WhitePaper
Distributed ledger network technology
Introduction
The combined success of the open source ecosystem that is decentralized by file sharing and public cryptocurrencies has led to the realization that such Internet protocols can be used to radically improve the economic and social infrastructure.
Two complex problems stand in the way of the worldwide implementation of these technologies’ potential: low productivity and isolation from real application scenarios in the economic and social people’s lives.
We have seen specialized blockchain applications. However, to date, these blockchains have some shortcomings. The main ones are gross energy inefficiency, low or limited performance, and immature governance mechanisms. Bitcoin transaction throughput scaling proposals are vertical scaling solutions that are still limited by the power of a single physical machine to ensure full verifiability.
The smart contract functionality has brought blockchain closer to people's life situations and expanded application scenarios. However, early implementations are more like concepts that have a lack of flexibility and their functionality.
The perfect solution is one that allows multiple parallel blockchains to interoperate while maintaining their security properties. It is difficult to use the Proof-of-Work technology. Merged mining, for example, allows the work done to secure a parent chain to be reused in a child chain, but transactions must still be verified in due order by each node. In addition, the merged mining blockchain is vulnerable to attack if the majority of the parent node's hashing power is not active merged mining of the child node. Among other issues, the Proof of Work has received a sharp negative connotation recently due to the huge energy consumption. This is done to economically punish malicious network nodes, because the energy spent costs money that can no longer be returned. However, this punishment method releases too much CO2.
We present you the KGchain. It’s a new blockchain network architecture that solves all these problems. KGchain is a network that consists of many independent blockchains called Applications. Such blockchains are managed by KGcore BFT, which provides a high-performance, consistent, secure consensus mechanism similar to PBFT, where strict branching liability guarantees control over the behavior of attackers. The KGcore BFT consensus algorithm is well suited for scaling public the Proof-of-Stake blockchains.
KGchain is the first network blockchain. It is a multi-active Proof-of-Stake blockchain with a simple governance mechanism that allows the network to adapt and update itself. In addition, the KGchain can be extended by connecting other blockchains, virtual computers, compatibility layers and REST API / RPC services.
New network elements are called Applications and may contain arbitrary functionality, rules and responsibilities.
All KGchain network elements and blockchains interact with each other using the interlock communication protocol, a kind of virtual data exchange language for blockchains. Tokens can be transferred securely and quickly from one network to another one without the need to exchange liquidity between the networks. Instead, all token transactions between the blockchains go through the KGchain, which keeps track of the total number of tokens found on each blockchain. The distributed ledger technology isolates each blockchain from the failure of other blockchains. Since anyone can connect a new blockchain to the KGchain, the blockchains provide compatibility with future innovations.
KGcore
Here, we will describe the KGcore consensus protocol and the interface used to build applications with it.
VALIDATORS
In classical Byzantine Fault Tolerance (BFT) algorithms, each node has the same weight. In a KGcore, nodes have a non-negative number of votes, and nodes that have a positive number of votes are called validators.
The validators participate in the consensus protocol by broadcasting cryptographic signatures or votes to agree on the next block. The validators’ voting right is determined when creating or deterministically changed by the blockchain depending on the application. For example, in a proof-of-stake application such as KGchain, voting right may be determined by the number of staking tokens pledged as a guarantee.
CONSENSUS
KGcore is a partially synchronous BFT consensus protocol based on the DLS consensus algorithm. The KGcore is characterized by simplicity, performance and fork accountability. The protocol requires a fixed, known set of validators, where each validator is identified by its public key. The validators try to come a consensus by one block at a time, where a block is a list of transactions. Block consensus voting takes place in rounds. Each round has a
round leader or block proposer. After it, the validators vote in stages on whether to accept the proposed block or move on to the next round. The offering round is chosen deterministically from an ordered list of the validators in proportion to their number of votes.
