Whitepaper

Clive Rudd edited this page Mar 8, 2018 · 10 revisions

Coin2Fly: A crypto-currency based on Dash with a three-tier network (AppNode) for the General Aviation industry

Clive Rudd– clive@coin2fly.com

Abstract. This paper presents a crypto-currency based on Dash, with improvements such as a three-tier incentivized network. It has a Masternode as in the Dash network and a new added network, the AppNode network. Included are Dash improvements over Bitcoin such as "PrivateSend, for increasing fungibility and InstantSend, which allows instant transaction confirmation without a centralized authority". The Coin2Fly network uses Neoscript instead of X11 to empower users with weak hardware to verify transactions.

1 Introduction

Bitcoin was launched in January 2008 as a concept [1] with a whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash​ System" and authored with a nom de plume as Satoshi Nakamoto [2]. This​ paper described a system ​for ​a peer-to-peer ​network ​that ​would develop ​a​ “system​ ​for ​electronic​ ​transactions​ ​without​ ​relying​ ​on trust” [2].​

Nakamoto implemented the bitcoin software as open source code and released it in January 2009 on SourceForge [3]. The identity of Nakamoto remains unknown.

In January 2009, the bitcoin network came into existence after Satoshi Nakamoto mined the first ever block on the chain, known as the genesis block.

Since 2009, Bitcoin as a cryptocurrency has emerged as a popular medium of exchange and was the first digital currency to attract a substantial number of users and investors [2]. Since its inception in 2009, Bitcoin has been rapidly growing in mainstream adoption and merchant usage [3].

Two of the main issues with the acceptance of Bitcoins have been: the time required to wait for the network to confirm the transaction as valid and the low level of privacy. To solve these two critical issues, the Dash coin was developed from Bitcoin. Dash was originally released as XCoin (XCO) on January 18, 2014. as a fork from the Bitcoin core code adding two important functions: InstantSend and PrivateSend. This resulted in "a series of improvements to Bitcoin ensuing in a decentralized, strongly anonymous crypto-currency, with tamper-proof instant transactions and a secondary peer-to-peer (P2P) network incentivized to provide services to the Dash Network."[4]

However, the main implementations of the network were focused on transactions on the blockchain, network maintenance, and a payment mechanism; not much was implemented to become an application platform.

Coin2Fly is designed from a Dash/AltCoin fork to make one major addition and improvement: a third network tier. It has two base networks—full nodes and Masternodes—and a third type of node focused on an application server layer: the AppNode network.

2 The Three Tier Network

The Coin2Fly network adds a new class of node—the AppNode. This is a full node as the Masternode is, but it adds an application API that uses the blockchain as data storage. Multiple networks of the type AppNode would be developed depending on the application that they support. As an example, AppNodes could be of the type PilotLognode, AirTaxinode, AirplaneLognode, FlySharenode, and so on.

Each of these specialized nodes will have different levels of complexity and will have a demand for a different level of hardware capacity. A weight property will be added to each node associated with the level of complexity. This will be calculated using the following formula:

AppNode weight formula to be determined. [TODO]

3 Masternode Network

Coin2Fly’s Masternode Network does not deviate significantly from the Dash implementation. Coin2Fly Masternodes are "full nodes servers running on a P2P network, that allow peers to use them to receive updates about the events on the network. These nodes require significant amounts of traffic and other resources that carry substantial cost." [4]

4 AppNode Network and Masternode Network

One of the weaknesses of the Bitcoin network is the lack of incentive to run a full node that must do more of the heavy lifting as the network increases in size. Dash introduced incentives for running a full node, creating the concept of Masternodes.

4.1 AppNode

The network of Masternodes provides an important service for the integrity of the network, and the two main additions to Bitcoin from Dash are PrivateSend and InstantSend. However, little is provided as a blockchain service for application development and maintenance, which is a central part of the Coin2Fly network.

AppNodes are full nodes, just like in the Dash network, except they must provide a specialized service to app developers as well as to the network and require a bond of collateral to participate.

To run an AppNode, the node must store 500 CTF. When active, AppNodes provide data services to application clients as well basic Masternode services on the network; in return, they are paid in the form of a dividend. AppNodes are all paid from the same pool of money: approximately 3 CTF of the total block reward is dedicated to this program.

4.2 Reward Program Masternodes, AppNodes, and Governance – Cost and Payment

The distribution of the 15 CTF reward per block will be as follow: 5 CTF for the Masternode network, 5 CTF for the miners, 3 CTF for the AppNode network, and 2 CTF for the Governance program.

The reward programs for Masternodes and AppNodes are very similar to the Dash Masternode program. The main difference is the addition of a new reward queue for the AppNodes.

The Masternode and AppNode rewards programs are a fixed percentage of the reward per block, and Masternode and AppNode network node rewards fluctuate. Expected daily Masternode and AppNode rewards will vary according to the current total count of active Masternodes and AppNodes for their respective queues.

4.2.1 Masternode reward (Identical from the Dash coin)

As in the Dash network, payments for a standard day for running a Masternode can be calculated by using the following formula:

(n/t) * r * b * a (from Dash Whitepaper)

Where: n is the number of Masternodes an operator controls t is the total number of Masternodes r is the current block reward (averaging about 5 CTF) b is the number of blocks in an average day. For the CTF network, this is usually 576 a is the average Masternode payment (45% of the average block amount).

4.2.2 AppNode reward

The AppNode network, an introduction with Coin2Fly, will be rewarded with 3 CTF. Although the reward is less than for the Masternodes, the frequency of payment will be higher and the collateral to own an AppNode is half of that for a full Masternode.

The same formula is used to calculate the payments as for a Masternode.

