GENESIS VISION NETWORK

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2 GENESIS VISION NETWORK

3 Contents 1. Description of the problem Trust management The problem with smart contracts GVN Token Centralised exchanges against decentralised Deposit and withdrawal Genesis Vision Network Payment channels Genesis Vision Network blockchain and Mining Development Stages Genesis Vision Network DAG Matching Order execution Clearing blocks Rewards and penalties 15

4 1. Description of the problem While blockchain technology has grown significantly since its inception, in its current state, it is still far from ideal for mass adoption. Many multipurpose public blockchains have gained widespread adoption, with Ethereum being the most popular. As a platform, Ethereum has extensive functionality and impressive utility due to the presence of smart contracts that allows for the implementation of free business logic of blockchain-based applications. However, as with many things with a broad profile, we believe that Ethereum is insufficient for our future goals that require very specific, narrow, and specialized tasks. We encountered this problem first hand in Genesis Vision - one of the first versions of a highly-loaded commercial application based on Ethereum. The goal of the Genesis Vision Network Project is to create a fast, secure, and decentralized crypto exchange platform that offers margin trading and trust management features. Despite the solutions voiced by many platform developers, the scalability problem is still a major concern in Ethereum. Problems with performance and the cost of transactions under high network loads make it impossible to use Ethereum in areas where speed and the efficiency of transaction processing are critical. One such area, of course, is in trading. Moreover, this problem is not unique to Ethereum; this is the current state of affairs in much of the industry as a whole. There are no effective, decentralized and working alternatives that have shown satisfactory results. The lack of such alternatives severely hinders the progress of blockchain technologies in what we believe to be one of the most natural and powerful uses for it - the development of decentralized financial applications. The idea of building a decentralized exchange on a public blockchain with the support of smart contracts is akin to the idea of running an exchange on the same server as a popular MMORPG. Such an exchange would have to share server resources with the game during both normal loads and during peak loads - during peak loads, users of the exchange effectively would receive a limited denial of service. This is exactly what happens on blockchains with public decentralized platforms with smart contracts, as evidenced by examples of Cryptocities, launches of large ICOs, and the executions of mass Airdrops. During such events, transaction costs may increase several times and the queue of transactions becomes up to ten times higher. 7

5 2. The problem with smart contracts Currently, it is extremely difficult to develop complex distributed applications based on public blockchains with the support of smart contracts. It is very easy to make a mistake that cannot be fixed later. Smart contracts themselves and their dependencies often contain errors and vulnerabilities that may lead to security problems later down the road that results in a loss of value (everyone remembers the loud stories about DAO, Parity, EOS vulnerabilities and Bancor (the list is seemingly endless)) This makes the development of smart contracts very time consuming and at the same time risky. 3. Centralized exchanges against decentralized Currently, nearly all of the volume of crypto assets that are transacted occur on centralized exchanges. This is mainly due to the relative safety, speed, cost, and ease of use provided by many centralized exchanges. Scalable and efficient decentralized exchanges are possible with blockchain technology, but for the reasons listed below, nearly all of them are forced to return to some degree of centralization between participants. Unfortunately, there currently are no decentralized solutions that work in a manner that is both safe and effective. 4. Genesis Vision Network To resolve these issues mentioned earlier, we will create GV Network. GV Network will be a public blockchain that records the history of crypto asset transfers and it will also serve as a parallel DAG (Direct Acrylic Graph); a distributed data structure for the storage of order books. The usage of blockchain provides a secure and distributed method of exchanging GVN cryptocurrency and tokens issued on the platform, while DAG working in parallel will allow the creation of a decentralized exchange that would rival the order execution speed of centralized exchanges. Additionally, GV Network will incorporate proven technologies from payment channels, HTLC 1, Lighting network and atomic swaps for the transfer and exchange of cryptocurrencies that use other blockchains. GV Network is not a platform for running decentralized applications and executing arbitrary smart contracts. The main application that will be launched on GV Network is a decentralized exchange with a number of ancillary services necessary for its continuous operation and to guarantee its full functionality for all market participants. GV Network will have its own mined coin called GVN that has limited emissions. The initial distribution of pre-mined coins will be carried out via Airdrop to all GVT holders with a portion of the GVN reserved for the development and promotion of future Genesis Vision projects. The main problems of the existing decentralized exchanges are: Partial centralization (for example, centralized matcher); Support for only Ethereum-based assets Slow transaction processing. Of course, these realities are a deterrent to the development of crypto trading and are a detriment to the crypto industry as a whole. 1 8 Hashed Timelocked Contract 9

6 5. Genesis Vision Network blockchain and Mining The main mining algorithm is Proof of Work with an average block release time equal to two minutes, as well as an additional confirmation of every 6th block by voting Proof Of Stake for extra protection against double spending. To participate in the Proof Of Stake vote, miners must freeze a certain amount of GVN coins in the system. The weight of a voice is determined by the share of сoins frozen by the miner in relation to all of the coins which participate in mining. Each DAG element is either an order, order cancellation, order confirmation, or a matching item. When placing an order in the Order book, it enters the DAG and must refer to 2 other elements from the DAG. After two other referring orders appear on an order placed in the DAG, it is considered to be confirmed. Mining algorithm 6. Genesis Vision Network DAG DAG (directed acyclic graph) - directed graph, in which there are no directed cycles. Unlike a blockchain, DAG provides fast and low cost transactions. DAG element Order cancellation is also performed by placing an order in the DAG and then confirming it with two other transactions. 7. Matching When orders appear that satisfy each other, they can be matched and an exchange of assets between the parties can be made. For the implementation of the match, the network itself serves the role of the matcher. Any node can become a match, for this you need to freeze a certain amount of GVN in the network. The matcher scans the DAG in search of warrants suitable for the match. After finding suitable orders, the matcher adds a Trade element to the DAG indicating the orders for the match. DAG (directed acyclic graph) 10 11

