A Proposed Solution to the Scalability Trilemma:
Proof of Ethic and the HELO Blockchain

Introduction

The gap between rich and poor is widening. Global financial systems are often restrictive, wherein a large percentage of the world's population struggle for accessibility. Current systems do not work to benefit the people, but the powerful. A new vision for blockchain is required. HELO™ is an egalitarian blockchain which can widen access to important financial tools, as well as offering small and large businesses a platform to reduce costs and improve operational efficiency.

Distributed ledger enabled systems, such as blockchains, tangles and hashgraphs, are systems comprising databases that are consensually shared across a decentralized network of 'nodes' which are actively maintained to track transactions. To ensure data legitimacy, the entities related to the distributed ledger blockchain system usually achieve a consensus in a predetermined manner, known as proofs.

This whitepaper will illustrate how we achieved this solution, detailing the architecture, logic, and mechanisms used to achieve consensus while maximizing speed, security, environmental friendliness, and accessibility.

Proof of Ethic™

Proof of Ethic™ is a novel consensus algorithm with virtually zero carbon footprint and truly no transaction fees. The algorithm is based on a principle of absolute probabilistic equality, in which all nodes have an equal opportunity to generate the next block without the need for heavy capital investment. This results in an eco-friendly, accessible, and egalitarian consensus.

Proof of Ethic™ offers a solution to the "scalability trilemma" proposed by Vitalik Buterin, without any Sharding or Layer 2 mechanisms. POE™ offers optimizations in five aspects: speed, security, decentralization, eco-friendliness, and monetary investment.

Speed Advancements

Essentially being a game of speed, Proof of Ethic™ incentivizes nodes to generate blocks as fast as possible. POE incorporates a proprietary dynamic block size strategy to prevent bottleneck congestion. Dynamic block sizes adjust to meet the needs of the network, enabling transactions to be processed as efficiently as possible. Existing simulations show Proof of Ethic™ achieving several million transactions per second.

Security Advancements

HELO™ and POE™ present a new opportunity for security in the blockchain industry, keeping assets and data protected from detrimental threats. The core rules that make Proof of Ethic™ possible ensure a secure network.

Decentralization Advancements

In part because of a variety of roles and other proprietary POE™ mechanisms within the consensus, Proof of Ethic™ remains decentralized. No group or individual will be able to effectively attain influence by any monetary or technical leverage. One of the only aspects that could potentially impact a given influence of a given node in the network is internet speed, which is only a marginal advantage.

Eco-Friendliness Advancements

Compared to consensus algorithms such as Proof of Work, Proof of Ethic™ does not rely on making heavy mathematical computations. Compared to Proof of Stake, it does not require staking of large sums. Instead, nodes must adhere to a strict and structured behavioral system. This keeps the carbon footprint to an extreme minimum and allows POE™ powered blockchains to be run on low power devices.

Accessibility Advancements

Staking of coins and advanced computing hardware is not needed to participate in the HELO™ blockchain. Simply having a compatible device (such as an Android smartphone or nearly any personal computer) and an internet connection allows any truthful actor to be a node in the network. This breaks down barriers for blockchain adoption and provides a much more egalitarian network.

Consensus

Peterson

Each block in the blockchain will have what's called a Peterson, which is a pseudo-random number generated at the time of forging a block. A Peterson is created by taking the Peterson of the previous block, concatenating the ID of the current node that generates it, hashing the result one or multiple times, and transforming the resulting hash into a number clipped between ɑ and δ.

Roles

Each role within the HELO network receives a percentage of rewards per block forged, with rewards differing based on the tasks performed. The higher a node's score, the more roles they can fulfill, and the more rewards they will earn.

Actor

Actors perform specific actions inherent in a certain role (generators, enforcers, etc.). They are activated based on scoring and various network parameters.

Generator

A node that generates a block from transactions when the mempool is full and controls the enforcement process.

Enforcer

When a node forges a block, it requires a certain number (Ψ) of enforcers to inspect it for missing transactions. These nodes are chosen in a pseudo-random manner. The generating node chooses the first enforcer, and each subsequent enforcer is chosen by the previously selected one, forming a chain.

