Themelio: a new blockchain paradigm

Abstract

Public blockchains hold great promise in building protocols that uphold security properties like transparency and consistency based on internal, incentivized cryptoeconomic mechanisms rather than preexisting trust in participants. Yet user-facing blockchain applications beyond "internal" immediate derivatives of blockchain incentive models, like cryptocurrency and decentralized finance, have not achieved widespread development or adoption.

We propose that this is not primarily due to "engineering" problems in aspects such as scaling, but due to an overall lack of transferable endogenous trust—the twofold ability to uphold strong, internally-generated security guarantees and to translate them into application-level security. Yet we argue that blockchains, due to their foundation on game-theoretic incentive models rather than trusted authorities, are uniquely suited for building transferable endogenous trust, despite their current deficiencies. We then engage in a survey of existing public blockchains and the difficulties and crises that they have faced, noting that in almost every case, problems such as governance disputes and ecosystem inflexibility stem from a lack of transferable endogenous trust.

Next, we introduce Themelio, a decentralized, public blockchain designed to support a new blockchain paradigm focused on transferable endogenous trust. Here, the blockchain is used as a low-level, stable, and simple root of trust, capable of sharing this trust with applications through scalable light clients. This contrasts with current blockchains, which are either applications or application execution platforms. We present evidence that this new paradigm is crucial to achieving flexible deployment of blockchain-based trust.

We then describe the Themelio blockchain in detail, focusing on three areas key to its overall theme of transferable, strong endogenous trust: a traditional yet enhanced UTXO model with features that allow powerful programmability and light-client composability, a novel proof-of-stake system with unique cryptoeconomic guarantees against collusion, and Themelio's unique cryptocurrency "mel", which achieves stablecoin-like low volatility without sacrificing decentralization and security.

Finally, we explore the wide variety of novel, partly off-chain applications enabled by Themelio's decoupled blockchain paradigm. This includes Astrape, a privacy-protecting off-chain micropayment network, Bitforest, a blockchain-based PKI that combines blockchain-backed security guarantees with the performance and administration benefits of traditional systems, as well as sketches of further applications.