SagaChain™ Technical White Paper

Abstract

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PraSaga™ has created a new blockchain infrastructure, SagaChain™ which addresses three fundamental issues:

• Scalability of the Consensus Algorithm
• Parallelization (i.e. Sharding) of the Smart Contract Architecture
• Cryptocurrency to Incentivize Node Validators (aka Miners) and that is used for transactions rather than just a store of value

The SagaChain™ addresses these three aspects with the following:

• Distributed Proof-of-Work (D-POW) for scalability
• Extensible Blockchain Object Model (SagaOS™) for parallelization
• The SagaCoin™ Financial Model for cryptocurrency

The SagaChain™ addresses scalability with algorithms that increase transaction throughput directly proportional to increasing quantities of node validators (miners). That increase also increases the amount of blockchain cybersecurity directly proportional to increasing quantities of node validators (miners). This is accomplished through the use of parallelization of the blockchain, known as sharding, and through the use of the proof-of-work algorithm applied in an approach that distributes across the blockchain shards.

The SagaOS™ uses a “first-class object model” concept coupled with an adaption of the “system object model” concept to create a blockchain object-oriented user account model. Each user account contains a directed graph of objects, with each object maintaining its own state. An account may have new objects added to its account, or may be transferred to other accounts, or deleted, depending on the transactions executed and the class methods implemented for each of the various objects. This is in direct contrast to the existing blockchain smart contract model where user accounts only contain a balance of the native token of the specific blockchain, and all state is stored in separate smart contracts, not in the user’s account.

The SagaOS™ users’ state account model enables deterministic parallel transactions between any disjointed or unconnected set of user accounts.

As an example: Consider user accounts A, B, C, D. If accounts A and B have a transaction, and accounts C and D have a transaction, because all object state is local to the accounts, these two transactions can be executed in parallel. Therefore, these two transactions can be executed on separate blockchain shards. By contrast, the existing blockchain smart contract model depends on all transactions being serialized, i.e. one after the other, because the state of the smart contract is stored in a single account. This means that both transactions must be executed one after the other, even though the transactions are completely unrelated to each other. This fundamental change in state management permits scaling with a sharded blockchain, such as the D-POW consensus algorithm of the SagaChain™.

The SagaCoin™ financial model addresses several aspects of limitations of the current cryptocurrency models. The well-known Bitcoin model, and the Ethereum model, both can be characterized as deflationary currency models that are non-responsive to variations in the economic “climate”. This has resulted in widely varying, but generally increasing pricing against fiat currencies for these models. A deflationary currency model has the effect of encouraging owners to hold the currency instead of spending it. Any time an owner spends their Bitcoin,

they lose the future value of the Bitcoin. An extreme example of this is the $800,000,000 pizza. An early Bitcoin enthusiast paid 10,000 bitcoins for a pizza. Less than 10 years later, those were worth greater than $800,000,000.

In contrast to a deflationary currency model, an inflationary cryptocurrency model would be created simply by mining ever increasing larger amounts of tokens. An inflationary currency model would have the effect of encouraging the immediate expenditure of the token to some other value, such as fiat currency. As a result, such a token might be used as a very short term means of transfer of value between different currencies or as an immediate point-of-sale purchase medium but would not be suited to holding for any length of time in a user account on a blockchain. Although there may be high velocity of transactions, with this model, the cryptocurrency would have little to no appreciation in value. This has a negative effect in attracting miners to the blockchain. Without the miners, the security of the blockchain collapses, and the cryptocurrency completely fails.

The SagaCoin™ addresses both the deflationary and inflationary aspects through a model that supports managing the rate of new tokens being added in to circulation by the miners (called mining) and the rate of tokens being taken out of circulation, (called burning). To avoid centralized control of the financial model, and thus to provide credibility to the value of the SagaCoin™ as a viable cryptocurrency, the management of the financial model uses a decentralized democratic governance model (i.e. voting) to control the various parameters of the model. The voting is conducted on the SagaChain™ itself, creating a self-managed, trustless financial model that is responsive to the SagaChain’s economy. As a result, the SagaCoin™ is internally stable within the SagaChain™ which makes it suitable to be used as a currency.

The following sections describe the major components of the SagaChain™ technology: Main Loop, Individual Shard Consensus; D-POW; SagaOS™; XSOA; and SagaCoin™ Financial Model. This is followed by a brief description of the PraSaga™ Foundation and concluding paragraphs.