Storer

When a node's score exceeds a certain value, it becomes a "storer". A storer receives a reward for sending data to a light node. While a storer is a full node, not all full nodes are storers.

Speedster

Speedsters change block sizes by checking their own mempool frequency. If the frequency is too high or too low, they create a poll to adjust the dynamic block size range to maximize throughput efficiency.

Transactions Process

Any operations in the blockchain network are documented in the form of transactions. The process is divided into several steps.

1. Transaction Creation

A transaction is initiated with a user RPC query to a node. The node receives the query and forms it into a transaction containing information about the user's operation.

2. Partner Selection

A partner node is required for transaction checking. The partner is selected pseudo-randomly from a list of network participants whose score is above a certain threshold.

3. Transaction Check

The created transaction is sent to the partner, who checks if the creator is blacklisted and if the transaction is well-formed. The partner's reply is added to the transaction, which is then checked for field correctness and consistency before being signed.

4. Transaction Broadcast

A created, validated, and signed transaction is broadcast to all online nodes. Nodes receive the transaction and store it in their mempool.

5. Block Creation

When the total size of transactions in the mempool exceeds the minimum block size, the block forging process begins. The block consists of a header (timestamp, previous hash, Peterson, creator), metadata (signature, enforcer list), and transaction descriptions.

6. Enforcer Chain

An enforcer is a participant that confirms block validity. A certain number of enforcers must confirm the block. Enforcers are selected sequentially, with the selection of the current enforcer depending on the previous one, forming a chain. Each enforcer checks if all available transactions are included in the block and helps generate the next enforcer in the chain.

7. Block Broadcast

After the enforcer chain is complete, the block is signed and broadcast to the network. Every participant validates the block based on rules like Peterson validity, enforcer chain validity, previous hash, timestamp, and forger's score.

Scoring

Scores are assigned based on a node's actions within the network.

Rules

The Proof of Ethic consensus algorithm is a mechanism that penalizes entities that do not act justly by assigning a score based on conduct and applying restrictions to limit bad actors. All rules are placed in a dynamic shared library that is loaded when a node starts.

New Rule Introduction

1. Pythia decides to introduce new rules and opens a "New rule presentation" poll.
2. If the vote is positive, a network parameter "Set new rule" is raised.
3. Once a new library version is developed, a "Code review" poll is created, containing the source code and binaries.
4. If the "Code review" poll is positive, nodes replace their old library with the new version, and the "Set new rule" flag is reset.

Dynamic Block Size (DBS)

Dynamic Block Size (DBS) works by defining a range for the sum of transaction Petersons in a block: `[DBSmin, DBSmin + DBSgate]`. If a block's sum falls outside this range, the forger is penalized.

The Speedster role is for controlling transaction flow and DBS parameters. A user must reach a special `speedster_score` to activate this optional role. If transaction flow is too low or too high, the Speedster will initiate a poll to decrease or increase the DBS range.

Speedster Voting

A Speedster creates a Tyche poll to propose a change to the DBS range. Other speedsters vote based on their own mempool data. If a threshold of speedsters vote before the poll expires, the DBS range is updated according to the results.

Speedster Conflict Resolution

If multiple Speedsters attempt to create a DBS poll at the same time, only one transaction will be saved in the mempool to avoid conflicts. Priority is given based on lower transaction height, lower Peterson value, and older Speedster account age.

Oracles

Blockchain oracles are third-party services that allow smart contracts to access external data, serving as a bridge from off-chain to on-chain information.

Pythia

Pythia is a node with extended privileges responsible for creating and modifying new entities on the HELO™ blockchain, such as adding tokens, managing accounts, and adding other oracles. Pythia nodes work by creating specific transactions that are signed by all Pythia nodes using a collective signature protocol (CoSi). The initiator of a signature request waits for a certain ratio of valid Pythia nodes to reply before the signature is considered valid, calculated as $R = (\text{replied-signers} / \text{overall-valid-pythia-nodes}) \times 100$.