KGcore's security depends on the usage of Byzantine Fault optimized by super-majority voting and collateral locking mechanism. Together they ensure that:
▪ More than one-third of the votes must be Byzantine to cause a security infraction where more than two values are recorded.
▪ If any set of the validators ever manage to violate security, or even attempt to do so, they will be identified by the protocol and punished. This includes both voting for conflicting blocks and broadcasting unfounded votes.
Despite a strong stability guarantee, the KGcore delivers exceptional performance. The KGcore can process tens of thousands of transactions per second with a commit latency on the order of one to two seconds. Remarkably, the performance in excess of tens of thousands of transactions per second is maintained even in the severe conditions of competition when the validators crash or broadcast maliciously crafted votes.
Certain types of practical technology implementation make it possible to achieve a total performance over 100,000 transactions per second.
Light Clients
One of the significant benefits arising out of a technologically advanced consensus algorithm is the ability to build lightweight network nodes. Such nodes can be used, for example, in mobile devices. They do not need to download the entire blockchain and perform other resource-intensive actions. To carry out operations, it is enough to get an up-to-date set of validators and then verify more than ⅔ of draft proposals in the last block.
KGChain Overview
KGChain is a network of independent parallel blockchains, each one uses the classic BFT consensus algorithms such as KGcore.
The first and main blockchain in this network is called KGchain and has the same name. Many other blockchain applications connect to it using a new Inter-Blockchain Communication protocol. The KGchain keeps track of numerous types of tokens and the total number of tokens in each connected
blockchain. The tokens can be safely and quickly transferred from one blockchain to another one without the need to exchange a liquidity between the blockchains, because all coin transfers between them use the KGchain.
This is how we ensure application compatibility, scalability, and the ability to seamlessly upgrade and expand. For example, Bitcoin, Ethereum, Solana based blockchains or any other blockchain systems can be connected to the KGchain. These blockchains allow the KGchain to scale indefinitely to meet the global transaction demand.
The KGchain is not just a single distributed registry for issuing cryptocurrencies and tokens. Serving the financial markets is not its main purpose. The KGchain technologies allow creating transparent and accountable registers of property, pension savings and citizens' investments in infrastructure projects. The fundamental difference with existing solutions lies in the support of not only and not so much financial transactions, the essence of which can be described as “speculation”. We are developing a system to ensure the real everyday life of people: daily purchases, accumulation of funds by a person, family, company, home, city, country to make large purchases and to do projects. It is also possible to rationally organize non-commercial activities, common ownership and disposal of property. The built-in rights system plays a key role here.
RIGHTS AND OBLIGATIONS
The KGchain has built-in support for various right levels and a modern mechanism of multiple transaction signatures. Each blockchain, an application included in the KGchain ecosystem, can set various right levels and the rights and obligations corresponding to them at startup or after it by voting. The content may be completely different.
Imagine, for example, a household. The family has several income sources and many expenses. Parents can give their child the right to spend certain amounts of money. Over spend limits can be promptly approved by parents with an electronic signature.
All members of the household also have access to the joint account, but large expenses also require the several or all family members’ signatures. In this way, we can organize savings for real estate or education for children, where the ability to use funds is limited by the age of the person, and reaching a certain age gives a new level of rights.
The household members or an arbitrary set of network users can take a common loan using a multi-signature mechanism and jointly spend and pay for it. It also opens up scenarios of P2P loans, where the party can be either one citizen or a group of citizens, and the subject of the loan can be both means of payment and other tangible and intangible assets.
Residents of a building or street can get the right to vote and get an electronic signature on spending common funds in exchange for the obligation to transfer a part of the income to the general fund. This opens up, for example, scenarios for transferring all issues of housing and public utilities to current technologies.
Accepting the obligation to respect other people's property rights fixed by NFT in the KGchain, opens up the possibility to register your own property rights. This opens up scenarios for the modern implementation of property registers for real estate, vehicles and other properties. Blockchain implementations of notary services, indirect mortgage loans, auto-paying property fees resulting from intellectual property, etc.
