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SEEEDS: A Blockchain Based Network (3)
"Decentralization isn't a feature that most people care about, they care about the value that the system provides." - Daniel Larimer, Co-Creator of Bitshares, Steem and EOS
SEEDS is built on top of several existing and proposed open-source, protocols, libraries, and decentralized organizations. SEEDS gives credit to these pioneers for demonstrating, testing and developing many of the foundational systems that make SEEDS possible.
We credit Steem, Dash, NEM, Ethereum, Aragon, Bitcoin and others along with the developers behind these projects, for their revolutionary contributions.
SEEDS being molded with EOS in mind, would like to thank Daniel Larimer and all the developers at EOS.IO and Block.one for their contributions to this space.
SEEDS is only possible because of these pioneers.
- "Wait! I heard 'blockchains', are extremely energetically wasteful, unsustainable and unscalable!" - A Concerned Citizen
Fundamentally, SEEDS is a blockchain. Further, SEEDS is a 'decentralized' blockchain. Meaning, the security of the network is maintained by thousands of independent verifiers, called 'nodes'.
Blockchains eliminate the need to trust the operators of a centralized system. This is because everyone can see the source of truth, and it would take unfeasible collusion to manipulate this data. Therefore, people can trust with a high degree of confidence that the data is accurate, without requiring a central entity controlling this data.
Without a single source of truth to manipulate, lobby, blackmail, bribe, or control the decentralized model greatly reduces the abuse, fraud, inequality, and regulation that our present economies operate within.
Blockchain technology creates the environment for transparent and resilient markets that are less susceptible to the control, manipulation and concentration of wealth typical in the oligarchies that are our present economies and governments.
Underlying the entire SEEDS Ecosystem is a blockchain for storing, retrieving, and maintaining an immutable record of events and data. As well as, processing contracts and protocols.
This decentralized architecture is what allows SEEDS to do the vast majority of what is detailed in this paper. SEEDS's blockchain is not wholly unique in its underlying architecture, for this we use EOS.
*SEEDS acknowledges that many projects in this space have replicated the concentration of wealth dynamics of our current economies. We'll explain how SEEDS addresses this malfunction in SEEDS Economics.
SEEDS is designed to be built on top of EOS, if the right conditions with the EOS community are formed. Or, as a fork of EOS.IO's open-source code, creating a separate SEEDS Blockchain that would not be directly associated with EOS.IO (much like Dash's fork of Bitcoin).
"EOS.IO is open source software that anyone can use to deploy a high performance blockchain and smart contract platform. Designed to scale to hundreds of thousand and potentially millions of transactions per second with extremely low latency." -Daniel Larimer
EOS.IO is creating a blockchain and releasing the code for the world to use. We would take this base code and build on top of it what's discussed in this paper. SEEDS ecosystem is EOS.IO + SEEDS.
What differs between EOS.IO and SEEDS is the purpose of this paper and much of what you'll find in EOS.IO's white papers and subsequent information is not reiterated here unless otherwise stated.
For those who aren't concerned with the underlying technical protocols of SEEDS and EOS.IO, it is not necessary for you to learn more about EOS.IO to understand SEEDS. This paper is designed to give a reader with no information about EOS.IO a complete idea of what SEEDS aims to accomplish; but not a complete (technical) idea as to how, for that would require a reader to understand EOS.IO. For those of you who are interested in the detailed technical implications, it's important to read at a minimum the following information regarding EOS.IO:
EOS[.io an Introduction
Further reading:
It's important to note that SEEDS does not contain a nationally recognized legal governance structure, or elements for governments or organizations to sue or attack. SEEDS is simply a set of protocols and data on a distributed network of computers worldwide and accessible by anyone with an internet connection. SEEDS blockchain forms the foundations for a peer-to-peer, boarder-less, nation-less, Partner-owned economy.
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Accounts: Details for Partners of SEEDS
Accounts are a single profile/avatar for an entity (person/company) to navigate and interact with all the applications on SEEDS. Anyone who controls an account is considered a Partner of the SEEDS Ecosystem.
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Creating Accounts
Guests wishing to become partners and open up accounts will first have to purchase the minimum required Seeds, either through an exchange or directly and seamlessly through Light (or affiliate exchange) upon signup. These Seeds will need to be 'planted' in their accounts in order for them to gain full access to the network.
Completing an account involves:
- Attaching an email and phone number to the account.
- Planting Seeds.
- Naming the account
- Adding a publicly visible username
- Uploading a photo
- Filling out basic info of account: gardener, foodie, chef, transport, etc
- Creating pages (similar to blog posts) displaying your marketplace offerings and other interactions on the platform. (posting updates, creating polls, interacting with the crowd, etc.)
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Native Names
Wallet addresses used by many blockchain technologies, such as Bitcoin and Ethereum, have typically consisted of long strings of random letters and numbers, however, these wallet addresses can make it difficult to transact with other users in a seamless manner as users are unable to recall the long-string addresses from memory.
SEEDS uses native names in the same manner as can be found on the Steem platform. EG: @rieki ; @foodie123 ; @rake ; @best-uber-delivery
The SEEDS blockchain uses each participant’s user name as their wallet address, which bolsters the user experience for participants who attempt to send Seeds because they can verify the addresses from their own memory.
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Partner/Account Abilities
An account gives partners the ability to:
Create a profile (with a unique namespace/URL ex: rieki@light)
Grow Their Account:
- Gain ratings and reviews
- Grow reputation
- Increase contribution score
- Harvest Seeds (receiving a share of Grown Seeds)
Transact on the Network:
- Rate other partners
- Review transactions with partners
- Post blog's (to advertise your offering or engage with the network)
- Comment on blog's
- Delegate Planted Seeds
- Plant/un-plant Seeds
- Publicly message accounts
Send/receive Seeds with no fee:
- Buy
- Sell
- Transfer Seeds between accounts
Participate in SEEDS DAC
- Submit Proposals for local and global spending
- Create an Application and receive compensation for the applications contributions
- Vote for proposals
- Delegate voting weight to another account
Access SEEDS Services
- Promote Content on the Network
- Participate in Arbitration
- Access Seed Bank
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One Account, Multiple Applications
A new participant on the network would be able to access (and create accounts on) SEEDS through any number of applications, a primary application being Light Food.
