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COTI (Currency Of The Internet) aims to develop a decentralized form of money via its decentralized protocol. Instead of using a blockchain as its primary data structure, COTI is designing a Directed Acyclic Graph (DAG) based ledger. Other projects using a DAG are Fantom, ByteBall, and IOTA. Where blockchains are slow and expensive, COTI promises to deliver a fast and inexpensive method of transactions. This article will dive into DAGs briefly in the context of how it compares to blockchain but I will later release a deep dive into them as an Education Series article. More and more projects are moving away from blockchain structures so it seems prudent to highlight DAGs as a class of projects all unto itself.
The rest of my review is going to be a skim through.
DAGs are not new. In fact, several projects such as Byteball, IOTA, dagcoin, and Fantom employ their own variation of a DAG. I list their whitepapers down below. This architecture is different from blockchain in that it was specifically designed for low-value transactions. IoT devices and smart phones appear to be tailor made to utilize these protocols. IOTA calls its design tangle, COTI calls its transactions the cluster. COTI claims its cluster's theoretical throughput will be 10,000 TPS.
When a participant sends a transactions they are required to validate two prior transactions. Once they have completed that validation the transaction will be added to the ledger. Visualizing this schema will show why the term cluster is appropriate.
In the diagram, the white circles represent a transaction that has been validated by two transactions previously. The figure above is taken from the Byteball whitepaper. The red circles indicate a potential double spend attack. In Byteball, a sender must send all of their previous transactions as it may be possible to send two transactions unconnected to each other. COTI attempts to resolve double spend with their Double Spend Nodes.
Trust Chain Algorithm and Trust Score Servers
From their whitepaper, COTI will have a trust or a reputation based system to reach consensus. A machine-learning based algorithm will use historical behavioral data to validate and confirm transactions. This high level of trust will enable faster transactions. Every account is incentivized to earn a higher trust score. Having a low trust score is equivalent to a slashing mechanism in Proof-of-Stake based systems. Once you have a low trust it becomes more difficult to transact on the network, if at all. Trust scores will be hosted on what COTI calls their Trust Score Severs. There will be transaction fees on the network but the higher the Trust Score, the lower the fees to be paid on the network for users.
Double Spend Prevention (DSP) Nodes
DSPs prevent double spending. According to COTI's whitepaper the DSP performs the following tasks:
To host a DSP Node you must pass KYC/AML procedures and essentially stake a substantial amount of COTI (over 10,000 COTI) in a multisig wallet.
Full Nodes
In addition to the DSP Nodes, there is the option to run a Full Node (FN). These FNs collect transaction fees. A portion of these fees will go to the COTI network to fund infrastructural support of the DSP and Trust Score Servers. Fees are set by the FNs themselves. The better the service, the higher the fee they can charge the network. A maximum fee will be determined by the network and no minimum fee will be set.
Mediation Service
The Mediation Service will be used as a dispute resolution mechanism. Like, DSP Nodes, Mediators are also network participants with very high Trust Scores. For their services they are rewarded with mediation fees. Mediators essentially act as data oracles where they validate real world information in the case of merchant disputes. This offline mediation then provides an online consensus. Case participants will deposit their COTI funds into an escrow fund service developed and maintained by the COTI development team. Winners of their case will receive COTI transfers from the escrow funds.
Clusterstamp
Preventing the network from growing unmanageably large, COTI introduces what it calls its Clusterstamp. Essentially, the clusterstamp is a method of snapshotting an account's balance and stitched onto the latest unconfirmed transactions in the Cluster. From that point forward that will become the genesis transaction for the next wave of transactions. Think of it as a rolling history of the cluster.
Half of all COTI tokens are set aside for future development. Other projects set up a foundation with unbiased participants to determine what to do with reserved funds. Playing devil's advocate here, but what are the mechanics to ensure these tokens are used honestly to develop the ecosystem? What if the project burns through its capital quickly or mismanages its ETH treasury, will the team forcibly reallocate its "development fund" to fuel ongoing operations.
The whitepaper's claim of 10,000 TPS seems very reasonable compared to the blustery claims of millions of transactions per second. While the cluster itself is decentralized, the Trust Score Servers and Double Spend Prevention Nodes appear to be points of vulnerability for the network. Another point of weakness would be a coordinated attack on the Full Nodes on the network.
The cumulative growth of a blockchain is a concern when it comes to data storage and latency issues. COTI's clusterstamp approach could work in managing the ledger size by simply removing the history and snapshotting an account's balance. What is lost is the history of that account. In order to go back in history, a lighter node would need some sort of bootstrapping offering from the full nodes.
Overall, the design of COTI relies on too many trusted parties. Double Spend Nodes, Trusted Servers, and Mediation Service providers feature too many centralized points of vulnerability for my taste. I've already commented on the team and the level of the funds they are raising for the stage of development they are at. Lastly, I wished there was some code that was out there for the public to see. With all of this combined, I am going to pass on this opportunity.
Sources
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