We had another great AMA yesterday in the CryptoDiffer Telegram Group. A lot of good questions were asked by the community, including our first question about what POWSPLIT is and why Saito Consensus pays stakers in addition to routers. Check out the transcript below for the answer and much more!
Q1: Can you introduce yourself to our community?
David: Sure. I’m David Lancashire, co-founder of Saito. Background is in economics and tech. I worked in China for a long time as a tech entrepreneur. My co-founder and I both got into crypto in 2012-2013 in Beijing and went through the battles of the blocksize debate in 2015-2016. Saito is borne out of that period of time.
In 2017 we figured out how to solve a problem that — except for Saito — remains otherwise unsolved in blockchain. This is what I’m hoping we can talk about today. It’s how to keep a network like Bitcoin secure while also paying the nodes in the P2P network.
I immediately shut down my company to work on Saito full-time. Once people understand the solution they realize why. Richard my co-founder did the same several months later. We’ve been working and growing Saito since. Saito keeps getting bigger and better. We are aiming to be a top three crypto.
Myko: Well! thanks for this answer. Let’s now take a glance on Saito itself.
Q2: Can you introduce Saito to us?
David: POW pays for miners. POS pays for stakers. No-one pays for the P2P network. And that’s OK if you have a network that is run by volunteers. Right now, what is happening in blockchain is a train wreck. Lots of people are building “decentralized” networks and expecting that they will remain open and secure as they scale beyond the point where volunteers will pay for stuff. The problem is that this isn’t how economics work.
We can talk more about these economic problems if people are interested. But the short version is this — if you ask a company to pay for something, it closes access to the value that it creates. So as these networks get bigger and more expensive, companies start controlling and manipulating the flow of transactions for profit. We already see this in some of the biggest blockchains where running nodes are expensive — Infura controls over 80% of ETH’s transaction inflows, last we heard, and TAAL is producing over 95% of BSV blocks too.
Saito solves this problem. In the process, it also solves the 51 percent attack and eliminates sybils. We’re a revolutionary chain. So I’d love to answer questions about how we do this and am happy to dig as deep into economics or tech as people are comfortable!
Myko: Would love to see community questions to enhance this topic!
Q3: Let`s now talk about the milestones you have achieved so far and about your upcoming plans?
David: I recommend visiting the Saito Arcade. All of those games are blockchain applications. they are P2P (no steam, no unity, no casino servers). Just you and the other player. Shuffling decks and rolling dice? that uses cryptography. Those games are an example of what Saito lets you do — send transactions with lots of data. you can do that in Saito because we pay P2P nodes — we pay for bandwidth.
So providing bandwidth is like mining. We are adding support for other cryptocurrencies. if you click in the top-right hamburger menu you’ll see we already support DOT, KSM and WST — three Polkadot tokens. Soon you’ll be able to use them and other tokens while playing all of the games that are in the arcade, and many more to come. And — of course — if you can write a game on Saito, you can write any other application too. If anyone reading is a developer who wants an easier way to build blockchain applications — don’t build on a monopoly network like ETH+METAMASK. Contact us and we’ll help you get your app running on Saito.
Myko: Hope to see some game devs here!
David: I hope to see some poker players!
David: 6 player poker using crypto? No casino. No rake???
Myko: Sure there would be some.
David: Will centralized casinos be around in 5 years? Why should anyone pay them when everyone already has the Internet? Anyway, hopefully that helps people understand what we are doing. BIG blockchain + data in transactions = web apps + crypto.
Myko: Good! Thanks a lot for your answers! Now we’ll look on what community part offers us.
Kunlefighter: There’s this statement of yours I came across where you said “We aren’t building Saito to be “blockchain #5243” or “blockchain app #52343”. We are building Saito because we need Bitcoin. And Bitcoin is broken”. I really don’t understand what you meant by Bitcoin is broken here, can you please shed more light on this and why you think Saito is the bet on economic fundamentals?
David: Why are POW and POS broken? Because the economics break. Whoever controls 51% of the fees going into the chain can collect 100% of the money processed by the blockchain.
This is what the 51 percent attack really is. Blockchains are supposed to keep PAY equal to WORK. The 51 percent point of control is where this property breaks and there is nothing POW or POS developers can do to stop it. Any 51% can team up to cartelize the network, anyone who can rent 51% of work can use the profits to pay their rental costs. Saito does not have this problem. This is what we mean when we talk about Saito not being broken. There is nothing you can buy 51 percent of that lets you collect more than 51 percent of the network. There is no 51% attack. There is no 75% attack. The cost of the attack gets smaller and smaller the greater the % of transaction inflow that you control, but it is ALWAYS positive. No other blockchain has this property.
Xperia: Hi! Where did you get the inspiration of the project name Saito? What does it mean? Is it Japanese?
David: It’s from Inception. We love Inception.
Kenechukwu: On the Saito blockchain, what happens in situations where the Golden Ticket computational puzzle is not solved? I mean, what will be the case for the funds?