These accounts will enable the user to access all the various applications on SEEDS. From a user experience it is similar to how Facebook can be used as a login to various websites. The difference being that on SEEDS, the data that is stored would be able to be used for all the other sites/applications as well.
This allows a user to build a single account value for activity on any application on SEEDS (and thus not only gain value from food related activities, but any activities that might be hosted on the wider and future SEEDS Ecosystem). So, a user can build reputation and gain monetary rewards (Harvests) for their actions and contributions (from transacting to leaving reviews) anywhere across the SEEDS network.
Through sharing a motivated and vested user-base, various applications can leverage the users of other applications to gain more attention and users. This cooperative approach to growing each application unifies the marketing and rewards of all the once-separate applications.
As an example, if Airbnb, Uber and Facebook were all built on SEEDS users would have one account for all of these applications. Users would build their accounts and receive compensation for liking on Facebook, riding with Uber, and booking with Airbnb. So, Facebook users would be more motivated to book through Uber than through other ride sharing applications like Lyft or Grab since they share the same incentives for use. This way as Facebook gains more users, Uber indirectly benefits and vise-versa.
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Guest Access
Guest access would allow non-partners to seamlessly purchase and leave reviews on the network as easy as any similar non-blockchain platform. A Guest account managed by Light will allow guests to access and make purchases on SEEDS applications. Guests can use a variety of accepted currencies and pay a small exchange fee for using non-Seed currency. This exchange fee would be much less than the fees associated with centralized applications.
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Protocol
Guests can use the platform, however they do so through an intermediary account managed by Light. This account would be @Guest and have a high planted Seed balance to accommodate for massive transaction volume related to all guests accessing the network.
Reviews, ratings, and purchases by guest users will all be conducted by the @Guest account. Light manages the Seeds in this account and accepts directly any fiat or other currency paid and makes the transaction on the network in place of the guest.
Light (or affiliate exchange) retains the transaction fee as part of its service of exchanging the currency into Seeds in order to transact on the network. A bot managed by Light controls the “@Guests” account and automatically conducts the transactions as a proxy for the participant acting as the guest.
For guests this would be unnoticeable and would take place in the same way as a typical transaction with any on-line service. Guests would be able to make purchases on the platform and leave reviews, but not take part in any other account function such as gaining reputation, selling, voting, Harvesting Seeds, or submitting proposals.
The @Guest account would not participate in CS protocols, limiting the ability for guests to use the account to drastically effect others accounts ratings and reviews. The @Guest account would maintain the CS of a brand new account with minimum planted Seeds while holding the Seeds necessary to use the required bandwidth.
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Contribution Score (CS)
Not every partner has an equal voice (voting weight) or share in the harvest (grown Seeds). A partner who has used the network once to buy dinner does not have an equal voice or receive an equal share of the harvest as a partner who has committed thousands of Seeds, hours of time and routinely transacts using their account.
The CS is designed to give partners a variety of ways to contribute to the ecosystem and be compensated, outside of financial commitments.
Contribution Score is a protocol and series of metrics used to track a Partners' contribution to the ecosystem. A partners CS determines their voting weight and their share of the harvest.
The CS metrics are designed to encourage users to participate in SEEDS and grow the ecosystem. This relates to the success of SEEDS and to the economic success of each partner.
CS is designed to more equitably distribute the voting weight and harvest than previous economic or blockchain designs.
Further a CS provides partners with a metric to determine which accounts contribute most and are more likely to be positive influences and actors.
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Contribution Score Metrics
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Planted Seed Score
This metric tracks a partners contribution in the form of Planted Seeds. This is similar to POS (proof of stake) protocols where accounts are rewarded a share of the harvest relative to Seeds planted. This encourages Partners to plant Seeds above the Seeds required to meet transaction volume.
This is a real-time metric and is continuously applied. If an account plants or un-plants Seeds its CS will immediately reflect the change.
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Transaction Score: Transaction diversity and volume
Encourage and reward Partners who use the SEEDS Economy. Provide an economic incentive for Partners to encourage others to join SEEDS and transact with them, opposed to other economic systems.
This metric tracks transaction diversity and volume of an account. This is a weighted average metric and takes into account the previous 3 months of transactions. Further, to encourage Partners to diversify their activity on the network by giving weight to transaction diversity.
A total transaction score is created with 3 metrics, A partners:
- Volume;
- Transactions;
- and Diversity.
*Users may attempt to 'game' this metric and create proxy accounts for baseless transactions. See self-policing for how SEEDS prevents and corrects this problem.
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Reputation Score
This metric tracks and encourages platform use and promotes beneficial interactions throughout the SEEDS community. This provides an avenue for partners to increase their contributions outside of financial commitments. Reputation acknowledges beneficial efforts by presenting the account with a higher reputation score. Further, reputation scores provide a method to deter malicious behavior from high-financial value accounts. A destroyed reputation can decrease the overall contribution score of an account below the financial contributions, as a partners reputation can go negative. This is a lifetime metric and grows as the account conducts more actions on the network.
Reputation reflects the total of positive contributions and feedback minus negative partner feedback.
These metrics provide Partners with the ability to gain a larger share of the harvest by competing in 3 different categories of contribution, creating a more equitable playing field for receiving rewards.
Example: If one account was in the 90th percentile of planted seeds and the 10th percentile in both reputation and transaction diversity/volume it would receive equal rewards to an account in the 90th percentile in reputation but the 10th percentile in planted seeds and transaction diversity.
This allows partners to contribute in the ways in which their most able and rewarding them equitably for their contributions.
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Reputation
- encourage network use and reward accounts who contribute to the platform outside of financial commitments or transaction diversity;
- provide each account with a visual metric (from -25 to +75) that will allow other partners to quickly discern high and low quality accounts;
- encourage guests to complete and create robust accounts, participate in voting, collaborate with other users, and act in the interest of the whole.
A reputation score will be visible on all accounts. This score is used by the network as a trust metric to let partners and guests know which accounts are most active and involved (thus more time-invested) in the network, and are more likely to be trusted.
