Kings Reward Whitepaper

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Abstract

Proof of Work (PoW) is the most tried-and-true protocol for securing a modern blockchain. However, in its basic form, development and project operations suffer as there is no native funding mechanism to accompany the mining process.

There is also little incentive for stakeholders to hold coins other than for market speculation. This lack of holding interest, combined with selling pressure from miners (who must recoup equipment and power costs), combined with no funding system, eventually results in market erosion and development abandonment for all small-scale PoW projects. [1]

By keeping the Proof of Work layer intact, while adding a secondary reward protocol for both the developing team and major stakeholders, we can create a hybrid system of prolonged sustainability and completely solve these problems.

Goldcoin's History

Goldcoin was launched on the Bitcointalk.org forum on May 15, 2013 and is a peer-to-peer version of electronic cash that allows online payments to be sent directly from one party to another without going through a financial institution. [2]

Like Bitcoin, Goldcoin currently uses a Proof of Work (PoW) based consensus mechanism to secure its blockchain. The concept was adapted to money by Hal Finney in 2004 through the idea of "reusable proof of work."

The Goldcoin protocol is designed to scale on-chain with 32 MB blocks and 2-minute block intervals, giving it a throughput of 1,120 Tx/s. Transactions support 0-Conf and can be sent with or without a transaction fee. [3]

Proof of Work's Problem

In the traditional Proof of Work model used by most cryptocurrencies, network security is provided by peers doing work. They deploy their resources (computation/processing time) to reconcile double-spending transactions, and to impose an extraordinary cost on those who would attempt to reverse transactions. Coins are awarded to peers in exchange for work, with the frequency and amount varying with each cryptocurrency’s operational parameters. This process is known as mining. [4]

The frequency of block generation, which determines each cryptocurrency’s available mining reward, is generally intended to stay constant. As a result, the difficulty of the required work for earning a reward must increase as the work capacity of the network increases.

As a Proof of Work network becomes stronger, there is less incentive for an individual peer to support the network, because their potential reward is split among a greater number of peers. In search of profitability, miners keep adding resources in the form of specialized, proprietary hardware that requires significant capital investment and high ongoing energy demands.

The protocol is fair in the sense that a miner with p fraction of the total computational power can win the reward and create a block with the probability p. An attacker is required to solve the same tasks as the rest of the Goldcoin network; i.e., an attack on Goldcoin will only be successful if the attacker can bring to bear significant computational resources while penetrating its 51% defenses.[5]

While this system is the most proven for securing the network, development and project operations are not sustainable since there is no funding mechanism for development, general operations, and infrastructure. There is also no incentive for large stakeholders other than for purposes of speculation. This is combined with constant selling pressure from miners who must recoup equipment and power costs.

The Solution:

The Kings Reward System

By introducing a secondary PoS system of reward, we can solve the problems outlined above within the basic PoW protocol.

This can be done by creating a funding block (KRF) at the genesis of the KRS (Kings Reward System). Then every 220K blocks thereafter, distributing the 1,100,000 KRB (Kings Reward Block) to the top 11 richest addresses for a period of infinity.

This will result in sustainable funding by default as the team address will become a king, while motivating top stakeholders to protect the project and ensure its continuity in order to preserve the PoS reward.

Specifications

Kings Reward Block

The Kings Reward Block (KRB) is a Superblock containing 1,100,000 GLC.

After the initial Funding Block, every 220K blocks (12-month target), the 1,100,000 GLC contained within the KRB will be equally distributed to the top 11 addresses in the UTXO set. This means 100K GLC each to the 11 richest addresses. [6] [7]

This idea is unique in the fact the original PoW layer remains intact while being complimented by a brand new PoS incentive system.

Eligibility

Kings's addresses must contain at least 1 outflow/send transaction within the previous 24-months. Known exchange addresses are ineligible.

Cold Staking

There's no requirement to have an online client to be eligible for a KRB payment, making this a cold staking system by default. The PoW layer will continue to manage blockchain consensus. [8]

Funding Block

The initial block is a one-time funding block containing 11 million GLC to be paid to a preprogrammed 2-of-3 multi-sig address controlled by the Goldcoin Development Team. [9]

This will not only provide immediate funding, but prolonged funding since this address balance will qualify for the Kings Reward.

These coins will be allocated over time via a team-designed voting system and used for glcgives.org, development, marketing, exchange listings, Etc. Every reward block thereafter will be distributed per the KRB specification above.

Roll Out Phases

The KRS will be integrated in two phases. The first phase (Q4 2022) will come in version 0.14.9 which will include several bug fixes, network connectivity advancements, and a 20% improvement in mining efficiency. Phase two (Q1 2023) will complete the system and come in the release of 0.15.0.

Expected Behaviors

Once the system has been activated, there will be incentive to compete for a top eleven address, and to maintain a balance sufficient to remain a King.

Kings are likely to hold their balances to secure a share in future KRB reward payments. As with Proof of Stake, these Kings will be motivated to protect the integrity of the network and seek out its continuation in order to protect their positions.

There will also be new users and current users with smaller balances competing to accumulate coins in order to reach King status.

Concerns

There will be a concentration of power in the top tier of wallet holders by design. A collective group consisting of benevolent caretakers to serve and protect.

This is not a centralization concern as these individuals are independent and not appointed. And any user can compete for a position among the top eleven by sufficiently elevating their wallet balance. [10]

While this fork will create an increase in the circulating supply, it is expected that any additional selling pressure will be offset by the fact the project will gain the advantages of a staking system and sustainable funding for research, development, and network infrastructure support.

Conclusion

The Kings Reward Protocol creates a hybrid system of Proof of Stake rewards on top of the existing Proof of Work layer.

This specification will:

  • Solve the issues of project funding and sustainability.
  • Offer passive income opportunities for eligible addresses.
  • Introduce a buy-and-hold incentive as Kings compete to protect their thrones.
  • Create a mechanism of incentive to protect the network and project.

Notes

Reserved for future use.