An acronym for “currency of the internet”, COTI is a payment and financial service provider that uses a form of Distributed Ledger Technology (DLT) known as “Directed Acyclic Graph (DAG)”. COTI coin is the native cryptocurrency of the platform and is also available as an Ethereum ERC-20 or Binance BEP-2 standard COTI token. Plus, these cryptocurrencies are convertible using the COTI bridge. The DAG-based Trustchain system is more energy-efficient than traditional blockchains and can scale without additional energy consumption. Moreover, the platform is driving enterprise adoption of DLTs in a variety of novel ways.
In this article, we’re going to dive deep into the COTI ecosystem. We’ll discuss the COTI coin and the COTI bridge. Plus, we’ll explore the Trustchain, the Directed Acyclic Graph (DAG) mechanism known as “the Cluster”, and the Proof of Trust (PoT) consensus mechanism. Also, we’ll look at the various features and services the platform has to offer.
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What is COTI?
An acronym for “currency of the internet”, COTI is a Directed Acyclic Graph (DAG)-based enterprise-ready Fintech platform and payments service aiming to solve the instabilities and complexities that hinder the mass adoption of blockchain. The self-styled “ultimate power grid of payments”, COTI uses a “blockless chain” model to build a robust payments solution with enterprise-grade scalability. Plus, the platform enables businesses and organizations to create their own bespoke payment solutions while digitizing any major currency. This empowers organizations with the ability to operate outside of the legacy financial system, saving them time and money in the process.
In an age when almost everything is digital, currencies seem to be lagging behind. It is still cheaper to use cash than it is to use banks, PayPal, or other payments services. However, COTI provides simple, instant, low-cost, and price-stable payments using straightforward merchant-facing tools without intermediaries. Furthermore, the network is capable of processing up to over 100,000 transactions per second (TPS), boasting a much higher throughput than many legacy payment systems and blockchains while maintaining the same security. Plus, the platform offers a dispute resolution mechanism to protect against user errors and fraud. The native cryptocurrency of the platform is the COTI coin.
The COTI Token & the COTI Coin
The project’s native cryptocurrency operates on three separate mainnets. Firstly, the native COTI coin operates on the Trustchain network. Secondly, the COTI token is an ERC-20 token on Ethereum. Thirdly, a BEP-2 version of the token is available exclusively on the Binance crypto exchange.
Most exchanges use the ERC-20 COTI token as it is a universally recognized standard. However, the native COTI coin will be the sole unit of account and common means of payment for transaction fees and other tasks throughout the ecosystem. Also, holders can convert tokens and coins between mainnets using the COTI bridge.
COTI Bridge
The COTI bridge facilitates interoperability between all of the mainnets. Also, the bridge has a cap to regulate the amount of tokens transacted between chains. Following a hack on the KuCoin exchange, an influx of COTI bridge users converting from the COTI coin to the ERC-20 COTI token has caused the cap of the COTI bridge to be reached. This has resulted in a price gap between exchanges. However, COTI claims that the gap is “destined to be closed”, with a plan in place for “smooth and fair operation of the bridge”. Moreover, the COTI bridge enables cross-chain interoperability with two of the most popular token standards.
Core Technology
COTI uses a type of distributed ledger technology known as “Directed Acyclic Graph (DAG)” as the base layer of the protocol. DAG-based systems boast various advantages over blockchains when it comes to scalability. As blockchain networks scale and gain adoption, they sometimes suffer network congestion and high transaction fees. This makes the user experience slow and expensive. Moreover, the more network participants DAG-based systems see, the faster transactions can be confirmed. This creates a “positive correlation between network usage and network scalability” and facilitates scalability without compromising on decentralization or security.
Furthermore, COTI’s Directed Acyclic Graph (DAG) mechanism, “the Cluster”, enables near-instant transaction finality using “Trust Scores” to reach consensus throughout the network. In the future, the Cluster and the Trustchain algorithm will be capable of validating hundreds of thousands of transactions per second (TPS).
