Everything You Want To Know About COTI’s DAG and Consensus Algorithm

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COTI

5 min readDec 6, 2019

For those new to the COTI community, and for those that want to learn more, we’ll be releasing a series of tech guides over the next week detailing the COTI tech and what powers the COTI network. In the article below you can learn more about COTI’s DAG and Consensus Algorithm.

The COTI Proof of Trust Consensus algorithm is a bespoke consensus algorithm that assigns each user on the network a Trustscore and combines it with Proof of Stake to incentivise good network behaviour that results in lower fees, higher payouts and better quality of service as compared to other networks.

In this article, you can learn more about COTI’s protocol and consensus algorithm.

The Trustchain Protocol

To resolve industry challenges, COTI decided to develop a new protocol called Trustchains.

Instead of using a blockchain-based ledger, COTI spotted the potential of directed acyclic graphs(DAG) to facilitate a unique way of solving the scalability challenge. COTI’s DAG is called the Cluster. Each node in the Cluster is a transaction in time, and so token transactions have to be attached to two prior transactions to be a part of COTI’s ledger. The Cluster solves the first issue of scalability by connecting transactions simultaneously and asynchronically (as opposed to linearly approving transactions presented by other projects).

In layman’s terms, the Cluster enables attaching transactions at a very fast pace, achieved by the validation process. This advantage is reached by implementing another layer of data on every user — the trust score. COTI embeds the trust score of each sender in two different algorithms in DAG:

1. Whenever a new transaction is initiated, it has to be connected to the two previous transactions. Each full node is responsible for creating the new transaction bundle, and by that, compose the attachment of the two other transactions which are in the range of their trust scores.

2. In a flow of time, such process creates a Trust Chain, for as the entire DAG is segmented into different flexible clusters by their accumulated trust score.

The lifetime of a transaction in COTI’s Cluster, from origination, through source selection algorithm, to achieve consensus

The Trust Chain-Based Consensus — New Data Confirmation Decision

Furthermore, the blockchain industry faces another dilemma — the variety and different uses of consensus methodologies used to achieve a precise confirmation regarding entering new data into the ledger. The issue becomes increasingly important when it comes to the realm of money transfer. Data should be handled carefully as far as trade risk is involved. Existing systems do not propose payments adjusted mechanism that indicates data confidence level.

The Cluster is segmented to different Trust Chains, creating an overall consensus per each transaction, using its cumulative trust score in its specific Trust Chain.

Proof of Trust (PoT) Consensus

COTI’s DAG-based decentralized ledger achieves scalability through its use of parallel source selection and Trust Scores. The Trustchain algorithm utilizes user Trust Scores to determine the amount of PoW necessary to confirm a transaction. The higher a user’s Trust Score, the faster the confirmation time. This is the basis of COTI’s Proof of Trust (PoT) consensus.

Proof of Trust (PoT) Algorithm

COTI has developed a unique PoT algorithm that is able to control and prevent network spamming, as well as balance incentives for network participants.

DSP (Double Spend Prevention) Node Clusters

DSP Nodes will be geographically distributed to a number of clusters. All DSP Nodes in a cluster will be strongly connected to each other as before, and a specific protocol for cross-cluster synchronization will be implemented.

Monitoring Network Behavior

Nodes in the COTI network are also assigned Trust Scores. Node Trust Scores are used to help users select the most suitable Full Node. Less trusted DSP Nodes, TS Nodes and History Nodes are banned from network operations and cannot collect any fees.

DSP Consensus

The COTI double spend prevention solution consists of adding a handful of highly trusted Nodes to the network with only one function: to reach consensus on whether the transaction is legitimate or a double spend. Transactions require the signature of a DSP Node before they can be considered fully confirmed, while any detected double-spending attempts are flagged and refused.