7 How DAG turns into an order book 12 13

8 8. Order execution A trade is considered to be executed after voting is completed by POS miners. The role of the POS miners is necessary to confirm orders in the network. As soon as trade receives >50% of the votes of POS miners - the trade is considered to be completed. 10. Rewards and penalties To ensure the stability and integrity of the operation in the Genesis Vision Network, a system of penalties and rewards will be implemented. Penalties are decreed in the following cases: POS miner votes for different branches in the blockchain. Since users can see both chains, they can collect two of the miner s signatures. If the user sends a transaction in the blockchain containing two signatures, the miner will be punished, and the user will receive the reward of this miner; POS miner voted for two conflicting outcomes. The penalty scheme, in this case, is the same as the penalty in the blockchain; Order execution Punishment for the unfulfilled warrant. The user who placed the order freezes a certain amount of GVN. If the user does not give an order, then the user s GVN will go to the POS miners. 9. Clearing blocks Every X blocks, the account balances in the DAG are recorded. During the mining period of the clearing block, trading stops and no transactions can be made. Miners synchronize the entire DAG and record the final balance. The block is confirmed after receiving >50% of the votes of POS miners. The content of the DAG goes to the content based distributed file storage, and the hash from the content goes to the Clearing block. In addition to the rewards for punishing violators, rewards can be earned for the following activities: POW mining. The miner receives the generated GVN; POS mining in the blockchain. The miner receives a percentage of each fifth block.the reward is proportional to the weight of the miner s voice; POS mining in DAG. Miner receives a percentage of the order; Matching. Matcher receives a fixed commission for the order. 11. Trust management Clearing blocks The current centralized Genesis Vision system will be transferred to a decentralized infrastructure on the GV Network. ERC20 GVT tokens will be upgraded to a new version that supports the migration to the internal GVT tokens of the GV Network platform

9 12. GVN Coin 13. Deposit and withdrawal GVN is the cryptocurrency necessary to ensure the functionality of the GV Network. Purpose of GVN: Miner fee in GV blockchain for POW miners; Fee for confirmation of transactions for POW miners in the DAG; To place an order in the DAG, it is necessary to freeze a certain number of GVN. GVN is unfrozen during order cancellation or order execution; To obtain the role of POS miner or matcher, it is necessary to freeze a certain amount of GVN in the blockchain. GVN is a mineable currency, similar to Bitcoin. Since the basis of Genesis Vision s decentralized exchange is the principle of POS miners voting - the network is vulnerable to potential 51% attacks. Recognizing this potential risk, we understand that the methodology and logic of the initial distribution of GVN is incredibly important. Therefore, we have decided that the bulk of the coins (70%) will be distributed to GVT token holders. The remaining 30% will be transferred to Genesis Vision for further distribution, as well as for the development and promotion of the project. Coins of the team will initially be frozen and can not be sold or participate in mining. Unfreezing will occur throughout the year linearly. The last coins will be unfrozen one year after the launch of the Genesis Vision Network. The only way to become the owner of GVN coins at the time of launch of the Genesis Vision Network is to hold GVT tokens. GVN will be distributed automatically to all GVT holders. Some crypto exchanges support airdrop functionality without the need to withdraw tokens to a separate wallet. In most cases, holders won t have to perform any actions to receive the coins from the airdrop. More detailed information about this will be published closer to the release. Two types of assets are traded on the exchange: GVN-based assets (GVN and tokens issued on the GVN blockchain) and assets of other blockchains. Deposits and withdrawals of GVN-based tokens are performed by freezing / unfreezing assets in the blockchain. When a user wants to transfer tokens to the exchange and start trading them, coins are frozen in the main blockchain and become available for placing orders in the DAG. With the withdrawal - they are thawed and become available for transfer. For the deposit and withdrawal of assets from other blockchains, the Proof of Delivery mechanism is used. For instance, let s take a look at GVN / BTC pair. One side wants to buy GVN for BTC (Buyer), the other party wants to sell GVN for BTC (Seller). The seller places an order in the DAG to sell the necessary amount of GVN. The order also indicates the address of the seller s BTC wallet, for which he wants to receive his BTC. The buyer places a GVN purchase order in the DAG. To place an order in the DAG, the user must freeze a certain amount of GVN on his balance. When the seller s and buyer s orders match, the number of GVN placed in the order is transferred to the buyer but is frozen. These GVN will be unfrozen when one of the events occurs: either a seller confirms that he received the necessary amount of BTC, or a Proof Of Delivery or Dispute resolution in the form of a POS miner s vote is submitted to the DAG. The first case is the usual course of events; however, in the second case, the BTC recipient will be punished for not confirming the receipt of BTC. There is also a third case in which one of the two will be punished (either the seller, who did not deliver the BTC or the buyer, who did not confirm the receipt of the BTC). Punishment occurs by transferring frozen GVN order to POS miners

10 14. Payment channels If cryptocurrencies are exchanged through transactions in the blockchain, this will make the exchange very slow, since the user will need to wait for confirmations in the blockchain. In Genesis Vision Network the Payment Channels mechanism is used to increase the speed of transactions. A Payment Channel is created for both of the exchanging parties. The receiving party creates a transaction for receiving BTC, signs it and uploads it to the DAG. Next, the sender signs the transaction and uploads the signed transaction in the DAG. After that, the trade is confirmed and the sender s GVN are unfrozen. 15. Development Stages GVN TestNet without a DAG; GVN MainNet without a DAG; DAG TestNet without margin trading and asset management functionality; DAG MainNet without margin trading and asset management functionality; Margin trading and asset management in TestNet; Margin trading and asset management in MainNet. 18