Proof of Trust (PoT)
The Proof of Trust (PoT) consensus algorithm is a “unique combination of the Trustchain Algorithm and Proof of Work”. PoT does not require the same levels of energy consumption as legacy Proof of Work (PoW)-based systems. Furthermore, PoT does away with the mining process, instead assigning a “Trust Score” to network participants. Plus, Proof of Trust uses Directed Acyclic Graphs (DAGs) to facilitate mass scalability with low fees, high levels of security, and minimal network congestion.
The project’s DAG solution, “the Cluster”, works more efficiently than most blockchains, achieving scalability without additional energy usage. Network participants’ Trust Scores represent transactions on the Cluster. A Trust Score is a way to “ascertain the amount of Proof of Trust (PoT) necessary to confirm a transaction”. Instead of every transaction being attached to every other block of transactions, they are attached to two previous transactions with a similar Trust Score. Transactions then reach approval simultaneously and asynchronically, enabling scalability without compromise. This “block-less and miner-less blockchain” mechanism incentivizes higher Trust Scores using faster transaction confirmations while reducing network congestion and providing equitable incentives for network participation.
Trustchain
Trustchain is the proprietary machine learning-based consensus algorithm at the heart of the platform’s infrastructure. The Trustchain resides on a “MultiDAG” data structure that enables a throughput of over 100,000 transactions per second (TPS). As a highly scalable and secure form of distributed ledger technology (DLT), Directed Acyclic Graph (DAG) is an ideal foundation for payments services thanks to low transaction fees and secure scaling capabilities. Trustchain transaction speeds are achievable through assigning trust scores to transactions and clustering it in chains”.
Rather than using a blockchain, COTI uses a Directed Acyclic Graph (DAG)-based algorithm and data ledger. This algorithm uses machine learning to address some of the fundamental issues that hinder the mass adoption of blockchain technology. Most notably, the DAG system boasts much higher transaction throughput than most blockchains, with low fees, price stability, and buyer-seller protections. Plus, the protocol provides tooling to create bespoke, modular payment solutions.
Directed Acyclic Graph (DAG)
Directed Acyclic Graphs (DAGs) are a form of distributed ledger technology (DLT). Several cryptocurrency projects use DAGs instead of blockchains, such as Hedera Hashgraph and IOTA. Whereas transactions on a blockchain are linked to every previous block of transactions, DAG-based transactions are linked to each other directly. This method of processing transactions allows for far greater throughput than most blockchain-based systems.
For example, the average number of transactions per second (TPS) on the Bitcoin blockchain is roughly between four and seven. The Solana blockchain, currently the fastest in the industry, can process up to 50,000 TPS. Also, traditional payments services such as Visa can process around 1,000 TPS. DAG-based systems, however, can process hundreds of hundreds of thousands.
Furthermore, DAG-based systems provide greater energy efficiency for Proof-of-Work (PoW) consensus mechanisms using a sequencing algorithm that doesn’t discard forked blocks. This reduces the use of computational resources, and therefore reduces transaction fees. Plus, these benefits come without compromising on security. Moreover, DAG-based systems have the potential to support major scalability for DLT-based applications.
MultiDAG
COTI’s “MultiDAG” infrastructure facilitates the coexistence of multiple DAGs for different use cases. This enables various instances of DAGs, or “Clusters” to serve specific purposes, such as stablecoins, company-specific tokens, or tokens to expedite settlements on other blockchain ledgers. Moreover, MultiDAG aims to provide “one common frictionless crypto universe that includes many tokens of various types”.
COTI Pay
COTI Pay is a versatile payments service capable of processing crypto and fiat payments both online and offline. Also, COTI Pay can process credit card payments and merchant-specific coins. Plus, users of the service can earn interest on deposits and may be eligible for business loans. Also, the recent introduction of the COTI Visa card is a physical crypto debit card and bank account service that will integrate with COTI Pay. COTI Pay users will also benefit from fast and secure payments, loyalty rewards, fiat-crypto purchases, and cashback rewards.
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Loyalty Networks
COTI’s loyalty networks service is an end-to-end solution for businesses wanting to explore customer loyalty programs while expanding revenue streams. According to COTI, traditional loyalty plans often fail to realize their full potential due to “account inactivity, low redemption rates, time limitations, and customer retention costs”. COTI’s loyalty solutions address these operational inefficiencies by enabling businesses to issue their own customized tokens and record loyalty points immutably on the COTI ledger. Plus, companies benefit from a branded wallet, straightforward integration, customizable parameters, and frictionless payments.