When searching the network, seller accounts with higher reputation scores and reviews will be seen higher on the list (similar to AIRBNB with ‘super-hosts’). Reputation is based on involvement and contributions to the network. Further, some Partners may choose to set reputation minimums and only deal with accounts with a specified reputation.
Reputation score is one metric that determines an accounts voting weight (see Contribution Score).
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Actions/transactions for reputation:
These actions build an accounts reputation. A higher reputation discerns users who contribute positively to the community.
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Creating a robust account.
Adding information to one's account builds reputation. This process involves adding photos, details and contact information(if required).
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Receiving ratings.
Ratings are able to be given from and to any account on the network. They are given on a scale from -100 to +100. The weight of this rating is based on the Partners reputation.
So, receiving high ratings from high reputation accounts will impact a Partners reputation greater than the same rating from a low reputation account.
Only receiving a rating impacts your reputation. An account does not gain reputation from giving a rating.
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Receiving/giving reviews.
Reviews are only available for accounts that have traded with one another. They consist of a weighted score along with some comments, much like reviews on Amazon.com. These reviews are able to be given after each unique transaction.
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Voting on proposals.
Participating in the voting process increases reputation. Delegating voting weight will also benefit a Partner as long as the weight is used. This gives 80% of the reputation gain to the one delegating and 20% to the Partner who received the delegation.
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Participating in proposals
Participating and receiving high ratings on comments given on proposals.
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Referring Partners
Referring other Partners to SEEDS increases an accounts reputation.
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Submitting proposals.
Submitting a proposal increases reputation, a successful proposal increases reputation again.
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Avoiding negative feedback.
Negative feedback decreases reputation. Feedback from other accounts can be received from financial interactions or simply gaining feedback from interactions on the platform or voting process.
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Rating and reviews half life
All ratings and reviews that take place on the platform have a half-life of 6 months. Meaning new votes carry more weight than old votes. Just as is true in our lives, things become less important and meaningful over-time. This has a 'waning' effect for all reputation good, or bad that helps bring all accounts back to neutral.
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Successful Arbitration
When an account is on the side of the majority during arbitration, that account will gain reputation.
The weight of these specific action is not yet defined. This is intended to be a collaborative effort by the Light community leading up to the release of Light.
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The "Whale" Issue
Taking the “whales” (accounts with massive financial commitment) out of voting weight. Using reputation, gives anyone the ability, regardless of when they committed to the platform, to increase their importance and voting power on the platform. This will ensure the power will continue to spread to other people who are promoting and building a powerful network and not just stay concentrated at the few who heavily committed at the beginning or have the financial ability to buy importance. This helps to alleviate concerns and fears of new people joining who feel they will never have a voice (A problem with ‘whales’ on steemit, Masternodes in DASH, and early adopters in PoS protocols).
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Feedback Weight
Just as accounts with a higher contribution score (CS) have a greater voice in voting for proposals. Similarly accounts with high reputation have a greater voice in which accounts are reputable and which ones are not. To clarify, reputation weight is based on reputation alone, and not CS. So, users are unable to purchase reputation.
High reputation accounts are unlikely to misuse this power as it would decrease confidence in the platform and undermine their commitments and could result in decreasing their reputation. This will expedite the process of building/decreasing reputation and decrease the likelihood and effectiveness of proxy accounts being used to build reputation. Any feedback given to another account can alter its weight using a feedback ‘slider’ (from -100% to +100%) this will allow accounts to choose the level of confidence or lack of confidence they are displaying.
EX: A 10% vote of confidence from a high reputation account would alter reputation more than a new accounts’ 100% vote.
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Negative Feedback to Deter Abuse From High Wealth Accounts
Negative feedback from accounts decreases reputation score and is used by the network to police its partners and discourage abuses on the network. If an account goes below 25 it begins to reduce the CS from the other metrics. Thus, a high value account can lose it's voting/rewards share if its reputation is reduced. This protocol protects the network from potential high-value malicious actors.
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Protocol
Reputation is calculated as one number which is the sum total of all interactions on the platform. Some interactions will increase this total more than others.
Accounts with higher reputation score will be able to effect a greater change in the reputation score of other accounts. High or low feedback from other accounts will be weighted based on two factors:
- Reputation of that account.
- Percentage of weight applied. (-100% to +100%)
Just as it’s harder in life to build credibility that it is to lose it; It is harder to get to the next level of reputation than it was to get to the previous level.
Accounts range from -25 to 75. Accounts begin at 25, which has no effect on the CS.
All account metrics (positive and negative) will be combined to create a reputation score.
All accounts on the platform fall into a bell curve in their respective percentiles of reputation points and are assigned scores based on their position.
i.e. only the top reputation account will have a score of 75 and the absolute lowest ranked account will have a score of -25. In the top 98 percentile will receive a score of 74. Etc...
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Rating Half-Life
As is present in the EOS system, votes have a half life of 6 months. We will apply this, not to voting, but for rating other Partners and leaving reviews. Thus newer ratings and reviews hold more weight than older ones. This is likened to society where time degrades the importance of an affliction "time heals all wounds".
In this manner we have a waning effect for rating and review metrics. This encourages routine and up-to-date feedback.
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Waning Contribution Score (Solving the "whale" issue)
One problem with PoS protocols is the compounding of stake and the centralizing of rewards. Those with more stake, get a greater stake, and this positive feedback loop centralizes the ownership and rewards overtime. This means that an investor who simply buys up a lot of stake at the beginning can grow their stake and rewards even if they don't continue to contribute to the community.
SEEDS protocols create a situation where an account’s CS (relative to the network) will decrease if the partner who holds that account is not continually contributing to the network in various ways. This will ensure that accounts that are the most involved on the network at any time will have the most importance. Waning occurs as the total network CS grows and an account stays stagnant. The account will become less important relative to the rest of the network.
An Partners CS is determined by taking that accounts total CS divided against the network's total CS and ranking it among the other accounts. The network's total CS is constantly increasing as the network operates. If an account is not increasing its contribution relative to the total contribution than that accounts CS percentile will decrease over time.
