['int32']
}

A ShardAndCommittee object is of the form:

fields = {
    # The shard ID
    'shard_id': 'int16',
    # Validator indices
    'committee': ['int24']
}

Each ValidatorRecord is an object containing information about a validator:

fields = {
    # The validator's public key
    'pubkey': 'int256',
    # What shard the validator's balance will be sent to 
    # after withdrawal
    'withdrawal_shard': 'int16',
    # And what address
    'withdrawal_address': 'address',
    # The validator's current RANDAO beacon commitment
    'randao_commitment': 'hash32',
    # Current balance
    'balance': 'int128',
    # Status:
    # 0 = not yet inducted
    # 1 = active
    # 2 = want to log out
    # 3 = logged out, awaiting withdrawal
    # 4 = gone
    # 128 = penalized
    'status': 'int8',
    # Slot where this validator leaves
    'exit_slot': 'int64'
}

And a CrosslinkRecord contains information about the last fully formed crosslink to be submitted into the chain:

fields = {
    # What dynasty the crosslink was submitted in
    'dynasty': 'int64',
    # What slot
    'slot': 'int64',
    # The block hash
    'hash': 'hash32'
}

Beacon chain processing

Processing the beacon chain is fundamentally similar to processing a PoW chain in many respects. Clients download and process blocks, and maintain a view of what is the current "canonical chain", terminating at the current "head". However, because of the beacon chain's relationship with the existing PoW chain, and because it is a PoS chain, there are differences.

For a block on the beacon chain to be processed by a node, four conditions have to be met:

The parent pointed to by the parent_hash has already been processed and accepted
An attestation from the proposer of the block (see later for definition) is included along with the block in the network message object
The PoW chain block pointed to by the pow_chain_ref has already been processed and accepted
The node's local clock time is greater than or equal to the minimum timestamp as computed by GENESIS_TIME + slot_number * SLOT_DURATION

If these conditions are not met, the client should delay processing the block until the conditions are all satisfied.

Block production is significantly different because of the proof of stake mechanism. A client simply checks what it thinks is the canonical chain when it should create a block, and looks up what its slot number is; when the slot arrives, it either proposes or attests to a block as required.

Beacon chain fork choice rule

The beacon chain uses the Casper FFG fork choice rule of "favor the chain containing the highest-slot-number justified block". To choose between chains that are all descended from the same justified block, the chain uses "immediate message driven GHOST" (IMD GHOST) to choose the head of the chain.

For a description see: https://ethresear.ch/t/beacon-chain-casper-ffg-rpj-mini-spec/2760

For an implementation with a network simulator see: https://github.com/ethereum/research/blob/master/clock_disparity/ghost_node.py

Here's an example of its working (green is finalized blocks, yellow is justified, grey is attestations):

Beacon chain state transition function

We now define the state transition function. At the high level, the state transition is made up of two parts:

The crystallized state recalculation, which happens only if block.slot_number >= last_state_recalc + CYCLE_LENGTH, and affects the CrystallizedState and ActiveState
The per-block processing, which happens every block (if during a crystallized state recalculation block, it happens after the crystallized state recalculation), and affects the ActiveState only

The crystallized state recalculation generally focuses on changes to the validator set, including adjusting balances and adding and removing validators, as well as processing crosslinks and managing block justification, and the per-block processing generally focuses on verifying aggregate signatures and saving temporary records relating to the in-block activity in the ActiveState.

Helper functions

We start off by defining some helper algorithms. First, the function that selects the active validators:

def get_active_validator_indices(validators, dynasty):
    o = []
    for i in range(len(validators)):
        if validators[i].status == 1:
            o.append(i)
    return o

Now, a function that shuffles this list:

def shuffle(lst, seed):
    assert len(lst) <= 16777216
    o = [x for x in lst]
    source = seed
    i = 0
    while i < len(lst):
        source = blake(source)
        for pos in range(0, 30, 3):
            m = int.from_bytes(source[pos:pos+3], 'big')
            remaining = len(lst) - i
            if remaining == 0:
                break
            rand_max = 16777216 - 16777216 % remaining
            if m < rand_max:
                replacement_pos = (m % remaining) + i
                o[i], o[replacement_pos] = o[replacement_pos], o[i]
                i += 1
    return o

