What is Saito?Saito is a PKI network that can pay for itself at scale.
Why do people call Saito a paradigm shift in blockchain design?Saito approaches blockchain security from an entirely new perspective: given that difficulty in POW and POS networks is always reducible to economics, why not just guarantee that producing blocks is always expensive for attackers? Can we guarantee the proportionality of payment-for-work as our first order problem to solve? And for what kinds of work?
Solving this puzzle requires addressing fundamental questions that other blockchains cannot answer: what is the value of different kinds of work to the network; and how can we drive the price for each down to market levels? The strength of the solution Saito provides lies in the way it elegantly and incidentally solves “foundational” problems like the 51% attack and the “scalability trilemma” in the course of paying for everything the network needs to scale.
How does Saito solve the 51% attack?In Saito, routing nodes collect transactions from users and earn fees in return. Block producers put transactions into blocks and earn money too. The miners that run the payment lottery also get paid. All three activities are necessary to produce blocks and pay the network.
So controlling 50% of resources is not enough to attack a Saito-class network. Unless attackers match the amount of work done by the overall network, they either cannot produce blocks as quickly as honest nodes, or are able to produce blocks but not collect payments.
The design also ensures that even rich attackers will eventually go bankrupt. As attacks continue and the transactions collected by honest nodes build up outside their fork, attackers face a catch-22. Including those transactions increases their cost of collecting payments. Not including them increases the cost of producing blocks. Costs increase without stop until attackers either go bankrupt or permit others to add work to their chain.
Surely there is a 51% attack in there somewhere?Nope. Attackers have to match 100% of network fees to produce a block. That money is GONE unless they can also match 100% of network lottery spending and find a way to get their money back. 51% of the network gets you nothing.
How does the transient chain / automatic rebroadcasting work?Every time a block is produced, all unspent tokens in the earliest block in the chain are moved into new transactions and included in the block. A copy of the original transaction is included within each “rebroadcast transaction”, while a small fee is deducted from the user balance.
All nodes in the network check that the new block contains all necessary rebroadcast transactions. The oldest block is then pruned from the chain and the genesis block is moved forward by one.
Why can’t we scale existing blockchain technology?There are two incentive problems (market failures) in traditional blockchains which force developers to find creative ways to cheat economics. Common solutions make unpaid work like “collecting fees” and “storing data” the responsibility of third parties who are expected to find their own reasons for covering the costs.
These trade-offs destroy the self-sufficiency of their networks. Limiting throughput lowers security. Relying on volunteers makes networks unreliable. Asking outside companies to fund core network operations destroys the openness and independence of the nebigtwork.