However, it is possible that the harvests value could increase greater than the decreasing relative contribution. Resulting in a stable harvest.
Ex: An account was harvesting 1 Seed/day based (holding 10% total CS) with the network creating 10 Seeds. This accounts CS waned as the partner did not contribute relative to the increase in the networks CS. So, the share of the grown Seed actually decreased to 5% of the network. However, during this period since demand has increased (which would be an indicator if the networks CS is increasing) than the rate of grown Seeds would have increased as well. So, if the network went from creating 10 seeds to creating 20 seeds during this time, the account would still receive 1 seed.
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Rating and reviews half life
In addition, all ratings and reviews that take place on the platform have a half-life of 6 months. Meaning new votes carry more weight than old votes. Just as is true in our lives, things become less important and meaningful over-time. This has a 'waning' effect for all reputation good, or bad that helps bring all accounts back to neutral.
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Voting Weight
The network evolves and develops by having partners vote on proposals. CS is how the network determines voting weight. CS attempts to quantify how committed one is to the network. The more committed to the network you are through your contributions, the more valuable the network is to you and the higher your voting power becomes. Those who are more committed to the network have less to gain from sabotaging the network and will be more likely to vote for proposals most beneficial to the network.
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Protocol
The CS on the platform is shown as a whole number. A number that grows as any of the above actions are increased. The whole number is divided by the the entire CS on the platform to discover one's CS % relative to the network. This number is used to determine voting/rating weight and share of harvests (see seed economics).
Each of the 3 metrics are individually rated and ranked. This provides Partners with a better understanding of how they compare to the network ,and which contributions will result in greater rewards.
For ease of understanding, these metrics can be displayed to Partners by showing what percentile they are in compared to the network. This way, a Partner can aim to improve their percentile ranking and track their progress.
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Encourage Platform Participation
Accounts on SEEDS will display all CS metrics (transaction diversity, plants, reputation) on top of providing economic incentive for participation. SEEDS applications would utilize other methods for encouraging interaction on the platform. These games can be displayed as awards for reaching different levels of contribution on the network. Implementing ideas from successful applications, such as TripAdvisor, SEEDS could give ‘badges’ and ‘awards’ which could be displayed on account landing pages. These badges could be for:
- Reviews given/received (totals, highest in a week, etc)
- Total number of meals ordered.
- Most meals sold in a week.
- Most meals delivered in a week.
- Most Hectares of land rented on Light.
- Most meals bought in a single day.
- etc.
These badges are random, fun, and designed to encourage use, and most importantly; are metrics that are easily gleaned from the transactional data on the blockchain.
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Personal Data
Partners decide what personal data they want shared and stored on SEEDS. Various levels of contribution will require certain levels of verification.
Reputation is awarded for Partners providing various personally identifiable information. This helps other Partners know who they are actually dealing with, providing more trust and confidence for the interactions. The more personal information an account provides, the higher the reputation gained for that account.
There are a variety of decentralized options for managing personal data and the SEEDS community can decide which service to implement before launch.
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Rate Limiting for Fee-Less Transactions
SEEDS does not charge fees, but instead mimics EOS's bandwidth limiting algorithms.
Because the stewards are compensated through the growth of new Seeds, there is no need to charge partners a fee for accessing the blockchain. The only reason to charge a fee would be as a deterrent to prevent users from completing an unreasonable amount of transactions, which could potentially impact the performance of the blockchain. This is where rate-limiting comes in. By allocating bandwidth on the platform proportional to how much an account has planted in Seed, the more Seeds an account has planted the higher the bandwidth allocated (and thus the ability to make transactions on the blockchain). This gives more bandwidth to those with more commitment and prevents attacks on the network by uncommitted parties.
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Protocol
Light's account-based system with publicly known balances simplifies the implementation of the bandwidth-based rate limiting algorithm. Account’s will be unable to transact on the network without at least the minimum planted Seeds.
This implies that all new accounts should be funded with at least this minimum balance. Any initial account balance would have to come from the partner creating the account and not from Seed growth due to the potential for sybil attacks. The minimum Seeds required to open an account will be at a fixed rate and set by the DAC based on market research.
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Seeds: SEEDS Native Currency
One of the most powerful elements of the SEEDS Ecosystem, is the ability to create and manage a currency. SEEDS's Economy and its applications won't need to resort to the classical monetization strategies of subscriptions, fee’s, taxes, selling data, or external advertising. Not only does SEEDS not charge its Partners transaction fees, but actually rewards participation, seeding the foundations for economic sovereignty.
Seeds, the biological form, are the foundations of all life and are the most effective and valuable mediums of exchange. Unlike gold, paper or digits, they have the inherent capacity to sustainably grow in quantity and provide for human needs. Within the SEEDS Ecosystem, Seeds (the currency), behave as seeds (the natural form), mimicking many of the same fundamental characteristics. As such, we call our currency ‘Seeds’.
- highly-trusted currency (exchange medium) founded on food, that can become a robust alternative to other currencies that are less effective at serving the people who use them;
- decentralized global currency powered by people;
- currency that rewards the partners who use it opposed to charging transaction fees.
- currency that will be safe from the hyperinflation and debt-based backing of the majority of currencies today;
- platform cooperative where all users of the system can voice their opinion, present proposals and vote on evolutions and upgrades to the system. Seeds will be the revenue model to reward and finance these functions.
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Legal Requirements of Seeds
The protocols created for SEEDS is that planting and using Seeds should be deemed as a simple contract, equivalent to a franchise agreement. By this measure, the analogy is fitting: holders of accounts with planted Seeds are granted rights to contribute to a larger system, “rather than through a passive investment interest.” The advantage of classifying Seeds as a simple contract disentangles ownership from the legal complexities of holding a security. It further encourages the inevitable shift towards decentralization, improving the efficiency and security of digital protocols.
To reiterate, harvesting or receiving Seeds through CS (contribution Score) or as a Steward are not passive processes. Account holders are rewarded for efforts of engagement throughout the network (CS) or through securing the network (Steward). Therefore, holding Seeds do not pass the ‘passive investment’ aspect of the Howey test.
