Coti Protocol Development

Centralized payment systems come with several drawbacks, including a single governing authority, high transaction fees, and lengthy processing times. In response, the COTI blockchain project emerged as a viable alternative for both businesses and individuals. The network boasts impressive throughput and offers minimal fees.

The Origin of COTI Coin

Founded in the spring of 2017 by David Assaraf and Shahaf Bar-Geffen, the project aimed to develop the first financial and technical platform to address the key challenges faced by centralized payment systems and existing blockchains:

High Fees: Particularly prevalent in custodial services managed by a single entity.

Limited Scalability: Often leading to network congestion, a common issue in many blockchain systems.

Trust Issues: Users frequently face risks of fraud and a lack of confidence.
The COTI platform enables businesses to build decentralized payment solutions and tokenize fiat currencies, streamlining transactions and lowering costs.

Project Leadership

Shahaf Bar-Geffen: CEO and President, holds a bachelor’s degree in Biotechnology and Economics from Tel Aviv University. He is the founder of the prominent marketing agency WEB3, the mobile video streaming service Positive Mobile, and the international media firm Maple.

David Assaraf: Co-founder and financial expert, previously worked in the credit risk department at the Central Bank of Israel. He is also the founder of the tech company Frequants.

Nir Haloani: CTO, who earned his bachelor’s degree in Mathematics and Computer Science from Tel Aviv University and a PhD from Bar-Ilan University. His expertise lies in data compression, machine learning, and artificial intelligence. He has served as CTO at Infima Technologies and holds 14 patents.

The project team was established in March 2017, following several rounds of fundraising:

• Pre-sale (2018): Participants received discounts of 15% to 25% based on the lock period for coins, raising over $3 million.
• Private Token Sale (2018): The startup secured $10 million from private investors.
• Initial Exchange Offering: Held on June 4, 2019, via the KuCoin platform, this sale required participants to complete a KYC (Know Your Customer) process and generated $3 million in funding.

COTI Features

The project team has developed a secure TrustChain network that operates without traditional blocks and mining processes. This innovative approach addresses scalability issues and enables real-time transaction confirmations with very low fees. The protocol is tailored for decentralized payment transactions across various sectors, including:

• Government entities.
• Payment networks lacking a central authority.
• Individual users.
• Projects that create stablecoins.
• Developers of decentralized applications.

The primary aim of the project is to establish a Type 3.0 blockchain payment system that normalizes cryptocurrency as a widely accepted payment method.

With the advancements made by this project, both individual users and large enterprises can execute swift, cost-free transactions using any type of currency or coin.

Benefits of the COTI Payment Solution

User Benefits:

Cashback rewards.

A system for loyalty points.

Option to request a prepaid debit card.

Enhanced transaction security and fraud protection.

Capability to purchase COTI and other cryptocurrencies with a credit card.

Benefits for Service and Product Providers:

Instant transaction processing

• Low transaction fees.
• No currency conversion fees.
• Developer-friendly plugins and toolkits.
• Diverse financing solutions.
• Support for both bank customers and those not affiliated with traditional financial institutions.

Loyalty program capabilities

Another significant feature is the ability to create stablecoins. Clients on the platform can issue their own branded coins with a fixed value, and the stability mechanism can be tailored to any asset. The advantages of this technology include:

• Increased revenue through reduced operational costs and data processing fees, leading to less reliance on existing stablecoins.
• Minimal transaction costs.
• Market expansion by offering a wide array of payment options.
• Decreased volatility of digital currencies, ensuring price stability.

Currency of the Internet

The Currency of the Internet is a native coin created within its own decentralized network, TrustChain. The latest version, MainNet 2.0, was launched on November 2, 2021.

This high-performance cryptocurrency serves various functions and acts as the primary means of payment within the project ecosystem, specifically for:

Incentives: Operators of all types of nodes are rewarded. To confirm a node’s activity, users must hold native coins in their accounts.

Fees: All network-related fees, including those for transactions, arbitration applications, node operations, and token generation, are paid using these coins. Additionally, rewards are provided for launching external projects and blockchain applications.

Arbitration: In cases of disputes (such as billing errors, unfulfilled services, or product discrepancies), either the buyer or seller can initiate arbitration. Arbitrators tasked with resolving these issues must also hold native coins in their accounts.

It’s important to differentiate the utility cryptocurrency from COTI Dime, which is a distinct coin with different functionalities.

COTI Dime is a stablecoin pegged to a value of $0.10. It exists solely within the project ecosystem, functioning as a price stabilizer and facilitating interactions between clients and service providers. The platform also enables users to create their own tokens on the project network for quick payments and purchases of goods and services.

