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Proof-of-AI in blockchain technology




BACKGROUND

Blockchain technology is based on a distributed ledger system allowing secure,
transparent, and tamper-proof transactions recorded as blocks. Each block
contains a hash of the previous block, a timestamp, and transaction data. Hence,
the blocks form a chain, as each block depends on the previous block.

One feature of blockchain technology is that no centralized authority determines
the validity of transactions and adds them to the blockchain; instead, a
consensus mechanism is required by which nodes in a blockchain network add
blocks to the blockchain. The consensus mechanism should be resistant to
spoofing, in which a bad actor seeks to add blocks containing fraudulent or
inaccurate information.

In conventional blockchain technology, one type of consensus mechanism is Proof
of Work (PoW) in which appending entities must expend significant computational
effort to add blocks to the blockchain. One example of a PoW mechanism is the
mining process, using, for example, Bitcoin, in which miners compete to mine
tokens (e.g., cryptocurrency) and append blocks. By design, this type of
consensus mechanism demands computational power and is, therefore, wasteful of
energy.

Another type of conventional consensus mechanism is Proof of Stake (PoS), in
which appending entities must hold a minimum number of blockchain tokens to add
blocks to the blockchain. PoS is less energy-intensive than PoW but can lead to
centralization in which a few entities holding many tokens come to control the
network. PoS is also vulnerable to attack because of the low computational cost
of spoofing.



INTRODUCING PROOF-OF-AI (POAI)

An alternative solution to common consensus mechanisms is a novel patent-pending
consensus mechanism known as Proof-of-AI (PoAI), invented by Jonathan MacDonald.
This document introduces the PoAI concept and describes the invention.

At its core, every part of PoAI drives efficiency by removing human interference
and establishing the objective of the AI to fulfil its task in the most useful
way. This is distinctly opposite to PoW (which is inefficient due to the
mechanical computing involved) and PoS (which is increasingly centralized and
therefore increasingly inefficient).

PoAI is based on the work of the following three algorithms that carry out their
work independently, enabling blockchain consensus to be achieved.


 * The AI-Block Builder Algorithm: this forms effective blocks of transactions.
 * The Voting Algorithm: this is implemented by the PoAI mechanism, the task of
   which will be to organize voting for blocks of block builders and communicate
   between the two associated AI algorithms to achieve final consensus.
 * The AI-Validator Algorithm: this votes for the choice of block builder and
   determines the node with the permission to enter a block into the chain.


An overview of the PoAI architecture is shown here:





AI-BLOCK BUILDER ALGORITHM

Block builders are full blockchain nodes that store ready-made blocks of the
blockchain and participate in forming and packaging new blocks. The block
builder's basis is a Machine Learning (ML) model, which has the initial,
specified parameters of the methodology for forming effective blocks from
existing mempool transactions.

The model can also learn and improve the efficiency of its work in selecting
transactions. The block builder considers transactions from the mempool for the
block in the following priority (n - number of transactions in the block):


 1. Highest price (>0.2n transactions)
 2. Lowest price (>0.2n transactions) - to compensate highest prices
 3. Average price (>0.5n)
 4. Oldest transactions (>0.1n)


One essential aspect of PoAI is making transactions optimized for affordability.
This is why the block builder packs the blocks as much as possible and why the
blockchain includes a halving algorithm that drives the reliance on transaction
efficiency. Due to the dynamic nature of PoAI, the mechanism can sense and
respond to attack vectors and attempts at manipulation and adjust accordingly to
mitigate threats.

Each block requires a certain volume of Points to be created (this is known as
the PointPrice). The goal is to align the number of points for each block with
the number of coins generated. For example, 1 point equals 0.001 coins. If the
block requires a PointPrice of 10,000, the blockchain generates 10 new coins.
When the blockchain reaches a certain amount of total PointPrice spent (for
example, 30,000,000,000 points), each point becomes equal to 0.0005 coins. After
reaching the second milestone (for example, 60,000,000,000), each point equals
0.00025 coins.