“We note that the manner in which the sale of a Blockchain Token occurs, particularly the promotion and marketing, may also affect the “expectation of profits” analysis. For example, if the language used to promote the Blockchain Token includes words like “investment,” “returns” or “profits,” the purchasers of the Blockchain Token may be more likely to expect profits from the efforts of others than if the Blockchain Token is promoted on the basis of the usefulness of the rights attaching to it.
Courts have also analyzed the existence of voting rights through this Howey factor. Whether voting rights are determinative of a security will be based on the facts at hand. For example, where (i) the holder is provided with rights that provide it with significant managerial control— i.e., the ability to participate in decisions that will affect the success of the enterprise; (ii) the holder has the resources and expertise to make a meaningful contribution; and (iii) the holder does, in fact, participate in management 18 decisions, the instrument is less likely to be considered a security.
Given that holders of non-security Blockchain Tokens [Seeds] play a more active role by using, contributing to or licensing the use of the system, it is less likely that the voting rights in this regard would be viewed as a security.
Essentially, each of the rights allows the non-security Blockchain Token holder[partners] to utilize, contribute to or license the use of the system in various ways, none of which would be considered a passive investment. Rather, we see the non-security Blockchain Token holders as active participants, like franchisees or licensees.” Source: A Securities Law Framework for Blockchain Tokens
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Seeds are a currency, not a security nor a share
Seeds are coins (opposed to tokenized securities or tokens) that are needed to create an account and plant/vest (confer or bestow power, authority, property, etc) Seeds. Seeds act as a medium across the network to verify transactions and to exchange goods throughout the system. Seeds are a currency. Seeds are not expected to increase in value and the protocols in this paper are designed to attempt to maintain Seed value, not increase it. Do not purchase seeds as a form of investment. Simply owning Seeds does not give one ownership of the system. Seeds must be planted in order to receive a harvest of newly grown Seeds and represent a contribution to the network. A Partner needs to regularly contribute in order to receive an increasing rewards share. Simply owning Seeds does not grant an account voting rights. It is possible that accounts can own many Seeds and have no voting rights do to low reputation. Voting rights are obtained through committing value and increasing ones contributions (Contribution Score) to SEEDS. This is similar to being an employee of a cooperative and receiving an increasing share of the organization for your efforts.
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Planting and Un-Planting
Goals:
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Encourage and give partners an option to commit financial value in the SEEDS network and be rewarded for doing so.
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Buffer market volatility by limiting access to Seeds that are taken out of circulation, and to create a stable value for Seeds.
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Minimize spam and promote high-quality voting, participation, and interaction in SEEDS.
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Planting
Planting Seeds in an account is similar to opening a savings account where a minimum is required to open the account (the account can never go below this minimum even though the person still owns that money).
Opposed to traditional models that require a user to pay for an account, services, or fees to transact Light provides free transactions and use. This experience is superior to the old model as it is an commitment to the platform, and an entry into the cooperative opposed to a payment, where the funds are not lost but simply stored away and acting as method for the account to harvest newly grown Seeds.
Planting ensures all partners are committed to the platform. This creates a situation where all users would benefit from the network's success. This is the ultimate co-op where literally everyone who engages in the community on any level will benefit financially from its success. Not just employees, owners, and major investors of typical organizations, but the customers too (as all partners are investors regardless of their role in the network). This is the foundation for the growth capabilities of network marketing organizations and Light evolves this capacity.
Seeds that are planted become less liquid and require a process (un-planting) to become liquid again.
Steem runs a similar algorithm called ‘powering up’. Where 'Steem' is turned into ‘Steem power’. This algorithm is adapted to turn Seeds into Plants.
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Methods to encourage planting Seeds:
These methods encourage Seeds to be taken out of circulation. As more Seeds are taken out, more Seeds are grown to increase the supply and maintain the price/value of Seeds.
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Increasing Contribution Score
The more Seeds an account has planted, the more that account has contributed to the network, thus increasing that accounts CS. An increased CS results in a greater share of the harvest.
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Becoming a Steward
Stewards are required to have a certain number of planted seeds. (See Stewards)
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Account Creation
Accounts are required to have a minimum amount of planted Seeds in order to access the network.
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Account Transaction Growth
When accounts increase the number of transactions they are needing/wanting to perform, these accounts will need to increase their planted seeds to gain greater access to the networks bandwidth. All actions on the blockchain, such as methods to increase reputation, constitute a transaction; not solely exchanging Seeds.
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Trial Accounts
To protect potential partners and foster trust, Light offers a period where newly created accounts can immediately unplant their entire Seeds.
Potential partners chose from a variety of options at account creation:
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Limited access trial
The limited access trial restricts the account from harvesting (receiving grown Seed) and building reputation or importance. This option will allow potential partners to trial the network, for a limited time, without having to consider the 3 month un-planting process.
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Immediate account creation
Immediate account creation will give full access to the partner and plant their Seed commitments.
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Protocol
The initial planting protocol is managed by Light as the network does not allow for this protocol as it would be unnecessarily time consuming (and possibly impractical) to code. The trial period is accomplished by the potential user sending the required Seeds to Light and Light delegates Seeds to this account for the trial duration. When the trial period is over Light will send back the Seeds and stop the delegation. Then the user can either exchange the Seeds or plant them and establish an account. All actions conducted by the user during this period are attributed to LA, such as building reputation or POC.
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Planting Requirements For Accounts
In order to use Seed directly on the network a user would have to open an account. Accounts don't 'cost' money but require a minimum commitment from the partner, similar to a savings account requiring a minimum balance. This is money that is not lost or spent, but committed and will result in harvests of newly grown Seed (see CS). People are much more willing to commit at minimal risk in an organization, then they are to pay out (lose/spend) money as a subscription or fee. This is a 2 way value transfer. By having all users commit into the platform they have an economic incentive to support the platform outside of their personal businesses on the platform. This will ensure that all users will be advocates of the platform and seek to promote Light. Further, this solidifies our desire for the partners to be the participatory operators of the platform creating a true cooperative.
Accounts are for partners, and partners are those whom have access to a portion of the network. In order for someone to become a partner they have to acquire and plant Seeds based on their desired account activity level (for easy user experience there will be several account suggestions offered to meet partners needs, they are simply designed to help people understand, they are not written into the code).
