COTI Blockchain #ICO – Technical Review
Technical Review
The Trust Chain Algorithm
COTI has developed a new approach for achieving consensus between transacting parties that operates on a DAG-based data structure. The Cluster is based on a completely decentralised DAG, which is not stored by any central authority. The Cluster is considered the ledger, or a record of all transactions processed by the network. It achieves scalability through its use of parallel source selection and transaction confirmations, as well as its use of COTI’s Trust Scoring Mechanism.
Trust Score of transactions in the Cluster
Each transaction in the Cluster receives a Trust Score based on a combination of the sending account’s historical behaviour and information about the account owner. This information is given to COTI when the user first creates an account and is substantiated by supporting documentation. Trust Scores are the main determinant of transaction fees in COTI. Participants with high Trust Scores can expect to pay low-to-zero fees, whilst participants with low Trust Scores will need to pay higher fees. This incentivises merchants to supply the best service possible in order to increase their Trust Scores. An additional benefit of having a high Trust Score is that higher Trust Scores are confirmed faster.
When executing a transaction, the sender is required to validate two prior transactions in order for the new transaction to be added to the ledger. The ledger is therefore organised as a DAG (directed acyclic graph), where the vertices represent transactions and directed edges extend from each transaction to two others that it validates. A schematic of the Cluster is shown below
Each white circle represents a transaction that has been validated by two subsequent transactions, while the darker circle represents a new, unvalidated transaction (a “source” in graph-theoretic terminology). As new transactions are added, they may validate the darker transaction.
Source Selection
The process outlined above requires each new transaction to select two prior source transactions to validate. In the COTI network, the algorithm for effectuating this choice is based on the Trust Score of each transaction (see Section 6). According to this Source Selection Algorithm, a source will likely choose prior transactions that are close to its current Trust Score. This results in the formation of Trust Chains, or any reverse-oriented path in the Cluster. The cumulative Trust Score of such a chain is the sum of the Trust Scores of all the transactions making up the chain.
The Trust Chain Algorithm makes use of the cumulative Trust Score to achieve consensus on transaction confirmation. A transaction is considered to be confirmed if it is the starting point of a Trust Chain that has a cumulative Trust Score exceeding some preset global threshold. In practice, we consider the longest Trust Chain (highest trust) starting from each transaction and compare its cumulative Trust Score to the threshold to establish if the transaction has been confirmed.
Because the Source Selection Algorithm tends to connect transactions of similar Trust Scores, Trust Chains generated by highly trusted users will mostly contain transactions with high Trust Scores. The cumulative Trust Score of such a Trust Chain will grow quickly past the threshold and achieve consensus, meaning that highly trusted users will enjoy faster confirmation times and higher transaction throughput.
Another important outcome of the Source Selection Algorithm is the soft segmentation of the Cluster based on Trust Scores. This means that the DAG is divided into nearly independent sub-DAGs consisting of users with similar Trust Scores.
The Cluster will progress through the following life stages: in the first stage, it is initiated as a new transaction; in the second, it attaches to the Cluster by validating two other transactions with similar Trust Scores; in the third, it is validated by other transactions; finally, it is confirmed and permanently added to the Cluster once the cumulative Trust Score of the heaviest path confirming it surpasses the set threshold (as illustrated below)
COTI’s Trust Chain Algorithm is designed in such a way that trusted users (i.e. those with a high Trust Score) will experience faster confirmation times than those who are less trustworthy. This is natural as people are more cautious when dealing with people they trust less and would like to be certain that their transactions are confirmed before accepting them. This is illustrated below
The Future of COTI
In order to provide a completely decentralised ecosystem for online payments, COTI is exploring various alternatives to allow for decentralised governance. This governance structure will be responsible for making decisions that affect the base protocol, the future use of COTI’s tokens, investments and more. This body will not only vote on these matters, but will also be responsible for executing changes.
Decentralised governance could take place following a protocol update. Once the update is ready, a team of experts in the field would be tasked with creating a metric (a way of assessing the update) to determine the possible outcomes if the update is implemented. After this is determined, COTI token holders will be able to vote for the best possible outcome for the network. As such, decisions will be based on the wisdom of the crowd. The mechanism for choosing the team of experts will be determined in future iterations of the network. To streamline COTI’s future development, COTI’s transaction bundles will have free space set aside where future information layers can be stored. These layers may be used by other companies that wish to run information based on the Cluster, for the transfer of other currencies and datasets across the network, or for the deployment of smart contracts.
Links :
ICO Website: https://coti.io/
Technical Whitepaper: https://coti.io/en/files/COTI-technical-whitepaper.pdf?v=9747d3147f0
YouTube: https://www.youtube.com/coti
Facebook: https://www.facebook.com/COTInetwork/
Reddit: https://www.reddit.com/r/cotinetwork/
Telegram: https://t.me/COTInetwork