An effective block is any block assembled so that the average PointPrice is
close to the actual PointPrice. It includes transactions with the maximum useful
information that can be entered into the block. For clarification, ‘useful
informationʼ is PointData (the volume of Points). The goal is for the maximum
amount of PointData to be included. A limited number of transactions with a
higher-than-average PointPrice should reduce the number of users in the system
who set a high PointPrice but still favor and compensate them with a limited
number of transactions with a low PointPrice. Most of the average PointPrice
transactions will be validated, incentivising users not to set high PointPrices.

In contrast, other networks choose the highest gas fees, leading to a negative
user experience. The alternative version provided by PoAI is illustrated below,
where the vertical axis is the PointPrice, and the horizontal is the data
length. The center of the target is the chosen price by the algorithm:


The effectiveness of the ML model depends on the server's technical resources
and the frequency of block assembly. A block builder's ML model is trained based
on its work in selecting transactions for a block, comparing its results with
those of other block builders, and the final voting result, which determines
whose block will be sent to the chain.
‍
The more often a block builder forms a block, and the more mempool transactions
it manages to sort through during the assembly of a new block, the more
efficient the block is and the greater the chance that this particular block
will be chosen for inclusion in the chain at the next stage. After the
generation of the current block is completed and entered into the chain, a timer
is started to assemble a new block. During the timer, all block builders are
sorting through mempool transactions and selecting the best transactions to form
a block. At the end of the timer, all block builders put their blocks forward to
a voting process. The voting application includes the following information:


 * Block assembly
 * Block efficiency (% filling of the block with useful information)
 * Income of the block builder during its existence
 * Timestamp of the last block assembly
 * Percentage of votes out of the total number of attempts
 * Percentage of victory in voting out of the total number of people going to
   vote

The below figure illustrates how PoAI selects which block builders can
participate in the round:


VOTING ALGORITHM

The PoAI mechanism organises voting and cannot directly influence its results or
participate in voting. It will have an identical ML model internally to that of
the block builder and generate its own version of the block with each new round
of assembly.

PoAI and block builders review transactions from the mempool and build an
efficient block for the round. The block generated by PoAI is considered as the
reference block and is compared with the blocks generated by the builders. If
the newly generated block is more efficient than the current reference block, it
becomes the new reference block.


PoAI removes block builders who have successfully submitted blocks to the chain
during the last N-block period from the voting list. Implementing such a timeout
allows all block builders to receive a reward for assembling a block and reduces
the risk of unfair assemblies from one of the participants. The PoAI mechanism
participates in all block assemblies from the very beginning of the chain. It
will also have information about all voting results, and the block collected by
the PoAI mechanism will be considered the reference block.

The chosen reference block is vital and ensures that, despite users' choices,
manipulating the mechanism is improbable, as it removes manual interference. For
each block builder admitted to voting, the PoAI mechanism will check the
accuracy of the efficiency coefficient based on the percentage of the block
filled with useful information, assess its quality, comparing it with its
reference block.

The coefficient is the numeric value based on the efficiency (Input minus
Output) of the amount of block creation. So, two objectives are required:


 * The volume of Points in the block is biased towards being the maximum
   possible.
 * The PointPrice is as stable as possible, so it is biased toward being as
   similar as possible to the previous block generation.

If the useful efficiency coefficient is higher than that of the reference block,
the PoAI mechanism will give such a block builder the highest score and, after
double-checking, consider its block the reference block for the current round of
assembly. Block quality is an additional parameter, not the main one for voting,
but one that the AI-validator model algorithm can use when making a decision.