Operating Principle

The network operates on the Proof of Trust (PoT) protocol, a distinctive blend of the Proof-of-Work algorithm and TrustChain Consensus.

This comprehensive and customizable decentralized payment system is enabled by a multi-layer architecture.

Layers and Elements

Bottom Layer: This layer is based on a Directed Acyclic Graph (DAG), establishing a new type of network that eliminates the need for miners. Users themselves connect transactions, embedding the hash of previous signatures within each one.

This grants all participants access to the distributed ledger, removing the reliance on block creators or miners to determine transaction inclusion. The use of DAG fosters complete decentralization, eliminates intermediaries, and lowers fees.

TrustScore:

This custom metric is crucial for efficient transaction processing and risk management. TrustScores range from 0 to 100, reflecting user interactions within the network. Users who act honestly and contribute significantly to the blockchain maintain high scores, while those who engage in poor practices face lower scores, higher fees, and longer approval times.

TrustChain Consensus: This consensus mechanism utilizes machine learning to assign trust scores to transactions, which are then grouped into chains. Users are incentivized to perform correctly through their TrustScores, receiving additional benefits tied to higher scores.

Second Layer:

Full Nodes: These decentralized servers are essential for network maintenance and are operated by regular users.

DSP Nodes: These distributed servers help prevent double spending and protect against attacks aimed at executing multiple transactions with a single balance. They ensure the integrity of the protocol, requiring a majority of such nodes to sign each transaction.

TrustScore Nodes: These dedicated servers calculate and store users’ TrustScores and KYC statuses.

KYC Server: This server is used for user registration on the network. Connecting to it is necessary for identity verification and compliance with anti-money laundering (AML) measures.

Third Layer: This layer encompasses services related to transactions, balance management, KYC, and arbitration.

Fourth Layer: This includes the COTI Coin system, Coti USD, Coti BTC, and other Coti-DAG tokens.

Fifth Layer: Applications such as COTI Pay, which facilitates the processing of all types of payments—both online and offline—using cryptocurrencies, stablecoins, and credit cards.
Additionally, it features built-in financing options with interest on loans and deposits.

COTI-X Overview

COTI-X is a currency exchange platform that ensures continuous access to liquid markets for cryptocurrency and fiat pairs. COTI boasts a highly scalable network capable of processing up to 100,000 transactions per second (TPS). This is particularly impressive compared to Ethereum, which recorded only 14 TPS in the fall of 2021, Ripple at 1,500 TPS, and Tron at up to 2,000 TPS. Even centralized payment services such as Visa report maximum rates of around 65,000 TPS.

This remarkable performance is attributed to the Cluster distributed ledger technology, which leverages a DAG structure to achieve faster consensus during transaction confirmations through the TrustChain algorithm.

Another distinctive feature of the network is that its efficiency increases with more users. In contrast, traditional blockchains often become less scalable as their ecosystems grow.

Advantages of the Blockchain Project Infrastructure

Scalability:

The network can handle up to 100,000 TPS, far exceeding the 25,000 to 65,000 TPS of payment systems like Visa and the 5 to 1,000 TPS typical of conventional blockchains.

Low Fees:

Transaction fees are nearly negligible for both buyers and sellers.

User-Friendly:

The software development kits (SDKs) and interfaces of the platforms and applications within the ecosystem are designed to be intuitive.

Micropayments:

Users can easily transfer as little as 20 cents.

Security for Participants:

An arbitration system is in place to protect transaction participants from errors, fraud, and abuse.

Economic Efficiency:

The project eliminates traditional, energy-intensive mining processes and removes the need for intermediaries, reducing associated fees.

Technologies Promoting Widespread Cryptocurrency Adoption

The startup offers price stability through the introduction of the COTI Dime stablecoin, which is pegged at $0.10. This stablecoin operates exclusively on the project platform and plays a crucial role in maintaining price stability.

Rapid Transactions:

All operations, from peer-to-peer transactions to coin development, are executed instantaneously.

Decentralized Structure:

The network operates without a central governing authority.

In September 2024, COTI announced the debut of its testnet. This launch provides developers with the opportunity to investigate the network’s capabilities along with its innovative garbled circuit (GC) technology. With COTI’s GC implementation, secure computations can be performed on private inputs without disclosing those inputs. The capacity to handle confidential transactions at scale and facilitate cost-effective, secure multi-party computation (MPC) will create new opportunities for blockchain applications that were previously hindered by cost limitations.