Also, when a solution is found, what factors affect the ratio of paysplit that either of the miner and routing node receives?
David: When a golden ticket is found, we pay the miner half of the previous block’s fees and we then hash the solution to generate another random number that is used to pick a router (who gets the other half). We then hash that second random number to go back to the previous block and pay a router and a staker there (if that block does not have a golden ticket).
If too many blocks are unsolved for this to be practical, we collect the money in the network “treasury” when the block falls off the chain. And we slowly distribute it back into the network as a special reward, maybe an extra 0.05% of the fees in the block.
Hakeem: Many users are now complaining about miner-extractable value and have now realized that PoS networks can simply be attacked by miners/stakers for money. How does Saito intend to solve/fix these problems and what was Saito really built for?
David: The MEV problem is an example of what goes wrong when you give an economic problem to tech people to solve. If you want to solve MEV the solution is simple. Measure it and then tax it so the block producer is punished if their block contains it. Thinking about the problem this way will reveal why it is difficult to solve.
My personal opinion is that MEV is solvable, but not in applications built atop a general-purpose blockchain. That is because the trade-offs necessary to measure the existence of MEV make the networks that measure it uncompetitive and unattractive (slower, less open, etc.). Long-term I think this stuff is better solved L2 atop Saito anyway.
Mert-F&B: Saito is known to power games, communication tools, social media applications. So will Saito be limited to these? Which area is Saito’s next target?
David: Saito lets you put data inside transactions. One great usage is to use the blockchain to do “Diffie Hellman Key Exchange” — generate unbreakable secrets between groups of 2 or more people.
At massive scale this may be the most important use of the blockchain, because once you have someone’s public key it is totally secure — there is no MITM attack. We can use this sort of network to replace pretty much any centralized service with decentralized versions. Publish your keys and IP addresses on-chain (when they change). Communicate with your peers off-chain with secure unbreakable comms
Abisola: No 51% attack, no volunteers, no miners and it’s impossible for stakers to attack the network for profit. With all these features of Saito, I can confidently say that it is far better than Bitcoin and Ethereum combined. However, only few people know about Saito and the benefits it brings. Can you tell us the effort you are making in helping people understand how Saito works? How frequent do you publish articles about the project as this will go a long way in making people understand the project better?
David: We can’t control the speed at which people understand, but we can build. The future we are building will happen regardless of whether people understand it. And once it exists people will treat it as obvious. We’re constantly experimenting with ways to communicate. I think we’re making progress. Lots of blog posts here.
Video is harder and more time-consuming. But we experiment with it too. I like this video a lot. If people like the Prestige I hope they will like it too!
Olamide Mutiat: What advantage does hosting on Polkadot network offers the Saito Network Platform?
David: Polkadot doesn’t have something like Metamask and the developers understand that Infura is a monopoly and can see the ways in which Ethereum is broken. We’re trying to position Saito applications as a better way to build Polkadot apps.
It is a lot harder to engage with ETH devs and Bitcoin devs, in part because they have these ideologies that make them highly resistant to the idea that their networks are flawed and broken in fundamental ways. Because if that were true….
Cryptomania: I see in one of your articles that Bitcoin is broken, Ethereum is broken and ALL PoS networks are broken. Does this mean that Saito will never break? How do you intend to make Saito work and never break?
David: It depends on what you mean by break. PoW and PoS have known cost-of-attacks that hold up until someone controls a percentage of network resources. Then the cost of attack goes to zero. With some POS networks, that percentage is actually really low. A small percentage of colluding validators can bring a POS network to a halt by refusing to validate blocks.
Saito has a known cost-of-attack that holds in all situations. If someone wants to spend/burn money then they can pay that cost. But that isn’t broken. That’s the point of the blockchain. The service a blockchain provides is that if you want N confirmations, you know anyone attacking your perceived consensus will need to spend X.
Niru: When does your presale begin? How can I purchase tokens?
David: Saito is available on Uniswap: you can buy it today. The ERC20 tokens that will be distributed this year are already something like 60 percent distributed? There’s not a lot out there. I’d really recommend people pick some up.
Abu Maleeq: Saito said the biggest “utility” it has over other networks is that users don’t need to pay extra in network fees? This sounds fascinating. What do you mean when you say this you. Don’t we already have Internet if we’re using any cryptocurrency?
David: When you pay a dollar fee in Bitcoin, you buy about 50 cents worth of security (because the 51% attack means the cost-of-attack is around 50 percent of network fee throughput). But big networks also need to pay for their P2P network. Those servers aren’t free. Either miners subsidize them, or companies like Infura run them and pull money away from miners. Or you get charged an extra fee. So 1 dollar in mining fees and another dollar in network fees. 2 dollars for PoW and PoS.
When you pay a dollar fee in Saito, the security you get is 100% of that because there is no 51% attack in Saito. And the fee pays for the routing P2P network, so we don’t need extra or hidden fees for that.
Double the security. Charge 50% as much?
