Introduction

Blockchains are not perfect, at least not yet. With the way blockchains are built, most chains have to compromise between decentralization, security, and scalability. Solutions that have been proffered are likely to tip the balance, sacrificing one of these factors for the other.

Quai Network is a Layer 1 network of EVM-compatible blockchains that achieves 50,000 plus transactions per second (TPS) without compromising decentralization, security, and scalability. Quai Network aims to defy the theory of the Blockchain TRILEMMA, which assumes that Blockchain can’t be perfect in the factors of decentralization, security, and scalability.

Quai Network is at the time of writing, August 2023, a pre-Mainnet network of blockchains utilizing merged mining and sharding to offer the functionality of the EVM at a low cost, without making any compromises to decentralization or security. Utilizing a network of interconnected blockchains that generate blocks asynchronously, with each housing its own EVM, Quai Network elevates the standards of decentralization and smart contract capabilities to unparalleled levels.

This article explores Quai Network’s distinct features, testnet, and proposed tokenomics.

What is Quai Network (QUAI)?

Source: Quai Network

Quai Network stands out as an open-source Proof-of-Entropy-Minima (PoEM) blockchain platform. Unlike conventional cryptocurrencies, Quai functions not as a singular blockchain, but as a network of multiple interoperable blockchains. While popular consensus mechanisms like Proof of Work (PoW) and Proof of Stake (PoS) have flaws in their calculation of “work” and do not account for the geometric nature of dependent events, PoEM accurately gauges block weight, thus introducing a more efficient way to measure work and its ability to eliminate all consensus-based forks, ensuring that all Quai nodes are in “perpetual consensus.”

Quai Network also leverages a unique blend of merged mining and sharding techniques. This combination not only reinforces the network’s decentralization and security but also leads to staggering improvements in transaction speed and throughput compared to traditional blockchains. With these features, Quai Network can handle thousands of transactions every second, setting a new standard for blockchain efficiency.

Brief History of Quai Network

Quai Network began as part of a research study at the University of Texas in 2019. Its founders are Yanni Georghiades, Alan Orwick, Jonathan Downing, Karl Kreder, and Sriram Vishwanath, the five businessmen who initially created Dominant Strategies, the parent company of Quai Network.

The founders released the project’s whitepaper in 2021. In 2022, it had two successful funding rounds from top venture capital companies Polychain Capital and Alumni Ventures.

How Does Quai Network Work?

Quai Network operates as a hierarchy of chains based on the Proof-of-Entropy-Minima (PoEM) framework, resembling a pyramid-like arrangement. Central to the security and operations of Quai Network is the Prime Chain, which is mined by every miner. This Prime Chain features high difficulty but limited throughput.

Source: Quai Network

The Quai Network features three Region Chains that operate under the oversight of the Prime Chain. Miners can choose any of these Region Chains to mine, benefiting from reduced difficulty and enhanced throughput compared to the Prime Chain. Additionally, each Region in the Quai Network contains three Zone Chains, summing up to nine Zone Chains in the network’s current configuration. These Zone Chains are characterized by minimal difficulty and exceptionally high throughput, making them perfectly suited for regular transactions and contract engagements.

To guarantee security across its 13 chains, Quai Network employs “coincident blocks.” These are blocks that are valid across several blockchains within the Quai Network. For instance, every legitimate Region block also encompasses a Zone block (and Prime blocks include Region blocks), ultimately linking all security to the Prime Chain. Through these Coincident Blocks, the entire network’s security anchored to the Prime Chain is maintained.

Quai Network lays out three simple rules for understanding Coincident Blocks:

• All Prime blocks within Quai Network must contain a Region and Zone block.
• All Region blocks within Quai Network must contain a Zone block.
• Zone blocks can be mined asynchronously without being included in a Prime/Region or Coincident block.

In simple terms, a Coincident block arises when a Prime, Region, and Zone block are simultaneously confirmed or just a Region and Zone block. These blocks “symbolize the integrated reduction of entropy across blockchains.” This enables the chains further down the hierarchy to benefit from the security and dependability of the Prime Chain at the network’s apex, all the while carrying out their distinct operations.