Arbitration Service
The platform offers a “ready-to-use” arbitration service that allows merchants to appeal against fraud or take part in dispute resolutions for settlements throughout the ecosystem. This service uses a “rolling reserve” for individual merchants to cover potential claims, along with a “system-wide Reserve Credit Fund (RCF) to guarantee it”. The required COTI coin and COTI token reserves are assessed based on the individual Trust Scores of merchants.
Remittances
The platform also provides a remittance service to facilitate frictionless, secure, low-cost cross-border payments for enterprises. Remittances in the traditional financial world are slow and generally require several intermediaries. As a result, the fees for making cross-border payments can be extremely high.
Also, the unbanked or underbanked population is rarely able to access such financial services without sufficient paperwork. However, the COTI remittance solution provides fast, simple, cost-effective cross-border payments that are resistant to censorship and available to everyone.
COTI NFT Game
The COTI NFT game is available to participate in during four weeks of each season. Available through COTI and partner platform SuperFarm, participants can collect a range of artistic non-fungible tokens (NFT) to win prizes. In total, there will be a distribution of over two million COTI tokens in prizes throughout the year. There are three different categories of NFTs to collect, each with its own prize distribution model.
The Legendary non-fungible tokens (NFTs) category requires participants to hold a minimum of two different seasonal Legendary NFTs to enter the final raffle. Two Legendary NFTs grant holders an entry ticket to win 100,000 COTI tokens. Three different seasonal Legendary NFTs give holders an entry ticket to win 250,000 tokens in the grand finale raffle. Participants owning one of each (four) different seasonal Legendary NFTs receive entry tickets to the grand finale raffle to win 1,000,000 tokens. In total, there are 320 Legendary NFTs for distribution throughout the year, introducing 20 each week of each season.
The next category of COTI non-fungible tokens (NFTs) is the Viper NFT series. The Viper NFT series has three subcategories: Rare, Unique, and Epic NFTs. Participants who hold one of each type of Viper NFT automatically receive a prize draw entry to win 52,000 COTI. Rewards will be spread into weekly settlements of 1,000 COTI for a whole year! COTI is distributing a total of 2,720 Viper NFTs throughout the COTI NFT game. Each active week of the initiative, there will be 100 Rare, 50 Unique, 20 Epic NFTs introduced every week.
Finally, the Common NFT category offers weekly raffle prizes, with holders needing to own only one Common NFT to participate. Distributing 15 new Common NFTs each week, winners of the raffle receive 1,000 COTI directly deposited into their wallets.
Exploring COTI and the COTI Token Summary
Businesses and institutions both small and large encounter frequent challenges and hurdles with the traditional financial system. COTI is offering a radical and innovative alternative to businesses. By cutting out third-party intermediaries, such as banks, COTI allows businesses to design their own payments network. Furthermore, users have free control over the payment method, network, wallet, currencies, and more. Also, this allows businesses to explore new revenue models, increase cash flow and conversions, plus increase brand loyalty. Plus, companies have full autonomy over promotions, tokenomic structures, and loyalty programs. This allows businesses to open up their services to the billions of unbanked and underbanked users across the world.
COTI operates using multi-DAG (Directed Acyclic Graph), “blockless” technology, to aid in the ease of scaling and development. This helps users of the project transact with micro-payments and connect with the consumers directly. Moreover, the project offers COTI Pay as a payments solution for businesses to embrace a true multi-currency merchant. COTI Pay works online and offline, accepting both fiat and cryptocurrencies, and offers a frictionless way for companies to gain a first-mover advantage by adopting cryptocurrency payments.
COTI welcomes an engaging community across a variety of social platforms. Additionally, the COTI NFT game, including a two million COTI token give-away, is attracting new users to the community. Are you a part of the COTI community, or would you like to be? Let us know your thoughts about this project by following us on Twitter @Academy_IOT! If you’re interested in getting a career in blockchain but not sure where to start, Ivan on Tech Academy has you covered! Check out our Blockchain & Bitcoin 101 course to learn about the basics of this cutting-edge technology today!
