The latest white paper of Horizen (ZEN) details theZendooblockblockchain incentive scheme.
we are happy to announceLatus Rewards Program White Paper, which detailsin the Zendoo white paperIntroducing the reward program for the Latus sidechain for the first time- zk-SNARK verifiable cross-chain transfer protocol that supports decoupling and decentralized side chains. This reward program is an essential element to achieve a fully decentralized system and allows for the creation of a balanced reward distribution mechanism. The program also promotes stable operation and honest participation in the system. The ideas described in this paper can be adopted by other SNARK-based blockchains to incentivize the creation of proofs.
What is the Latus Rewards Program?
In our previous article, we introduced Zendoo – a general structure for Bitcoin-like blockchain systems that allows creating different types of sidechains (full blockchains parallel to the main chain) and communicating with them , without knowing its internal structure.
Latus is a special construction that can be built on top of Zendoo and utilizes zk-SNARK technology to create a fully decentralized and verifiable sidechain. In Latus, due to the need to prove the history of the blockchain using SNARKs, we had to find a balanced mechanism to incentivize the decentralized system of participants to create proofs. The incentive program for Latus sidechain building promotes sustainable maintenance and further promotes decentralization through transaction fees rather than newly minted coins. In this paper, we identify the main players involved in sidechain operations and construct a reward-sharing scheme that maximizes the overall efficiency of the system and keeps the different parties in balance.
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What Makes the Latus Incentive Program Different
Unlike typical cryptocurrency blockchains, Latus-enabled sidechains do not have to rely on sidechain-created coinbases as a source of rewards, but instead rely on sidechain transaction fees. Another important difference is that, in addition to regulating minting, the reward plan must also regulate the reward mechanism used to create SNARK proofs. By making provers compete in a market, the mechanism aims to converge the proof fee to the lowest possible value.
“The Latus Incentive Program enables anyone to build dapps on the Horizen ecosystem and incentivizes all participants in a fully customizable manner and maintains the integrity of the ecosystem,” said Horizen co-founder Rob Viglione. “The customizability of the system ensures that anyone can build and earn rewards, no matter what they intend to use them for. The Latus Incentives Program is an important step towards our vision of a fairer and more inclusive ecosystem.”
This scheme enables the possibility of full decentralization in any sidechain system that does not have its own native assets (like in Latus), with the goal of maximum efficiency and balance between different entities. We see our work as a first step towards building a robust incentive scheme for sidechain systems that do not own their own assets and therefore cannot offer maintainers freshly minted coins as is done in most existing blockchain systems .