AI-VALIDATOR ALGORITHM

AI validators are lite blockchain nodes that store network wallet addresses and
color markers. Color markers are a key part of validation and connecting a block
to the blockchain:


 * Each wallet in the system is classed as a HEX wallet as it has a colour
   attributed to it using a hexadecimal value. When a user signs a transaction
   in their crypto-wallet, a hexidecimal hash is generated.
 * The AI validator stores information about the current color of the wallet.
 * The block builder divides the transaction hash into six parts. It divides
   each part into two and adds them until it gets a number of one character.
   Thus, it receives six numbers in HEX, which the block builder glues into a
   single number, which we term a HEX transaction. Next, the block builder adds
   the HEX wallet with the HEX transaction and receives a new HEX wallet.
 * The HEX of the new HEX wallet and the corresponding transaction hash are sent
   to the block for which AI validators are selected. AI validators are selected
   randomly among all those who voted for the AI builder in this round but only
   to those whose votes were not given to the winning AI builder (the random
   number is selected according to a special formula). AI validators also form
   the transaction hash into a transaction HEX and add it to the existing HEX
   wallet, obtaining a final HEX wallet.
 * If the new HEX calculated by the AI validator coincides with the new HEX of
   the wallet transmitted in the block for all wallets, then the AI validator
   considers the block valid.
 * The colors of the wallets change to those obtained by adding their current
   colors with HEX transactions.

Lite nodes can also send and receive transactions to power the blockchain wallet
application. For a wallet address to become an AI validator, it must satisfy the
following conditions:


 * In the last N hours there have been transactions at the wallet address (I.E.,
   the wallet is active);
 * the wallet address contains the N-amount of the native currency of the
   blockchain network.

The figure below illustrates how PoAI determines which validators are eligible
to vote in the round:



VALIDATION PROCESS

AI validators participate in every vote to determine the block builder with each
new round of block assembly. The AI validator votes independently, without user
intervention, in the background. The AI validator's artificial intelligence
model is being trained based on the results of previous voting and analysis of
the participants' block builders' parameters, as well as the requested manual
votes of the AI validator's owner.


 * Once the AI validator has voted, it requests user participation in voting at
   the beginning of its network activity and, using a special algorithm, reduces
   the number of requests to the wallet owner over time.
 * Human participation involves choosing one of two block builder options the AI
   validator provides. Every user has a different choice of two, and the choices
   become increasingly shortlisted. The result of the userʼs (wallet ownerʼs)
   selection is added to the validatorʼs knowledge base and used in the further
   operation of the AI model.
 * In the subsequent period, voting occurs automatically. At a certain point,
   the AI validator will again send requests for manual voting to replenish its
   knowledge base and verify that the wallet's owner is a real network user and
   is active.
 * If a wallet owner does not participate in several manual votes in a row, the
   associated AI validator is questioned, and the AI validator's votes may not
   be counted in subsequent rounds. This penalty is to encourage ongoing
   participation in securing the network.
 * The order and timing of requests for manual voting are determined randomly to
   prevent collective voting. An AI validator's owner cannot independently
   request the possibility of manual voting or influence the timing of its
   proposal.

Validators admitted to the voting process select the block for the round as
illustrated below:


After the voting is completed and the winning block builder is determined, the
PoAI mechanism selects one from the active AI validators. The validators
additionally double-check the collected block before placing it on the
blockchain. The AI validator for color-marker validation of block transactions
is selected according to the following parameters:


 * The AI validator is active and valid according to the conditions listed
   above.
 * The AI validator did not vote for the winning block builder.

Among the validators who voted, one validator is randomly selected from those
who did not vote for the block that won the round. This validator will use color
validation to check all transactions in the block.


Based on the formula for calculating the random value, the serial number of the
AI validator is determined from the list of voters, which will perform
color-marker validation of block transactions. The following image illustrates
these concepts.



THE INCENTIVE

The reward for participation is generated as a native coin, earned by helping to
assemble a new block among participants in the consensus process. An example
reward distribution is as follows:


 * 90% goes to the block builder;
 * 8% is distributed among the AI validators who voted for the winning block
   builder;
 * 1% goes to the AI validator, who double-checked the block (according to the
   color scheme);
 * 1% of the reward goes to PoAI mechanisms (credited to the blockchain's
   reserve fund) for organizing the voting procedure.

These percentages can be revised to reflect each consensus participant's labor
costs and contribution to its implementation. The example above is illustrated
below:


© Jonathan MacDonald | 12th April 2024