Theoretical Approaches

1. Node accountability

The basic principle of node accountability is to classify transactions as good or bad (typical examples of bad behaviour include double-spending attempts or a very large number of re-attachments). The idea is to create a reputation system, similar to object reputation systems used for peer-to-peer file-sharing. The reputation system would be conceptually similar to page-ranking algorithms, but much simpler and adapted to the needs of the IOTA ecosystem.

We have investigated various reputation systems; the one proposed by Walsh and Sirer has been well-received in the information security community and, at least on preliminary testing, seems very promising for the needs of the Coordicide project. The Credence system for computing peer reputations is completely decentralized, and has already been applied very successfully (e.g. in the Gnutella file-sharing network) in allowing users of different file-sharing systems to make informed judgements of authenticity before downloading unknown content.

The development of a reputation system will also help to avoid a Proof-of-Work race, as there would be nothing to gain from issuing too many transactions — it would be impossible to double-spend, and spammers would be penalized.

2. Improvements to the Tip Selection Algorithm

We are investigating — both theoretically and experimentally — various algorithms aimed at finding good starting points for the MCMC random walk, and the initial outcomes are promising. We have already developed a large-scale simulation aimed at finding some observable parameters of transactions in the tangle, and some parameters which are not so easily observable, such as exit-probability-similarity. The next steps in this direction include the application of regression analysis, performance optimizations, and investigation into other alternatives such as local modifiers.

3. Freedom of Choice — The ‘Stars’ Concept

Another candidate under consideration for Coordicide is to use what we call “Stars”, that is, nodes run by well-known public entities such as governments, corporations, or individuals with a high level of trustworthiness. These entities would issue reference transactions in much the same way that Coo issues milestones, but a user- or community-defined constellation of Stars would function as a decentralized, trustworthy reference path through the Tangle. In a way, this would be a ‘first-approximation’ reputation system. As suggested in Serguei Popov’s post on freedom: it is reasonable for one to give greater weight to transactions originating from entities one trusts. The expansion of such a system would substantially diminish the role of the proof-of-work race, and vastly restrict the attacking abilities of misbehaving users with large computational resources.