Here's a function that splits a list into N pieces:

def split(lst, N):
    return [lst[len(lst)*i//N: len(lst)*(i+1)//N] for i in range(N)]

Now, our combined helper method:

def get_new_shuffling(seed, validators, dynasty, crosslinking_start_shard):
    avs = get_active_validator_indices(validators, dynasty)
    if len(avs) >= CYCLE_LENGTH * MIN_COMMITTEE_SIZE:
        committees_per_slot = min(len(avs) // CYCLE_LENGTH // (MIN_COMMITTEE_SIZE * 2) + 1, SHARD_COUNT // CYCLE_LENGTH)
        slots_per_committee = 1
    else:
        committees_per_slot = 1
        slots_per_committee = 1
        while len(avs) * slots_per_committee < CYCLE_LENGTH * MIN_COMMITTEE_SIZE \
                and slots_per_committee < CYCLE_LENGTH:
            slots_per_committee *= 2
    o = []
    for i, slot_indices in enumerate(split(shuffle(avs, seed), CYCLE_LENGTH)):
        shard_indices = split(slot_indices, committees_per_slot)
        shard_id_start = crosslinking_start_shard + \
            i * committees_per_slot // slots_per_committee
        o.append([ShardAndCommittee(
            shard_id = (shard_id_start + j) % SHARD_COUNT,
            committee = indices
        ) for j, indices in enumerate(shard_indices)])
    return o

Here's a diagram of what's going on:

We also define two functions retrieving data from the state:

def get_shards_and_committees_for_slot(crystallized_state, slot):
    ifh_start = crystallized_state.last_state_recalc - CYCLE_LENGTH
    assert ifh_start <= slot < ifh_start + CYCLE_LENGTH * 2
    return crystallized_state.shard_and_committee_for_slots[slot - ifh_start]

def get_block_hash(active_state, curblock, slot):
    sback = curblock.slot_number - CYCLE_LENGTH * 2
    assert sback <= slot < sback + CYCLE_LENGTH * 2
    return active_state.recent_block_hashes[slot - sback]

get_block_hash(_, _, h) should always return the block in the chain at slot h, and get_shards_and_committees_for_slot(_, h) should not change unless the dynasty changes.

Finally, we abstractly define int_sqrt(n) for use in reward/penalty calculations as the largest integer x such that x**2 <= n. Here is one possible implementation, though clients are free to use their own including standard libraries for integer square root if available and meet the specification.

def int_sqrt(n):
    x = n
    y = (x + 1) // 2
    while y < x:
        x = y
        y = (x + n // x) // 2
    return x

On startup

Let x = get_new_shuffling(bytes([0] * 32), validators, 1, 0) and set crystallized_state.shard_and_committee_for_slots to x + x
Set crystallized_state.dynasty = 1
Set crystallized_state.crosslink_records to [CrosslinkRecord(dynasty=0, slot=0, hash=bytes([0] * 32)) for i in range(SHARD_COUNT)]
Set active_state.recent_block_hashes to [bytes([0] * 32) for _ in range(CYCLE_LENGTH * 2)]

Any value not explicitly set above in the active and crystallized state should be set to zero or an empty array depending on context.

Routine for adding a validator

This routine should be run for every validator that is inducted as part of a log created on the PoW chain [TODO: explain where to check for these logs]. These logs should be processed in the order in which they are emitted by the PoW chain. Define min_empty_validator(validators) as a function that returns the lowest validator index i such that validators[i].status == 4, otherwise None.

def add_validator(pubkey, proof_of_possession, withdrawal_shard,
                  withdrawal_address, randao_commitment, current_dynasty):
    # if following assert fails, validator induction failed
    # move on to next validator registration log
    assert BLSVerify(pub=pubkey,
                     msg=sha3(pubkey),
                     sig=proof_of_possession)
    rec = ValidatorRecord(
        pubkey = pubkey,
        withdrawal_shard = withdrawal_shard,
        withdrawal_address = withdrawal_address,
        randao_commitment = randao_commitment,
        balance = DEPOSIT_SIZE,  # in WEI
        status=0,
        exit_slot=0
    )
    index = min_empty_validator(validators)
    if index is None:
        validators.append(rec)
        return len(validators) - 1
    else:
        validators[index] = rec
        return index