Example of Planted Seeds to Transactions (not set rates):
- Wallet Account: 1 Seed (minimum to transact 5 times/week and used to open a Wallet)
- Standard Account: 20 Seeds (minimum to be a partner on the network): Gives one the ability to transact 100 times a week on the network.
- Foodie: 40 Seeds = 200 transactions/week.
- Basic Enterprise Account: 100 Seeds = 500 transactions/week.
- Medium Volume Enterprise: 200 Seeds = 1000 transactions/week
- High Volume Enterprise: 1000 Seeds= 5000 transactions/week
- Etc...
Any action on Light is a transaction. Ex: changing an account's visible name counts as a transaction, sending money is a transaction, posting an item for sale is one transaction, commenting or reviewing another account is a transaction, etc.
As accounts grow in popularity and more transactions are required on the network, partners will be able to plant more Seeds in order to meet their needs.
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Wallet Minimums
For potential partners who do not yet wish to fully join the network and are wanting a method to store and use Seeds. A wallet minimum is created, this minimum will reflect the minimum required Seeds to transact 5 times on the network per week. This will provide a friction-less option for people wishing to acquire, experience or make a payment in Seeds without having to commit into a full account.
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Spam Prevention
Requiring partners to plant Seeds and the rate limiting function will drastically limit spam accounts that can bog down the network as well as prevents spam voting (as it would be costly to do so and thus constitute a committed vote, not spam).
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Un-Planting
Once Seeds are planted and an account wants to regain access to its planted Seeds it will engage the Un-Planting protocol. When this protocol is engaged 7.69% (or fixed rate based on DAC) of planted coins will be Un-Planted per week. This means it will take 13 weeks (3 months) to regain access to all planted Seeds and to fully close an account. The first release doesn't occur until one week after the protocol was initiated.
This un-planting process will create a buffer for market conditions as partners are not able to immediately un-plant (access) their planted Seeds. Reactions will be slower, which will foster an environment to maintain a stable circulating supply, even with volatile market fluctuations and allowing Light to maintain market supply homeostasis. Further, this prevents larger accounts from being able to immediately withdraw and sell their Seeds which could further cause market instability.
When Partners only want to un-plant a portion of their Seeds, the protocol will unplant 7.69% of their maximum per week, favoring quicker access to Seeds.
Access to Lights blockchain is effected by un-planting Seeds and will respond directly by reducing bandwidth and other access proportional to the un-planted Seeds.
If an Account goes below the minimum required for an account, their account access will be limited to 1 transaction per-week to send out their Seeds.
(Note: Not all Seeds in an account are planted, only Seeds that a partner is wishing to commit to the network or that are required for account transaction volume and access.)
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Burning Seeds
A method to reduce total Seed supply to better support the economics model to maintain stability.
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Process and User Experience
Burning Seeds are destroying Seeds completely taking the Seeds out of circulation and the total supply.
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Purchase SEEDS Services
Partners can promote their accounts or the items their accounts are selling on the platform to give them a higher priority when guests or partners are searching on the platform. There can also be a separate page dedicated for promoted content for users to find quality content/products (content worth promoting).
Further SEEDS can evolve a myriad of platform related services to the community that would be purchased through burning Seeds.
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Present Proposals
When a partner presents a proposal, the Seeds required to submit the proposal are burned. This reduces spam proposals and ensures the partner is giving proper attention and care into the proposal as these Seeds are burned. It is possible for the partner to request burned Seeds back in their proposal and shall received them should the proposal pass and be funded.
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Propose @SEEDS DAC Monetary Policy
The global SEEDS account that is used to fund proposals could be used to destroy Seeds. If demand is falling in such a manner that the other methods of Seed stability begin to fail; any account can propose that SEEDS destroy Seeds opposed to releasing them into circulation. This happens through the standard proposal process.
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Execute Seed Bank Contracts
A 1-3% fee for all contracts with Seed Bank are taken and burned.
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Protocol
When Seeds are burned they are completely destroyed and taken off of the chain and out of circulation. This reduces the total supply of Seeds.
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Fee-Free Micro-transactions
Goals:
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To encourage the use of Seeds without fees;
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Create a 'better than cash' experience;
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To encourage massive adoption and use of SEEDS;
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To design a platform capable of 1,000-10,000 transactions per second.
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User Experience
The fundamental problem with charging transaction fees is that micropayments don’t work, especially for low-value user actions. When a fee is charged on every transaction, it limits the types of transactions that a decentralized network can process. Regardless of how rational the argument for the necessity of fees, users still hate the experience of being charged for everything they do.
People actively try to circumvent Airbnb, Uber, and other ‘sharing economy’ platforms to give these organizations their ‘cut’/fees. This is a problem, but less of one for those companies as user interaction on these platforms are less routine and vary.
However, Light aims to be highly routine and highly regular, if there wasn't an incentive to stay on the platform, people would be incentivized to avoid the platform and make arrangements directly and avoid the 'middleman'. Opposed to implementing expensive and cumbersome control measures to prevent this abuse, Light creates an environment to encourage maximum user interaction on the platform. Light aims to be better than cash.
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Protocol
Light will follow the same transaction protocols that Steem has developed and proved effective.
“The Steem network is built upon Graphene, the same technology that powers BitShares. Graphene has been publicly demonstrated sustaining over 1000 transactions per second on a distributed test network. Graphene can easily scale to 10,000 or more transactions per second with relatively straightforward improvements to server capacity and communication protocols.
- Keep everything in memory.
- Keep the core business logic in a single thread.
- Keep cryptographic operations (hashes and signatures) out of the core business logic.
- Divide validation into state-dependent and state-independent checks.
- Use an object oriented data model.
By following these simple rules, Steem is able to process 10,000 transactions per second without any significant effort devoted to optimization.” -Steem White Paper
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Delegating Planted Seeds
Delegations allow application developers to provide trial and temporary accounts to their users at no cost. This will enable these applications to grow their user base while absorbing the risks and costs associated with joining SEEDS.
Partners are able to delegate planted Seeds to other accounts. These Seed delegations allows all the benefits of those planted Seeds to be transferred to the account while retaining the Seeds.