KGchain has a non-commital open entry. However, the more responsibilities participants take on, the more opportunities open up for them. This gives an increase in the right level and trust in different communities.
CONTROL
Distributed public registries must have a constitution and a governance system. Bitcoin relies on the Bitcoin Foundation and mining to coordinate updates, but this is a slow process. Ethereum split into ETH and ETC after a hard fork to solve The DAO hack, mainly because there was no prior social contract or mechanism to make such decisions.
The validators and delegates can vote on proposals that can automatically change predetermined system parameters (such as transaction costs), coordinate updates, and vote on readable constitution amendments that govern policy. The constitution ensures that stakeholders are cohesive on issues such as theft and bugs (such as The DAO incident), allowing them to be resolved faster and cleaner. Each application can also have its own constitution, rights level system, and governance mechanism.
By enabling interoperability between different policies of different applications, the KGchain network provides its users with complete freedom and the ability to experiment without permission.
Application scenarios
DISTRIBUTED EXCHANGE
Just as Bitcoin is more secure by being a distributed, massively replicated ledger, we can make exchanges less attackable to internal and external hacks by running them on the blockchain. We call it the distributed exchange.
That the cryptocurrency community calls a decentralized exchange is based on transactions called “Atomic Cross-Chain Swaps” (ACS). Using an ACS transaction, two users on two different chains can make two transfer transactions that are committed together in both ledgers, or none at all (that is, atomically). For example, two users can exchange BTC with ETH (or any two tokens on two different ledgers) using ACS transactions, even if BTC and ETH are linked. The ACS transaction advantage exchange is that users do not need to trust each other or the transaction matching service. The limitation is that both parties must be online the transaction will take place.
Another type of the decentralized exchange is a distributed, mass-replicating exchange that runs on its own blockchain. Users of this exchange type can submit a limit order and turn off their computer, and the trade can be made without the user being connected to the network. The blockchain matches and completes the trade on behalf of the trader.
A centralized exchange can create a limit order book and thereby attract more traders. Liquidity breeds more liquidity in the exchange world, which is why there is a strong network effect (or at least a winner-takes-all effect) in the exchange business. Given such strong network effects, it is unlikely that the ACS-based decentralized exchanges will gain volume over centralized exchanges. For a decentralized exchange to compete with a centralized exchange, it must support deep the limit order book. This can only provide a distributed exchange based on the blockchain.
The KGcore provides additional benefits of faster transaction commitment. By prioritizing quick completion without sacrificing consistency, KGchain applications can complete transactions quickly both for exchange order transactions and token transfers to and from other applications.
By considering the current state of cryptocurrency exchanges, a distributed exchange (also known as DEX) is a great application for KGchain. Transaction capacity as well as commit latency can be comparable to those ones of centralized exchanges. Traders can place limit orders that can be filled without both parties being online. And with the help of the KGcore and the Cross-Chain Communication, traders can quickly move funds in and out of the exchange to and from other blockchains.
MULTIPLE APPS INTEGRATION
KGchain applications run arbitrary logic that is defined early in the very begginigs of the application and potentially updated over time by the control system. The flexibility allows the KGchain applications to act as bridges to other cryptocurrencies such as Ethereum or Bitcoin, as well as to create derivatives of these blockchains using the same codebase but with a different set of validators and initial distribution. This allows many existing cryptocurrency frameworks such as Ethereum, Zerocash, Bitcoin, CryptoNote, etc. to be used with KGcore BFT, which is a consensus mechanism with higher performance on the overall network opening up huge opportunities for platform-to-platform interoperability. Also, as a Multi-Asset Blockchain, a single transaction can contain multiple inputs and outputs, where each input can be any type of token. It allows the KGchain to directly serve as a decentralized exchange platform, although orders are supposed to be matched through other platforms. Alternatively, the application could serve as a distributed, fault-tolerant exchange (with order books), which could be a clear improvement over existing centralized cryptocurrency exchanges that are subject to hacking over time.
