DAG based crypto-currencies do not require a network of active miners to ensure the stability and performance of the network. They rely of various consensus approaches, such as a network of trusted validators or nodes. COTI is a cryptocurrency project currently in development that utilizes the DAG. With this approach, COTI is able to ensure much higher transaction throughput when compared to traditional PoW based blockchain technology, and for a fraction of the fee.

Here, we will take a look at the key components of COTI’s ecosystem:

1. The Cluster

The Cluster Technology forms the ledger framework in COTI

The Cluster is COTI’s distributed ledger, in the same way the Tangle is IOTA’s ledger and the block lattice is Nano’s ledger. The cluster assumes the role of a traditional book of records, as it is the ledger that stores and records every transaction that is performed on the COTI network. Transactions in the Cluster propagate in a unidirectional path — they are thus dispersed through the network.

2. The Trust Scoring Mechanism and Servers

A key component in COTI’s network is the Trust Score server. In any network, there is scope for friction between the members of the network. The question often arises, how do you trust someone in the network? A key metric that helps in building trust between the participants of the COTI’s ecosystem is the trust score. Trust Score Servers are dedicated servers within the COTI ecosystem that calculate and store participant’s trust. The score itself is calculated based on the Trust Score Algorithm. All accounts within the COTI network are assigned a trust score, and this score is based on the accounts data, behaviour and past performance. The trust score helps rate the participants of the network in accordance with the principles of the network, thus ensuring honest participants are rewarded for their contributions by the network giving them more weight.

3. Mediation System

As the currency of the Internet, COTI introduces a mediation system that is built into the network. In case of any dispute between the participants of the network, the mediation system can be availed in order to decide upon the dispute. This is typically seen in merchant transactions, where protection against fraud is an important requirement for both parties of a transaction to feel comfortable. Few scenarios where the Mediation System can be utilised are: Billing errors, Nonfulfillment of orders, Poor quality of services, etc. The mediation system utilises the trust score of the participant and mandates a minimum rolling reserve requirement for each merchant based on his trust score.

4. COTI Currency Exchange

Another important component of the COTI ecosystem is the native currency exchange for the COTI token, which aims to provide participants of the COTI network an easy to use exchange to send and receive funds, and also trade between COTI and any choice of fiat and other digital asset pairs. For any currency to become truly global, it is an important requirement to obtain access to highly liquid markets and a global order book. To achieve this goal, the COTI exchange will also enable market making by establishing COTI as the base pair among several currencies.

5. Decentralised Governance

It is now becoming obvious that any truly decentralised distributed ledger technology should set out a clear and concise approach to the governance of its network. COTI proposes to provide its network participants with voting rights, to decide upon any changes that will be made on the underlying protocol and to further the goals of adoption of COTI.

For more information on COTI and the technology behind it, please visit the website or read the whitepaper.