All harvests and reputation gained by this delegation is split 80% to the owner and 20% to the delegate (the one receiving the delegation).
The owner of a delegation takes on the risks of an account committing abuse or fraud. If an account refuses to pay a fee or fine then the obligation falls on the owner of the delegation.
By retaining and investing 20% of the benefits gained, Partners can eventually earn their own account and end a delegation. This will provide an avenue for people to join SEEDS with no financial commitment.
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Stewards- of the Blockchain
You may be familiar with the terms "miner" or "block producer" as those people who are responsible for creating the blocks that comprise the blockchain.
We call our block producers Stewards. This is because they are stewarding the system, not just producing it. Stewards are responsible for enacting the proposals passed by the DAC and maintaining the SEEDS network, for this service they are rewarded a salary from the Harvest [(newly grown Seeds).
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To create a decentralized and secure blockchain and compensate the creators/maintainers of the chain. To do so with minimal ‘waste’, that is associated with PoW blockchains or the centralization of POS blockchains.
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Encourage more planting of Seeds (commitment/investment into SEEDS).
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Encourage greater distribution of high CS (contribution score) accounts.
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Ensure that the most committed Partners are those who are able to be Stewards.
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Divert much of the wasted and manipulative energy present in voting systems, to avenues that benefit the whole network.
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Discourage and remove the feedback loops that centralize wealth and power in PoS and PoW blockchains.
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Steward's Explained
Stewards are the title of the accounts that maintain, secure, update, and create the SEEDS blockchain. The Steward's job is to collect transactions, bundle them into a block, sign the block and broadcast it to the network. They are the block producers for the underlying consensus mechanism. Collectively they have the ability to lock accounts, evolve the protocols and reverse transactions.
Stewards are required to have a much higher planted Seed minimum to ensure they are committed to the network and are economically incentivized to not abuse and lose their position.
The technical side of becoming a Steward is setting up a server and becoming a node.
Where SEEDS differs from Steem’s and EOS's DPoS is with minimum planting requirements and altering the delegation or 'voting-in' process.
SEEDS does not have a specific voting process for Stewards. Instead Stewards are ranked based on their Reputation scores. All Partners still "vote" in favour or against Stewards with the ratings they can give any Partner on SEEDS; which can positively or negatively impact reputation.
Through this process we divert and overcome much of the potentially wasted energy and faults found in voting and politicking. Instead Stewards are encouraged to increase their reputations which are best done through a variety of beneficial contributions. Further, this assures that Stewards who are producing blocks are of the highest reputation and didn't just "buy votes". Stewards can lose reputation if a partner gives a negative rating. This will provide recourse for buying votes and other unethical and unproductive behaviors common in voting systems.
The total votes for a 'block producer' in DPOS can't be reduced. So, if the producer is found to be buying votes, they could technically get away with it. In SEEDS, other Partners could respond to this behavior with 'down votes' reversing any reputation gained.
Further, Stewards collectively petition the SEEDS community quarterly for compensation. Stewards are paid monthly, and are required to submit new funding proposals each quarter, which can reflect any changes in requirements from the network or the Stewards. Stewards receive funding directly from the SEEDS DAC account and are paid hourly from the @SEEDS main account.
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POC (Proof of Contribution)
EOS, Steem and Bitshares designed a consensus protocol that uses drastically less energy than proof of work to secure the network, this is done by "witnesses" and "block producers".
SEEDS mimics the majority of the elements of Steem's DPoS (delegated proof of stake) with 'witnesses', Dash’s PoS with ‘masternodes’, NEM's Proof of Importance with some unique features - to create what we call 'Proof of Contribution (PoC)' - using Stewards.
Steward's are required to plant a minimum of 100,000 Seeds. If the balance falls below 100,000 Seeds they will be removed as a Steward and the next in line will replace them.
This commitment ensures that Stewards have 'skin in the game' and would decrease the likelihood of attempting to sabotage the network.
What really sets PoC apart from DPoS is how Stewards are selected. This isn't done through a formal delegation (or voting) process. Stewards who have met all the minimum requirements (see protocol) are ranked according to their reputation score and the top 21 Stewards according to this ranking will produce blocks and be compensated for doing so. Reputation can be gained or lost through other Partners rating block-producers (this is a form of voting). However, this isn't the only method to gain reputation.
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Protocol
The network begins with 21 stewards. To become a Steward a partner:
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Sets up a node and a server with a minimum of 1/21st share of the networks required technical demands. Stewards will need to upgrade this capacity as the ecosystem evolves (if they are operating at the minimum requirements);
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Plants a minimum of 100,000 Seeds;
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Joins the Steward waiting list or immediately fills a vacancy;
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Focuses on increasing account reputation.
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Waiting list is ranked according to Partner's reputation.
By ranking the list by order of reputation, Light ensures the highest valued and respected accounts are brought in to be stewards.
When the proposed Steward reaches the top of the list, they will become a Steward when:
- The accounts' reputation exceeds the reputation of the lowest ranking active Steward;
- A previous Steward was voted out;
- A previous Steward failed to meet obligations for more than 2 days (requirements can be modified by the DAC).
Any steward who misses a block and hasn't produced in the last 24 hours will be disabled until they update their block signing key. If they fail to update their signing key and rejoin the active stewards for 7 days they will be removed from the active stewards and replaced by the next partner on the waiting list. This encourages stewards to maintain high reputations and contribute in non-monetary ways to the SEEDS community.
SEEDS does not have a voting process for selecting stewards, but does have a voting process for removing misbehaving stewards.
Stewards are responsible for updating the core code when proposals to do so gain enough support.
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Code is Not Law: SEEDS, a System Designed to Heal
"Rather than saying we're going to write perfect code. We say, we're going to create a system that allows us to heal when bugs are found in imperfect code. We're ready for the imperfect code and we're ready for the bugs and they won't be catastrophic on the EOS platform whereas on Ethereum a bug is catastrophic." -Daniel Larimer discussing the flexibility and human centric design of EOS.