Saito Consensus is 25% the cost of POW or POS per byte at comparable security levels. The mechanism design problems are solved. At this point our big challenge is getting transaction and fee volume up so that we can actually offer people this security and the advantages are real and not just theoretical.
Mariam: Where do you see the future of Saito Network?
David: I am expecting that we’ll start with gaming applications. That will lead to a growing community and devs will start to build and target Saito community. But most people will think “Saito is gaming” and they won’t think “Saito is eating the world”.
We only need one use case that drives millions of on-chain transactions to offer comparable security to Bitcoin though. Finding out how to get there from here is our biggest scaling and growth challenge.
Tobias: What is the process for depositing and withdrawing tokens in Saito? Do you accept only the tokens previously listed on your page or how do you install a new cryptocurrency? Do you have other games in mind to add to Saito?
David: Anyone can add a 3rd party token to Saito. It requires a developer to write a module that specifies how the inter-chain behavior happens. Not necessarily easy but also not that hard.
We’re working to support Dot and some other networks first and will focus on the communities that use Saito to play games and drive growth. We hope that once people can see other communities playing games and using apps they’ll ask, “can’t we do that?” and that will lead more and more communities to embrace what we can offer.
Cryptorist: How does Saito disable bad actors when paying nodes in the P2P network instead of miners or shareholders? How do you control the security of the nodes and what is the feature of your blockchain network?
David: Saito pays nodes for collecting money to the network. You get paid depending on how efficient your part of the network is at doing that. If there is a bad actor or a useless node in your routing path, you get less money.
Participants in the P2P network have an economic incentive to purge sybils and other bad actors. If they continue to connect to them, they are less profitable and they go bankrupt. Problem solved either way
Danfavour: How do you feel bringing Saito into the blockchain industry with little or no competition for you? Do you expect more protocols like Saito to spring up sooner or later?
David: We think it’s a matter of time until everyone is adding routing work to their chains. We know that people in other chains are watching.
Lekside Olamilekan: NFTs is the hottest prospect on blockchain. Is there any possibility of applying NFTs technology to Saito products? Which features gives you the most confidence about Saito Network
David: We’re building this functionality into the Arcade. If you’re playing a game on the Arcade with a DOT token or something, you’re basically treating that DOT token as an NFT. If someone wants to write a game that uses an NFT, we will support them in getting it done.
Lalaforyou: Please, can you shed some light on the concept of the “POWSPLIT mechanism” and its benefits? How does this mechanism help to improve the security of the Saito blockchain?
David: The production version of Saito that we are building includes a POWSPLIT mechanism. This is the number of blocks that pay to miners versus the number of blocks that pay to stakers.
The reason this exists is because we can’t guarantee the variance of block production. This means we can’t guarantee that we will produce a golden ticket every block. That means money will fall uncontrollably off the chain. And we will either have deflation, or we will have a BIG block reward that will undermine security.
POWSPLIT solves this. If a block is not solved by a golden ticket, then when the next golden ticket is found we use that solution to pay a staker for this unpaid block.
The math is tricky (we have papers and equations we can share for those who want the technical work) but the short version is that it requires an exponential amount of mining to control the payouts not only for the current block but also all of these previous blocks.
The result is that even though the amount of money that we are spending on mining falls (from 50% to 25%), the cost of attacking the network remains >= 100% of fee throughput.
The POWSPLIT mechanism improves Saito. It also allows us to reduce the amount of energy that we burn, while keeping the cost of attack. The one trade-off is that it is slightly easier to spam the end of the chain-tip, although we handle that through congestion and spam policies.
Aykut: How does Saito use peer-to-peer Web3 toolsets and what is the feature of ZKP-based game functions? Can developers build applications in Saito without the need to run any infrastructure?
David: Yes. Write the app. Users can install it in their browsers. People will compete to get it to users, because they (P2P nodes) will earn money just like miners earn from Bitcoin!
Boylut: 1. I would like to know more about your Web3 Foundation Grant work, can you hint us more about it, why it was developed and what benefits will developers derive from it? 2. What do you think could be done to help eliminate Majoritarian attack which most people think it’s impossible to eliminate?
David: The work we’re doing to add DOT tokens to the Arcade are part of our Web3 Foundation Grant. We applied for the grant to make friends with Dot and have Dot developers take us more seriously when we say to them, “let us run your apps and save you money”
There are no majoritarian attacks in Saito. It’s a bit weird to be honest, because we say this and people don’t believe us until they look. At that point it’s 50-50 on them deciding Saito is amazing or deciding that they don’t want to solve the 51 percent attack. Haha. YMMV. People will care eventually.
David: If I missed anyone’s question, please feel welcome to join us in Saito Telegram. More and more people are getting “red-pilled” about the fundamental economic problems that Saito solves, and there is always good discussion to be had.
And thank you to everyone who has asked a question. I hope the answers have been on-target to what you’ve been asking.
For more updates, please do follow Saito’s official social media pages: