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Proofs as Probabilities

Recall from the introduction:

Note: Local is uniquely suited to capture markets where strict, deterministic service-proofs are either not available, or are too expensive to produce. We view verifiability as a spectrum between soft proofs (probabilistic) and hard proofs (deterministic and cryptographically verifiable). We provide a path forward for applications along this spectrum to exist in a p2p and token-incentivized setting.

In such networks, we can assign a degree of confidence to service-proofs and propagate the trust assumption through the graph to neighboring nodes with a dampening factor:

  1. over longer path lengths from the trusted source node
  2. over time

This allows us to reduce the requirement of capturing potentially cost-prohibitive proofs for every transaction without sacrificing the security guarantee of the network.

You can think of both identity and service proofs as injecting trust into the network. As the network becomes more trustworthy, the protocol becomes more confident in distributing rewards that are greater than the fees collected for each transaction. This unlocks a rich surface area for capital formation to bootstrap new markets. New markets can inherit the security from existing markets providing the network with a strong cross-market network effect.

For immature local networks that want to prioritize bootstrapping trust, EC rankings can help establish trust vectors through a combination of service proofs and identity proofs. As the network grows and trust is established, the reliance on expensive service-proofs can be gradually reduced.

Next Steps#

Next we will explore an example of probabilistic proofs in action by looking at proof of location possibilities for a last-mile delivery network.

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