Quai Network’s comparative advantage is the ability to natively bridge between chains. Its structure, built on merged mining, facilitates asset transfers between chains, offering the possibility for cross-chain contract execution, and more. With its distinctive and fully decentralized multi-chain network designed to process tens of thousands of transactions every second.

Unique Features of Quai

Merged Mining

Merged mining refers to the process where a miner can mine two or more cryptocurrencies simultaneously without any additional computational power; it allows miners to work on multiple blockchains using the same computational work.

By enabling merged mining across modular chains, miners can fortify multiple interconnected blockchains that adhere to a unified set of regulations, financial principles, and foundational tokens. This braided blockchain structure ensures a network defense against Sybil attacks, achieving a level of security that is comparable, if not superior, to the Nakamoto consensus.

Hierarchical Merged Mined Blockchains

Quai Network introduces hierarchical merged mining to scale blockchains without sacrificing decentralization or security. This method employs a tiered chain structure. At the top, is the ‘Prime’ chain, which offers the most substantial mining reward but presents the highest difficulty and slowest block times. Subsequent layers, termed ‘Regions’ and ‘Zones,’ possess progressively reduced difficulty and swifter blocks, enhancing responsiveness.

Every blockchain within this tiered system operates independently, free from reliance on other chains. While they share a common token and monetary framework, consensus rules are upheld locally. For mining purposes, a participant must mine at least one segment of this hierarchy (comprising Prime, one Region, and one Zone), with the freedom to select any segment. This selective mining capability ensures that, even as network capacity grows, miners can engage without the need to exponentially amplify node prerequisites in line with transaction volume.

A notable aspect of mining a hierarchical segment is what’s termed a ‘coincident block.’ In a merged mining scenario, the block header must encompass references to all blockchains being collectively mined. In Quai’s design, this materializes as a tripartite header, representing Prime, Region, and Zone respectively.

A block is recognized within a blockchain if it satisfies that blockchain’s specific difficulty criteria. Consequently, only a singular section of the header holds validity within a given context. However, upon discovery of a prime block, region, and zone blocks are inherently detected due to their lesser difficulty. This occurrence is labeled a ‘coincident block.’ Its significance lies in its ability to generate consistent, verifiable cross-chain links, facilitating state transitions between chains. This mechanism paves the way for a decentralized interconnectedness among all network blockchains, fostering seamless interoperability.

Multithreaded Execution

Multithreading is a CPU feature that allows multiple instruction threads to operate independently, yet share the same process resources.

Multithreaded blockchain networks allow for parallel processing (two or more processors handle separate parts of an overall task), where transactions can be validated and confirmed simultaneously in many different contexts.

This innovative feature allows Quai Network to process more than 50,000 transactions per second across all sub-networks. Quai retains transaction integrity by synchronizing block creation and reversals as overseen by Proof-of-Entropy-Minima (PoEM).

Further, Quai achieves multithreaded blockchain execution by decoupling local consistency and global consensus. In contrast to single-threaded blockchain where global consensus on the validity of a block must be reached before the block can be included on-chain and initiate consistency.

Quai’s multithreaded execution introduces the concept of scoped consistency and consensus. Subnetworks produce blocks asynchronously, which later fit into the overarching network structure. These blocks initially achieve local consensus and consistency and approach wider network consensus as they are braided into the network hierarchy.

Layout

Quai is structured in a 3x3 hierarchical layout of chains. These chains can be categorized as Prime, Region, or Zone, each with distinct features and functions. As Quai approaches its mainnet release, it will initiate with one Prime chain, three Region chains, and nine Zone chains. However, it can scale horizontally depending on user demand.

Quai Testnet

The Quai Network testnet has five stages; the Stone Age, Bronze Age, Iron Age, Golden Age, and Silicon Age. The first two stages have been completed and the Iron Age went live on the 19th of September, 2023. Details about the upcoming testnet have not been released at the time of writing as they’re still in the works.

As of the time of writing, there has been no information regarding Mainnet launch.

The Stone Age

This stage featured validation and transactions on Quai Network. Stone Age commenced on November 17 and ended on December 15, 2021.