The applications can also be as blockchain-based versions of enterprise and government systems, where parts of a particular service that are traditionally run by an institute or group of institutes instead run as an application based on a specific blockchain. That allows it to inherit the security and interoperability of the public KGchain network without sacrificing control. over the base service. In this way, the KGchain can offer the best of both worlds for institutes that want to use the blockchain technology but are wary of completely handing over control to a distributed third party.
EXISTING APP PORTABILITY TO KGCHAIN
Given the fact that the technological superiority and the ability to connect any blockchains, we will describe the possibility of transferring any existing decentralized applications. There are two engineering capabilities at once. The first is to connect the appropriate “native” blockchain for this application as an application to the general KGchain network and launch a decentralized application with updated performance.
The second one is the KGchain that directly supports both EVM and WASM. They are two leading virtual platforms for executing decentralized applications. A smart contract can be ported to the KGchain for subsequent execution in the corresponding virtual machine. Note that it will also require launching a new KGchain-based blockchain.
The difference is that in the first case, we can port the existing state to the KGchain, and in the second one, we lose backward compatibility, but we can
run the application using more KGchain technologies, not limited to the existing functionality.
FEDERAL NAME RESOLUTION SYSTEM
NameCoin was one of the first blockchains that tried to solve the problem of name resolution by adapting the Bitcoin blockchain. Unfortunately, there are several problems in this approach.
With Namecoin, we can check for example that @satoshi was registered with a certain public key at some point in the past, but we won't know if the public key was recently updated unless we download all the blocks since that name was last updated. This is due to the limitations of Bitcoin UTXO Merkleized Transaction model, where only transactions (and not mutable application state) are converted to a merkle hash of a block. This allows us to prove the existence, but not the absence, of later name updates. Thus, we cannot know for sure the most recent name value without trusting the full node, or without incurring significant bandwidth costs due to downloading the entire blockchain.
Even if the NameCoin implements a Merkle search tree, its reliance on proof-of-work makes light client verification problematic. Light clients must download a complete copy of the headers for all blocks in the entire blockchain (or at least all headers since the last name update). This means that bandwidth requirements increase linearly over time. In addition, changing a name on the proof-of-work blockchain requires waiting for additional proof-of-work blocks, which can take up to an hour in bitcoin.
Using the KGcore, all we need is the most recent block hash signed by a quorum of validators (by number of votes) and the Merkle proof for the current value associated with the name. This allows you to have a brief, fast, and secure validation of name values with the light client.
At the KGchain, we can take this concept and expand it. Each name registration area in the KGchain may have an associated top-level domain name (TLD) such as ".com" or ".org", and each name registration area may have its own management and registration rules.
TOTAL KGC EMISSION
- 30% (6,300,000 KGC) for marketing in 5 years at 1,260,000 KGC per year.
- 10% (2,100,000 KGC) for the company over the next 11 years at 190,909 KGC per year.
- 60% (12,600,000 KGC) distributed by spraying over 16 years:
2 million KGC - 1260,000 KGC= 740,000 KGC per year for the first 5 years
1 million KGC- 190,909 KGC= 809,091 KGC per year for the next 11 years
To receive accruals by spraying, you need to keep the tokens on deposit, for which accruals are used, for at least 30 calendar days. They are automatically frozen on the wallet after the verified user confirms participation in the distribution by spraying. At the same time, daily accrued tokens can be withdrawn, transferred at any time.
Also, 100,000 KGC is needed from the first-year marketing funds for the airdrop.
The first 36,000 verified participants will receive a reward according to the following scheme:
- 12,000 people * 4 KGC = 48,000 KGC
- 10,000 people * 3 KGC = 30,000 KGC
- 8,000 people * 2 KGC = 16,000 KGC
- 6,000 people * 1 KGC = 6,000 KGC