ParallelChain introduces a new first-level public blockchain with a TPS of 80,000. This makes it a prime candidate for developers looking to build on public chains or who want to take the unique advantage of developing applications that work on public blockchain networks and are licensed by ParallelChain.

In order to achieve these speeds, ParallelChain centralizes part of the consensus building. However, it improves this approach by regulating centralization within certain limits and making privileged parties democratically accountable.

Tokenomic incentives played a very important role in achieving this result. They are used to keep voting rights in the system well distributed and balanced through the design intended by ParallelChain, without resorting to direct log controls over agent behavior or the distribution of voting rights.

This section highlights some of the important tokenomic mechanisms involved.

Consensus with 3 validator classes

ParallelChain’s consensus process has three levels of seniority.

The most advanced layer – management nodes – is allowed to exercise a larger share of the voting rights within a small group of nodes. The base layer – the beta nodes – may exercise a significantly lower share of the voting rights. Between them, the alpha nodes stack in terms of both number and expected vocal power of each node.

This design centralizes a greater rate of consensus generation among smaller pools than high-level validators. This results in a higher transaction throughput in the network. Unlike other centralized chains, ParallelChain then democratically adds accountability checks to these perks using a combination of Know Your Customer (KYC). The governance value is driven by protocol and economic incentives:

• Management nodes and alpha nodes are both subject to KYC requirements and ultimately to pre-existing service requirements.
• Upgrades to the governance and alpha layers are subject to an open, protocol-driven governance process for all token holders across the network, including the beta nodes.
• Beta nodes are very numerous and do not need to be tested multiple times. That keeps the agency open and democratic.
• Validation incentives are designed to keep one class from becoming too strong and to keep the stakes balanced so that, on average, each class can be mastered by an algebra of the other two.
• The incentive design also ensures that no button in its class is disproportionately strong.

Manage focus with a “triple limit” incentive design

To keep the levels in balance, we need to solve the “centralization problem” blockchains face with a delegated proof-of-stake (DPoS) consensus.

The problem is motivated by a desire to avoid the concentration of pile formation. This keeps the consensus generation in the network decentralized in the long term. In the case of ParallelChain, we need to leverage the same properties to avoid having the stated privileges and careful balances outside of their intended limits.

The Cardano team solves the centralization problem of staking by applying a cap on the percentage of validation rewards that can be claimed by each individual node. The limit is set on the bet composition, which will be held if the bet is evenly distributed over an ideal number of nodes. So if that ideal number of nodes is 100, the limit is set to 1/100 or 1% of all shares on the network.

Under this plan, a knot that has tightened 2% of the stake can still only get 1% of the reward. If another unsaturated node has a 0.5% stake and increases its stake to 0.75%, that node will receive an additional 0.25% from the reward pool.

This design makes it very difficult for node operators to maintain oversaturation. Delegators will look elsewhere for attractive transactions, and nodes competing below saturation can bring delegators higher profits and lure them away from oversaturated nodes.

This creates a visual picture of the trends that this bonus design is creating. In the example given, it puts the system in a state where it is running on 100 nodes, each of which controls about 1% of the operation.

In order for ParallelChain’s 3-layer authentication system to work, we simply limit the number of dedicated nodes for each class that are assigned one-third of the voting power to each class in the target state.

So if we have 12 management nodes their limit is set at 33% / 12, and when we have 100 beta nodes their limit is set at 33% / 100.

These offers work at the node level. That may not be enough to prevent an unbalanced class in general. To mitigate this, additional incentives are activated on oversaturated nodes if and when their layer is oversaturated.

diploma

This article introduces how ParallelChain has constrained centralized mining and democratic accountability. We saw how tokenomic incentives provide ways to get the system into a desired state without the need for tough controls on the network.

But there are plenty of other tokenomic features at work! Read more here.

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