4.3 Deterministic Ordering and Weighting System

The selection of the Masternode reward will follow the Dash deterministic algorithm using the hash from the proof-of-work for each block; however, the AppNode network adds a new element, the app weight.

Pseudo Code for selecting a Masternode (from Dash):

For(masternode in masternodes){

current_score = masternode.CalculateScore();

if(current_score > best_score){

     best_score = current_score;

     winning_node = masternode;

}

}

Pseudo Code for selecting an AppNode:

For(AppNode in AppNodes){

current_score = AppNode.CalculateScore();

current_weight = AppNode.GetWeight();

if(current_score > best_score && current_weight > best_weight ){

     best_score = current_score;

     best_weight = best_weight;

     winning_node = AppNode;

}

}

The addition of the AppNode’s weight is a necessity to differentiate AppNodes that have light demand for ccomputingpower and storage from others that will need heavy calculations and high storage. To incentivize the creation and maintenance of such AppNodes, a weight system is created that will give those nodes a reward priority in the reward orders.

The Dash network added a reward system for Masternodes, and the Coin2Fly network is adding a new network tier that will have different types of nodes depending the type of app that they will be supporting.

5 Decentralized Governance

Coin2Fly follows the Decentralized Governance and Budget designed by Dash. The main idea behind it is that the community will have full control of how the coin develops and how the budget is being spent.

The first line of decision makers is the Masternode owners. Based on the network of Masternodes with a high collateral requirement, Coin2Fly already has a decentralized network of full node operators that are invested in the future of the currency. Every Masternode has a full vote in every Coin2Fly project or budget proposal.

"In the budget system, a portion of the block reward is held in escrow by the network itself, in the name of the operators, to be executed in the development and expansion of the ecosystem through the vote of the Masternodes in different budget proposals. These funds are directed to supporting development and promotion of the coin." [4].

This Decentralized governance system designed by Dash and powered and controlled by Masternode owners guarantees that the coin can continue to exist even when the founders and early adopters are no longer the main drivers for the coin.[4]

If a Masternode operator sells their coins, the new owner can set up a Masternode and with it acquire the right to vote on budgets and projects.[4]

The decentralized governance system is based on a voting mechanism set up in the rules governing the blockchain. Decisions and budgets for projects are first proposed, then the Masternode owners vote on them. Each project, if it passes, is added to the total budget and paid directly from the blockchain to the person doing the work. This allows Coin2Fly to hire developers, assign bounties, etc. and pay them directly after approval of the work in a decentralized fashion [5].

6 Additional Improvements

6.1 NeoScript Hashing Algorithm

A new mining algorithm was launched in the altcoin community in the year 2014. X11, as this algorithm is called, uses 11 different rounds of hashes (hence the 11) and was well received due to its incredible energy-efficiency when mining with a GPU or CPU. This algorithm was also capable of keeping mining hardware a lot cooler as there is a lower requirement for processing power.

Dash coin was designed to be ASIC resistant by implementing the x11 hashing algorithm. This meant that to be able to mine Dash, it was not necessary to set up power hungry and expensive hardware as is currently the case for Bitcoin.

Unfortunately, the X11 algorithm did not prove to be ASIC resistant for very long. Especially once Dash embraced X11, it was only a matter of time until the first X11 ASICs were designed and implemented.

The Scrypt algorithm was specifically designed to make it costly to perform large-scale custom hardware attacks by requiring large amounts of memory [6]. A simplified version of Scrypt, NeoScrypt, is used as a proof-of-work scheme by Coin2Fly as it still provides ASIC resistance and protection from large-scale custom hardware attacks.

**6.2 The AppNode Reward Queue **

As Coins such as Dash become popular and the population of Masternodes increases, the reward frequency and the ROI decreases, making it attractive to own and operate Masternodes. Coin2Fly has introduced a second reward queue, the AppNode.

The AppNode reward queue will be rewarded with less quantity of CTF each time, but the frequency of receiving it per node should be higher as the number of Masternodes are designed to be double the number of AppNodes, and the Masternode queue and the AppNode queue are both paid at the time every block is found by a miner.

6.3 Mining Supply

Coin2Fly is following the same Dash approach to restricting the inflation of mining using a 7% reduction of the supply per year.

7 Conclusion

This paper introduces various elements to improve the design of Dash, resulting in not just a payment network but an application platform as well. This is implemented by creating a new type of node, the AppNode, which acts as an application server that uses the blockchain as a data repository and exports a public application interface for app developers. Coin2Fly maintains all the innovations brought by Dash including InstandSend and PrivateSend, but it goes further and adds a new tier of networks specialized for application support. The Dash decentralized governance model will be supported by Coin2Fly and developed further.

References

1>*A History of Bitcoin. Monetary Economics: International Financial Flows, Financial Crises, Regulation & Supervision eJournal. Social Science Research Network (SSRN). Accessed 8 January 2018.

2>*Nakamoto, Satoshi (31 October 2008). *"Bitcoin: A Peer-to-Peer Electronic Cash System*" (PDF). bitcoin.org. Archive*d (PDF) from the original on 20 March 2014. Retrieved 28 April 2014.

3>Nakamoto, Satoshi (9 January 2009). **"Bitcoin v0.1 released*"Archive*d from the original on 26 March 2014.

4>Dash: A Privacy-Centric Crypto-Currency(2018) https://github.com/dashpay/dash/wiki/Whitepaper

5>Understanding the Governance and Budget System https://dashpay.atlassian.net/wiki/spaces/DOC/pages/8585240/Understanding+the+Governance+and+Budget+System

6>Stronger Key Derivation Via Sequential Memory-Hard Function*s, Colin Percival*

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