Horizen Publishes The Latus Incentive Scheme For SNARK-based Sidechains

This article was first published on Horizen

The latest whitepaper details the incentive scheme for blockchains powered by Horizen Zendoo sidechain protocol.

We are thrilled to announce the Latus Incentive Scheme whitepaper, which details the reward scheme of the Latus-enabled sidechain first introduced in the Zendoo whitepaper – A zk-SNARK Verifiable Crosschain Transfer Protocol Enabling Decoupled and Decentralized Sidechain. This reward scheme is an essential element for a fully decentralized system and allows the creation of a balanced mechanism of reward distribution. The scheme also promotes stable system operation and honest participation. The ideas described in the paper can be adopted by other SNARK-based blockchains to incentivize proof creation.

What is the Latus Incentive Scheme?

In our previous paper, we introduced Zendoo – a universal construction for Bitcoin-like blockchain systems that allows the creation of sidechains (complete blockchains parallel to mainchain) of different types and communication with them without knowing their internal structure. 

Latus is a specific construction that can be built on top of Zendoo and leverage zk-SNARK techniques to create fully decentralized and verifiable sidechains. In Latus, we had to find a balanced mechanism to incentivize a decentralized system of participants to create proofs due to the need to prove the history of the blockchain using SNARKs. The Incentive Scheme for the Latus sidechain construction facilitates sustainable maintenance and further promotes decentralization purely through transaction fees instead of newly minted coins. In this paper, we identify the main participants involved in sidechain operation and construct a reward-sharing scheme that maximizes the overall efficiency of the system and keeps different parties in equilibrium.

“True decentralization is mandatory for real-world blockchain applications, and it has always been an essential target of our research and design effort. A robust and fair incentive scheme is a founding element of true decentralization, where all participants must be rewarded for ...

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