Per-block processing

First, set recent_block_hashes to the output of the following:

def get_new_recent_block_hashes(old_block_hashes, parent_slot,
                                current_slot, parent_hash):
    d = current_slot - parent_slot
    return old_block_hashes[d:] + [parent_hash] * min(d, len(old_block_hashes))

The output of get_block_hash should not change, except that it will no longer throw for current_slot - 1, and will now throw for current_slot - CYCLE_LENGTH * 2 - 1

A block can have 0 or more AttestationRecord objects, where each AttestationRecord object has the following fields:

fields = {
    # Slot number
    'slot': 'int64',
    # Shard ID
    'shard_id': 'int16',
    # List of block hashes that this signature is signing over that
    # are NOT part of the current chain, in order of oldest to newest
    'oblique_parent_hashes': ['hash32'],
    # Block hash in the shard that we are attesting to
    'shard_block_hash': 'hash32',
    # Who is participating
    'attester_bitfield': 'bytes',
    # Last justified block
    'justified_slot': 'int64',
    'justified_block_hash': 'hash32',
    # The actual signature
    'aggregate_sig': ['int256']
}

For each one of these attestations [TODO]:

Verify that slot <= parent.slot_number and slot >= max(parent.slot_number - CYCLE_LENGTH + 1, 0)
Verify that the justified_slot and justified_block_hash given are in the chain and are equal to or earlier than the last_justified_slot in the crystallized state.
Compute parent_hashes = [get_block_hash(active_state, block, slot - CYCLE_LENGTH + i) for i in range(1, CYCLE_LENGTH - len(oblique_parent_hashes) + 1)] + oblique_parent_hashes (eg, if CYCLE_LENGTH = 4, slot = 5, the actual block hashes starting from slot 0 are Z A B C D E F G H I J, and oblique_parent_hashes = [D', E'] then parent_hashes = [B, C, D' E']). Note that when creating an attestation for a block, the hash of that block itself won't yet be in the active_state, so you would need to add it explicitly.
Let attestation_indices be get_shards_and_committees_for_slot(crystallized_state, slot)[x], choosing x so that attestation_indices.shard_id equals the shard_id value provided to find the set of validators that is creating this attestation record.
Verify that len(attester_bitfield) == ceil_div8(len(attestation_indices)), where ceil_div8 = (x + 7) // 8. Verify that bits len(attestation_indices).... and higher, if present (i.e. len(attestation_indices) is not a multiple of 8), are all zero
Derive a group public key by adding the public keys of all of the attesters in attestation_indices for whom the corresponding bit in attester_bitfield (the ith bit is (attester_bitfield[i // 8] >> (7 - (i %8))) % 2) equals 1
Verify that aggregate_sig verifies using the group pubkey generated and hash(slot.to_bytes(8, 'big') + parent_hashes + shard_id + shard_block_hash + justified_slot.to_bytes(8, 'big')) as the message.

Extend the list of AttestationRecord objects in the active_state with those included in the block, ordering the new additions in the same order as they came in the block. Similarly extend the list of SpecialObject objects in the active_state with those included in the block.

Verify that the parent.slot_number % len(get_shards_and_committees_for_slot(crystallized_state, parent.slot_number)[0].committee)'th attester in get_shards_and_committees_for_slot(crystallized_state, parent.slot_number)[0]is part of the first (ie. item 0 in the array) AttestationRecord object; this attester can be considered to be the proposer of the parent block. In general, when a block is produced, it is broadcasted at the network layer along with the attestation from its proposer.

State recalculations

Repeat while slot - last_state_recalc >= CYCLE_LENGTH:

For all slots s in last_state_recalc - CYCLE_LENGTH ... last_state_recalc - 1:

Determine the total set of validators that attested to that block at least once
Determine the total balance of these validators. If this value times three equals or exceeds the total balance of all active validators times two, set last_justified_slot = max(last_justified_slot, s) and justified_streak += 1. Otherwise, set justified_streak = 0
If justified_streak >= CYCLE_LENGTH + 1, set last_finalized_slot = max(last_finalized_slot, s - CYCLE_LENGTH - 1)

For all (shard_id, shard_block_hash) tuples, compute the total deposit size of validators that attested to that block hash for that shard. If this value times three equals or exceeds the total balance of all validators in the committee times two, and the current dynasty exceeds crosslink_records[shard_id].dynasty, set crosslink_records[shard_id] = CrosslinkRecord(dynasty=current_dynasty, slot=block.last_state_recalc + CYCLE_LENGTH, hash=shard_block_hash).

Let time_since_finality = block.slot_number - last_finalized_slot, and let B be the balance of any given validator whose balance we are adjusting, not including any balance changes from this round of state recalculation. Let:

total_deposits = sum([v.balance for i, v in enumerate(validators) if i in get_active_validator_indices(validators, current_dynasty)]) and total_deposits_in_ETH = total_deposits // 10**18
reward_quotient = BASE_REWARD_QUOTIENT * int_sqrt(total_deposits_in_ETH) (1/this is the per-slot max interest rate)
quadratic_penalty_quotient = (SQRT_E_DROP_TIME / SLOT_DURATION)**2 (after D slots, ~D²/2 divided by this is the portion lost by offline validators)

For each slot S in the range last_state_recalc - CYCLE_LENGTH ... last_state_recalc - 1:

Let total_participated_deposits be the total balance of validators that voted for the correct hash in slot S (ie. the hash that actually is the hash of the block at that slot in the current chain); note that in the normal case, every validator will be in one of the CYCLE_LENGTH slots following the slot and so can vote for a hash in slot S. If time_since_finality <= 3 * CYCLE_LENGTH, then adjust participating and non-participating validators' balances as follows:
- Participating validators gain B // reward_quotient * (2 * total_participated_deposits - total_deposits) // total_deposits (note: this may be negative)
- Nonparticipating validators lose B // reward_quotient
Otherwise, adjust as follows:
- Participating validators' balances are unchanged
- Nonparticipating validators lose B // reward_quotient + B * time_since_finality // quadratic_penalty_quotient

Validators with status == 128 also lose B // reward_quotient + B * time_since_finality // quadratic_penalty_quotient.

For each shard S for which a crosslink committee exists in the cycle prior to the most recent cycle (last_state_recalc - CYCLE_LENGTH ... last_state_recalc - 1), let V be the corresponding validator set. Let B be the balance of any given validator whose balance we are adjusting, not including any balance changes from this round of state recalculation. For each S, V do the following:

Let total_v_deposits be the total balance of V, and total_participated_v_deposits be the total balance of the subset of V that participated (note: it's always true that total_participated_v_deposits <= total_v_deposits)
Let time_since_last_confirmation be block.slot_number - crosslink_records[S].slot
Adjust balances as follows:
- If crosslink_records[S].dynasty == current_dynasty, no reward adjustments
- Otherwise, participating validators' balances are increased by B // reward_quotient * (2 * total_participated_v_deposits - total_v_deposits) // total_v_deposits, and non-participating validators' balances are decreased by B // reward_quotient + B * time_since_last_confirmation // quadratic_penalty_quotient

Let committees be the set of committees processed and time_since_last_confirmation(c) be the value of time_since_last_confirmation in that committee. Validators with status == 128 lose B // reward_quotient + B * sum([time_since_last_confirmation(c) for c in committees]) // len(committees) // quadratic_penalty_quotient.

Process penalties, logouts and other special objects

For each SpecialObject obj in active_state.pending_specials:

[coverts logouts]: If obj.type == 0, interpret data[0] as a validator index as an int32 and data[1] as a signature. If BLSVerify(pubkey=validators[data[0]].pubkey, msg=sha3("bye bye"), sig=data[1]), and validators[i].status == 1, set validators[i].status = 3 and validators[i].exit_slot = current_slot
[covers NO_DBL_VOTE, NO_SURROUND, NO_DBL_PROPOSE]: If obj.type == 1, interpret data[0] as a list of concatenated int32 values where each value represents an index into validators, data[1] as the data being signed and data[2] as an aggregate signature. Interpret data[3:6] similarly. Verify that both signatures are valid, that the two signatures are signing distinct data, and that they are either signing the same slot number, or that one surrounds the other (ie. source1 < source2 < target2 < target1). Let inds be the list of indices in both signatures; verify that its length is at least 1. For each validator in inds, set their end dynasty to equal the current dynasty + 1, and if its status does not equal 128, then (i) set its exit_slot to equal the current slot, (ii) set its status to 128, and (iii) set crystallized_state.penalized_in_wp[slot // WITHDRAWAL_PERIOD] += 1, extending the array if needed.

