PoO: A new Protocol for Stables on PoS chains
I am totally serious.
Proof of Ownership, or PoO is a new consensus paradigm for a stablecoin-first future. It comprises 3 main components, with the goal being to ensure an endogenous token (a so-called ‘gas token’, to many) retains value even as a stablecoin is the main transactable asset on a network.
Only wallets with a valid soulbound or wallet-bound (and potentially even time-bound) NFT can transact. If your stablecoin is private-by-design (it should be) then the creation of this should be a zero-knowledge event where only a proof is written to the ledger. The existence of this proof is locally required at the time of issuing a transaction by a valid client, but it not audited centrally.1
All transaction fees (as well as gas) are paid to the network in the endogenous token. Transaction fees should likely be stable (but one would envisage greatly cheaper than the equivalent fees when e.g. using the Visa or Mastercard rails).
Optionally, some amount of endogenous token is staked or bonded to a validator before a wallet can transact.2 An antehandler3 filters all transactions that would increase a validator’s share of VP above a fixed sensible point (e.g. 5%, if you assume a valset of 20). Another option that would reduce the governance overhead would be to have all vals be within +/- a couple of percent of the average VP in order to be eligible for stake bonding.
This system requires an oracle, since the value of the NFT should be stable relative to the exogenous price of a real-world currency (let’s say the dollar, if you envisage a dollar stablecoin, but you should probably denominate it in something else unless you are (a) American, (b) an American company).
Thus, at least in principle, the value of the NFT is stable.4 You might additionally consider making them bound to wallets and non-transferable. Assuming an HD type wallet, you would need one for each sub wallet.
Although this is not the goal of the system, you could imagine AML/CFT or KYC measures occurring at the point of NFT sale.
In fact, it is possible to use this general scheme on top of say, a Tendermint style blockchain and make it work with a Sark payments layer.5
Relays (Porters) would have to take additional metadata and verify NFT ownership on-chain before saving transactions to their local transaction trie, but apart from that, the principle should work.6
If assets needed to be transacted more than once (for example if they represented an RWA and not a payments primitive, like a stock holding), then you could in principle continue to use a system like Sark with multi-hop updates and saturate the full provenance of an asset to determine its history in the case of regulatory need. Let’s call this extended protocol PoOP, or Proof of Ownership and Provenance.
Having typed this whole thing, and despite the date, I’m still totally unsure if I’m serious or joking.7
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This potentially creates a coordination problem in terms of software versioning if it is baked into the client; alternatively it could be versioned to the circuit, or via some other means.
The downside of this versus a soulbound but oblivious proof is obvious: identity is revealed. Then again, we’re talking here about public networks, so maybe that’s no big deal.
Or similar mechanism, depending on network. I’m using the Cosmos SDK terminology out of familiarity.
Even if the token that was used to purchase it is not, and so its hypothetical value is not. Note that you can’t recycle this token, so it is essentially useless once purchased. I assume it is soulbound so there is no secondary market.
Shilling my own pre-print, I know, I’m sorry (I’m not actually sorry). The idea that you can pay stable fees for usage based on oracles is the point, not the operative system architecture.
In fact, if you’re one of the elite handful that understand zero-knowledge L2s and systems like Sark, you might have spotted that if the initial NFT is oblivious/private rather than public, then it’s the sort of thing a Sark system might issue.
Proofing the post, I’ve realised that at least the description of how the guarantees of obliviousness and provenance-saturation work might be the most succinct explanation I’ve yet managed to explain how the tech works. Which is kind of tragic, given the context.