We're dealing with code. A lot of code. Because of this we're going to experience bugs. The reason we're aiming to build SEEDS on top of EOS is because we are creating a complex system. In order to create the confidence for people to commit to SEEDS, we need to know that we can fall back on human-led judgments. To make sure we don't have the catastrophes that have plagued the cryptocurrency space thus far because of a simple bugs.
SEEDS with its DAC is designed to evolve and heal itself. If we encounter any bugs we are able to conduct return transactions which weren't intended by all parties involved. Further, we can collectively determine the upgrades and solutions required to heal these bugs and rapidly implement them through the DAC proposal process.
This will enable SEEDS to evolve and heal much quicker than the majority of present blockchains.
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SEEDS Facilitated Arbitration
Arbitration can be used for a wide variety of reasons:
- Failed contracts;
- Fraud;
- Self-policing SEEDS and its markets;
- etc
Any action that is not deemed to be in line with generally accepted human principles or the SEEDS Constitution, can come to arbitration for settlement and action. We say 'generally accepted human principles' because arbiters are randomly selected humans on the platform. The SEEDS Constitution will provide a reference for arbiters to help determine a correct choice. However, if there is no precedence or established protocol, it would be up to the arbiters personal beliefs of who is right and who is wrong that will decide the outcome.
Smart Contracts secured by SEEDS will serve as verifiable proof of interactions and help settle disputes. Failed contracts can reduce the reputation of an account and serve as a counter-measure to deter abuse and may resort in network facilitated arbitration. If partners are unable to settle a dispute, either party can request arbitration from the network:
The parties in conflict have their collateral (up to the value of the transaction) locked into a contract pending arbitration, along with a 1% fee that may be payable to each arbitrator or burned. All accounts have collateral in the form of planted seeds that can be held for dispute resolution if an account is non-compliant in putting forth collateral. *For transactions greater than the planted seeds in an account, that transaction can require additional collateral before executing.
- A Partner requests arbitration between themselves and another Partner or Partners.
- SEEDS randomly offers 7 accounts the opportunity to arbitrate.
- Once 7 accounts accept the invitation each arbitrator locks into a contract a set number of Seeds that are at stake.
- Parties in question present their cases to the arbitrators in an encrypted channel. Another encrypted channel is opened just for the arbiters to discuss. Arbiters are anonymous to the disputing parties and themselves during this period.
- Arbitrators study the case and communicate with the disputing parties to attempt to resolve the issue. At the end of the arbitration period the arbiters vote for who is at fault and what percentage of collateral (total transaction) needs to be paid out, if any.
- Once all arbitrators have decided, the results are presented to the disputing parties and action is taken. The arbitration protocol takes the mean percentage of collateral that arbitrators have decided as reimbursement. Or, automatically freezes an account if that is what was decided.
- Arbitrators who selected in favour of the majority receive the seeds of the minority arbitrators as a reward as well as the fee from the arbitration protocol. This encourages thoughtful votes and discourages abuse.
- Requesting arbitration requires collateral. For arbitration involving transactions this collateral is equal to the value of the transaction. For arbitration not involving transactions, the collateral is equal to the minimum number of Seeds the defending account needs to have planted for their average transaction volume.
- If the challenge was not successful the challengers collateral is awarded to the defendant as compensation for loss of account access, and time.
A 'bounty hunter'(a Partner seeking the rewards of successfully finding fraud accounts) created a bot to find and flag certain accounts. This Partner believe the bot successfully found an account as it had recently conducted 1000's of low volume transactions to a single account. This seemed suspicious and the Partner chose to initiate the arbitration protocol.
The arbiters ask the account in question to provide receipts or any form of evidence of authentic transactions. The Partner was unable to do so, but pleads with the arbiters that they are authentic. The arbitrators agree that a minimum fee would suffice and say that the account won’t be shut down and recommends the account maintain accurate receipts for suspicious transactions. This information is forever stored in the arbitration history for future arbitrators to reference.
Since the account was unable to provide any verification for his transactions he is given a small fee to be granted to the 'bounty hunter'/Partner as a reward. A note is left on that account for future arbiters to help them determine an outcome in any future arbitration.
Which such high risks we assume partners would refrain from conducting fraudulent transactions with proxy accounts. When protecting the network from fraud transactions, which can harm network performance we can't rely simply on bots. Bots can easily determine high risk accounts but lack the ability to process the information humans can to determine if the transactions were indeed fraud. SEEDS has a combination of human and code governance. Bots can be programmed to hunt down such accounts, but humans will ultimately make the call.
*What is considered 'suspicious’ is determined by the community. Some transactions are obvious and bots can be programmed to seek out these suspicious fraud transactions. The suspicion here is simply to prevent accounts from defrauding the transaction volume and diversity reward system. This system is designed to encourage economic activity not, game transactions. "Suspicious" is not a reference to what the funds were used for.
It is the Stewards duty to enforce the decisions made by the arbiters. Stewards (as block producers) can freeze accounts (if there is fraud) while it is under review for said fraud. If it is deemed to be fraudulent, then stewards can process return transactions to rectify any fraud.
*Stewards can be removed by the people if this power is abused.
*Partners require a positive reputation score to request arbitration.
*There are more protocols that comprise SEEDS. However, for ease and readability these protocols are located in the sections in which they are most relevant.
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Structure of SEEDS if Built on EOS
How this paper is designed is if SEEDS does not build on EOS. However, SEEDS could easily be placed on top of EOS, a few changes would occur.
Roles would adapt from maintaining the blockchain, to maintaining the "SEEDS Application" on EOS. They would no longer be responsible for processing the transactions or contracts on SEEDS, as this would be shifted onto EOS.
Stewards would receive a smaller harvest as they are no longer responsible for processing the transactions on SEEDS.
@SEEDS (SEEDS DAC account) would receive the funds that would typically be given to the Stewards. EOS tokens would be bought and held by this account to support the transactions taking place in the SEEDS Ecosystem.
Building on EOS relieves the need for the SEEDS Ecosystem to process transactions and contracts. In essence SEEDS would contract EOS to do so, through the purchasing of EOS tokens. This would support the EOS ecosystem.
SEEDS could benefit from the support of EOS and its community to help support the Local Food Economy and Local Food Movement.