Whitepaper

This article describes the main design goals and features of Ercoin.

Design goals

Features

Proof of stake

Treating money as a scarce resource, which gives the privilege of creating blocks, contributes to low costs of maintaining the network (hence low transaction fees) and low CO² emission.

Based on Tendermint

Ercoin is based on Tendermint. Thanks to that:

Accounts

Money is assigned to paid accounts. Contrary to Bitcoin and its descendants, there doesn’t exist a concept of unspent transaction outputs and there is no scripting language needed to perform transactions.

Transaction messages

When sending (or destroying) money, arbitrary data can be attached to a transaction. This can serve both as an ordinary, manually written transfer descriptions and as data generated by the companion software, allowing to place the payment function provided by Ercoin in a bigger ecosystem.

Fair distribution — IBO

Initial amount of ercoins is planned to be distributed proportionally to the amount of blackcoins destroyed in a specific time window. Sometimes called Initial Burn Offering (IBO), this is similar in concept to Bitcoin’s distribution, but instead of destroying real, physical resources (electricity), virtual money will be destroyed. The distribution will be therefore non-wasteful and eco-friendly. No entity will be privileged, in contrast to common ICO schemes.

Fees decided by consensus of validators

Fee amounts will be decided (in general, not per transaction) by the consensus of validators. The main factor limiting the amount of transactions processed will be fees, not the block size. Therefore block size should neither be an issue for an ordinary user nor a subject of debate.

Paying for transfers and for storing accounts on the blockchain will eliminate bloat.

Validators will be elected by long-term investors (locked accounts) which will have an incentive to care about long-term value of Ercoin.

Delegated staking

Locked accounts will be able to choose other addresses as intended validators. This means that compromising a validator’s key won’t necessarily mean loss of stakeholder’s funds. While it results in a lower incentive to protect validators’ keys, it also results in a lower incentive to crack validators (as there will be little funds to steal). Locked accounts will still have an incentive to make validators secure, as compromised validators can lower the currency value.

This also means that stakeholders will be able to easily delegate the duty of running a validator to an other entity, which opens a possibility of commercializing the service of running validators.