The Bronze Age

The second official testnet for the Quai network included a variety of tasks, from running a node/miner to deploying smart contracts. It commenced on February 18 and concluded on March 23, 2022, with the goal of stress-testing many new developments from the Stone Age Testnet.

The Iron Age

This stage will focus on testing smart contracts and dAapp deployments as well as testing the functionality and robustness of Quai Network itself. It introduces the initial public test of the novel PoEM consensus mechanism and its integration with cross-chain EVM opcodes. The Iron Age Testnet’s foremost objective is to evaluate the PoEM system by onboarding nodes and miners. Currently, it aims to encourage developers to launch projects that lay the foundation for the Quai ecosystem.

What is QUAI?

The Quai token acts as the backbone of the Quai network, ensuring network security, spam resistance, and simple exchange of value in a decentralized system.

Proposed Tokenomics

The proposed tokenomics are not final and could be changed and updated prior to the Mainnet release. Quai Network has a hard-capped token supply in order to achieve decreasing inflation in the short term and deflation in the long term.

Source: Quai Network

Token Distribution

Adoption Incentives

25% of the tokens are set aside for adoption incentives aimed at securing vital integrations for the Quai network. This might include collaborations with Fortune 500 companies, governmental bodies, and marginalized communities.

Mining

20% of Quai network’s entire token supply is set aside as block rewards for miners. Much like other Proof-of-Work blockchains, Quai network rewards the positive use of hash power by compensating miners who validate a genuine block broadcasted to the network. Given the varied mining difficulties in Quai network’s Prime, Region, and Zone chains, block rewards differ based on the hierarchy level where the miner successfully mined the block.

Foundation

15% of the tokens are earmarked for the Quai Foundation. They will support various ecosystem development efforts, such as marketing, business growth, brand promotion, and protocol assistance. These tokens come with a 10-year vesting duration and will be burned if not allocated.

Strategic Partners

15% of the tokens are reserved for strategic partners who share Quai network’s objectives and values.

Infrastructure Partners

5.5% of the tokens are allocated to infrastructure partners who are dedicated to helping Quai network become the most globally accessible blockchain platform to date. These services include node hosting, mining pool operations, RPC accessible, and more. It is our goal to utilize these partners to promote ongoing decentralization efforts for the long term.

Founders

5% of the supply is reserved for the founding team of Dominant Strategies in recognition of their ongoing contributions to the development of the Quai protocol and its ecosystem.

Bounties

5% of the token supply will be given to individuals contributing through written code, content, media, and other methods of promoting the ecosystem.

Testnet Incentives

0.5% of the entire token supply is reserved for individuals who dedicated time and hash power to the Quai network’s testnets. This diverse group of testnet participants played a pivotal role in Quai’s development journey. Token awards will be given based on the previously defined reward system for each testnet, as well as involvement in Quai’s mainnet reward program, giveaways, and other events leading up to the Mainnet launch.

Contributors

4% of the token supply will be given to key contributors within the Quai network ecosystem. These tokens are designated for those individuals and teams actively building essential tools and infrastructure for the Quai network.

Community

3% of the supply has been reserved for community allocation. Further details concerning this allocation are yet to be released.

Exchange Liquidity

Quai network will set aside 2% of the entire token supply to offer initial liquidity for exchanges. This provision is meant to support the first batch of users during the Mainnet launch, prior to achieving adequate liquidity from users.

Highlights

Social Media Rewards Program On Galxe

On the 9th of August 2023, Quai Network announced that it will be moving its social media rewards program to the community building platform, Galxe. The program rewards early adopters who join and interact with Quai’s social media platforms.

Pelagus Wallet

Earlier in June, Quai network launched its open-source browser wallet, Pelagus wallet which will be used for the Iron Age testnet.

Testnet Faucet

The Quai Faucet allows all Testnet participants to receive small amounts of testnet QUAI for free. Testnet QUAI can be requested on the Quai dashboard.

Note: The faucet will go live with the launch of the Iron Age Testnet.

Take Action on QUAI

Check out QUAI price today and start trading your favorite currency pairs:

Note: The project is still at Testnet, hence the QUAI token hasn’t been launched on crypto exchanges.