Finally...

Set crystallized_state.last_state_recalc += CYCLE_LENGTH
Remove all attestation records older than slot crystallized_state.last_state_recalc
Empty the active_state.pending_specials list
Set shard_and_committee_for_slots[:CYCLE_LENGTH] = shard_and_committee_for_slots[CYCLE_LENGTH:]

Dynasty transition

A dynasty transition can happen after a state recalculation if all of the following criteria are satisfied:

block.slot_number - crystallized_state.dynasty_start >= MIN_DYNASTY_LENGTH
last_finalized_slot > dynasty_start
For every shard S in shard_and_committee_for_slots, crosslink_records[S].slot > dynasty_start

Then, run the following algorithm to update the validator set:

def change_validators(validators):
    avs = get_active_validator_indices(validators, current_dynasty)
    total_deposits = sum([v.balance for i, v in enumerate(validators) if i in avs])
    max_allowable_change = max(
        DEPOSIT_SIZE * 2,
        total_deposits // MAX_VALIDATOR_CHANGE_QUOTIENT
    )
    total_changed = 0
    for i in range(len(validators)):
        if validators[i].status == 0:
            validators[i].status = 1
            total_changed += DEPOSIT_SIZE
        if validators[i].status == 2:
            validators[i].status = 3
            validators[i].exit_slot = current_slot
            total_changed += validators[i].balance
        if total_changed >= max_allowable_change:
            break

    cp = current_slot // WITHDRAWAL_PERIOD
    total_penalties = (
        (crystallized_state.penalized_in_wp[cp]) +
        (crystallized_state.penalized_in_wp[cp - 1] if cp >= 1 else 0) +
        (crystallized_state.penalized_in_wp[cp - 2] if cp >= 2 else 0)
    )
    for i in range(len(validators)):
        if validators[i].status in (3, 128) and current_slot >= validators[i].exit_slot + WITHDRAWAL_PERIOD:
            if validators[i].status == 128:
                validators[i].balance -= validators[i].balance * min(total_penalties * 3, total_deposits) // total_deposits
            validators[i].status = 4

            withdraw_amount = validators[i].balance
            ...
            # STUB: withdraw to shard chain

Finally:

Set last_dynasty_start = crystallized_state.last_state_recalc
Set crystallized_state.current_dynasty += 1
Let next_start_shard = (shard_and_committee_for_slots[-1][-1].shard_id + 1) % SHARD_COUNT
Set shard_and_committee_for_slots[CYCLE_LENGTH:] = get_new_shuffling(block.parent_hash, validators, crystallized_state.current_dynasty, next_start_shard)

Note: this is ~80% complete. The main sections that are missing are:

Logic for the formats of shard chains, who proposes shard blocks, etc. (in an initial release, if desired we could make crosslinks just be Merkle roots of blobs of data; in any case, one can philosophically view the whole point of the shard chains as being a coordination device for choosing what blobs of data to propose as crosslinks)
Logic for inducting queued validators from the PoW main chain
Penalties for signing or attesting to non-canonical-chain blocks (update: may not be necessary, see https://ethresear.ch/t/attestation-committee-based-full-pos-chains/2259)
Per-validator proofs of custody
Versioning and upgrades

Slashing conditions may include:

Casper FFG slot equivocation [done]
Casper FFG surround [done]
Beacon chain proposal equivocation [done]
Shard chain proposal equivocation
Proof of custody secret leak
Proof of custody wrong custody bit
Proof of custody no secret reveal
RANDAO leak

Appendix

Appendix A - Hash function

The general hash function hash(x) in this specification is defined as:

hash(x) := BLAKE2b-512(x)[0:32], where BLAKE2b-512 (blake2b512) algorithm is defined in RFC 7693 and input x is bytes type.

BLAKE2b-512 is the default BLAKE2b algorithm with 64-byte digest size. To get a 32-byte result, the general hash function output is defined as the leftmost 32 bytes of BLAKE2b-512 hash output.
The design rationale is keeping using the default algorithm and avoiding too much dependency on external hash function libraries.

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