Long thread👇
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There are two incentive problems that Proof-of-Work (PoW) and Proof-of-Stake (PoS) blockchains inevitably encounter that undermines network scalability:
1⃣ Tragedy of The Commons Problem
2⃣ Free-rider Problem
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These are types of problem that lead to market failure wherein individuals can profit by behaving in ways that imposes cost on the whole ecosystem.
Let's dive deeper👇
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Tragedy of The Commons Problem:
❗️ Miners make money today by putting data on the blockchain that must be supported by other network members in the future
❗️ There is a privatization of gain (today) and a socialization of losses (tomorrow)
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❗️ Tragedy of the Commons Problem is a problem that usually leads to blockchain bloat (renders the whole network unusable - AKA network collapse)
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Free-rider Problem:
❗️ participants maximize profits by refusing to perform necessary but costly activities like running p2p infrastructure, and spending their money instead on the narrow set of paid network activities
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❗️Gains are privatized while losses are socialized onto whoever remains to perform the unpaid work
❗️The Free-Rider Problem encourages participants to fund mining and staking at the expense of equally important work like running non-excludable network infrastructure
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How does Saito Network eliminate Tragedy of The Commons Problem?
Solution: Introduce a market-based pruning mechanism to the blockchain
Effect: Transactions will pay their fees out to block producers over time rather than all-at-once
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Result:
✅This prevents nodes from adding transactions to the chain that do not pay enough fees to cover the actual costs of operating the blockchain (eliminating blockchain bloat)
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✅ This also fixes several other intransigent problems, such as allowing the network to properly calculate the cost of on-chain storage into perpetuity (storing data on a blockchain forever)
Read more at:
org.saito.tech/wp-content/upl…
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How does Saito Network eliminate Free-rider Problem (much complex)?
Solution: 🟥The Saito Consensus (golden ticket, paysplit etc)
💡org.saito.tech/introduction-t…
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Result:
✅The consensus makes the overall network more secure
✅ The consensus fully eliminates economic attacks (51% attack, Sybil attack, Spam etc)
Read more at:
org.saito.tech/wp-content/upl…
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Interested to know more? Check out the Saito Network Whitepaper and go down the rabbit hole
saito.io/saito-whitepap…
#Saito #SaitoNetwork $Saito #Web3 #boardgames #Cryptocurrency $BTC
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