Thesis

Thesis nodes are responsible for generating rewards for block enforcers and forgers. They listen for new blocks, create reward transactions, and these transactions must be signed by all active Thesis Nodes using the same collective signature protocol as Pythia. The validity of the signature is also determined by a reply ratio: $R = (\text{replied-signers} / \text{overall-valid-thesis-nodes}) \times 100$.

ATHENA

ATHENA enables the creation and management of trust funds.

Trust Funds

A KYC-approved user can create a trust fund in a special wallet. They must specify the beneficiary's wallet, the token, the lock duration, contribution amounts, and contribution frequency. Multiple withdrawals can be set up like milestones, allowing a beneficiary to withdraw a specific amount after a certain number of blocks.

KYC (Know Your Customer)

Although HELO requires KYC to become a node, no sensitive or personal information is stored or shared. The process involves:

1. Client signs a random message to acquire a JWT token for authentication.
2. Client verifies a unique email address with a 6-digit code.
3. Client uses a Sumsub token to upload documents and a liveness selfie through an SDK for identity verification.
4. The backend receives a webhook with the review status (success, fail, or retry). A final "FAIL" decision blocks the public key from registration.
5. After successful verification, the user can register their nickname on the blockchain.

Transaction Types

A transaction is a collection of data representing instructions. In Proof of Ethic, each transaction must adhere to specific rules and is associated with at least one Partner Peterson and a nonce.

Token Create - Pythia

New tokens are created using Pythia. A percentage (X%) of the initial or maximum supply is automatically sent to the HELO Bank Wallet. A percentage (Z%) of block rewards or transaction fees also goes to the Bank Wallet.

Update Token Block Reward - Tyche Poll

This transaction updates the block reward for a token. It is only valid if a poll is created by the token's creator and a minimum percentage (Y%) of nodes agree to the update.

NFT Create (Tyche Poll Needed)

When an NFT is created, a Tyche poll must also be created by the creator. The NFT only becomes tradable if at least Y% of nodes agree in the poll before it expires.

NFT Transfer

Transfers one or more NFTs from one wallet to another.

NFT Data Update (Tyche Poll Needed)

To update an NFT's data, the creator must create another Tyche poll for community approval. For pure NFTs, this only works if the original owner has never sold it. For non-pure NFTs, it applies only to non-sold and future copies.

NFT Quantity Update

Updates the quantity of a non-pure NFT. Does not work for pure NFTs.

Pythia (KYC) Approval *

Approves a wallet for transactions after a manual KYC/KYB process on the servers. Can have an expiration based on a number of blocks.

Themis Loans - Borrow Request

Creates a request to borrow a specified quantity of a token. The borrower supplies collateral and defines a repayment period. If the loan is not repaid by the expiration, the collateral is lost to Themis' wallet.

Themis Loans - Supply Offer

Creates an offer to supply a loan, specifying interest, minimum payments, and maximum loan time.

Themis Loans - Link

Links a supply offer to a borrow request to finalize the loan agreement.

Themis Loans - Closed

Marks a Themis Loan as closed once repayment is complete or if it has defaulted.

Tyche Voting - Create

Creates a new poll. Requires a minimum score to create and has a creation fee in Penia tokens unless signed by Pythia. Polls can have settings like expiration, score requirements for voters, and a list of allowed wallets.

Pythia - Tyche Voting - Create Poll Type

Allows Pythia to create a new, official type of poll (e.g., "Feature").

Tyche Voting - Vote

Allows a wallet to cast a vote in a given poll. If the poll is Penia Weighted, voters can send Penia tokens to the poll creator to add weight to their vote.

Tyche Voting - Poll Results

A transaction created by the poll creator to publish the final results, including the winning choice index.

Athena - Create Trust Fund for Token

Creates a trust fund, with a limit of 5 active trust funds per user. The creator specifies beneficiaries, the token, a lock period, and a contribution schedule. If a contribution is not made on time, the creator's wallet is frozen for a period and loses score.

Athena - Beneficiary Withdraw From Trust Fund

Allows a beneficiary of a trust fund to withdraw an available amount from it.

Pythia - Add Transaction Type

Allows Pythia to add a new transaction type, and thus new functionality, to the blockchain. This only works when "Beta mode" is activated, a temporary period after release for making crucial fixes.