Chia is an open-source cryptocurrency project aiming to reduce perceived waste in Proof-of-Work consensus mechanisms. Chia is a blockchain protocol aiming to support an approximately stable valued cryptocurrency based on a novel ‘Proofs of space and time’ consensus mechanism, invented by BitTorrent founder Bram Cohen. As part of the application process, developers for the Chia network participate in development competitions with a crowd-sourced set of contributors. Developers have already submitted a number of entries such as those yielding a Verifiable Delay Function (VDF) which runs 80% faster than the Chia team’s initial implementation. As of the beginning of Q2 2019, Chia has two motivating academic papers, discussing Simple Proofs of Sequential Work and Time-Memory Trade-offs in Proofs of Space. Investors in Chia include Naval Ravikant and Andressen Horowitz.
Chia’s design, and jargon, is influenced by Bram’s previous BitTorrent protocol design, where storage space is ‘seeded’ to the network, in order to participate in proofs of space. Chia is ‘farmed’ through the usage of (previously) empty storage space to occupy proofs. Publicly verifiable proofs of sequential work were originally designed for non-interactive timestamping, since validators can check a proof of an approximately predictable quantity of work. Rather than using an oracle extrinsic to the network as a reference point for public verifiability of elapsed time, participants in the Chia network can utilize VDFs computed towards the PoS process. In addition to requiring less-energy for significant participation in the network, the Chia protocol represents a more efficient system than Proof-of-Work mining from a resourcing perspective, since the hardware required for consensus is already in existence and can be used for other things–unlike Bitcoin ASICs. This attribute additionally benefits the network’s adoption, proliferation and distribution, since user’s do not need to expend additional capital to participate.
Proof of Work depends on an economic structure that incentivizes participants to invest in hardware until the sum of the rewards they stand to gain are approximately equal to the cost of instantiating the hardware. Chia’s value proposition is partly motivated by the fact of this initial cost already being sunk, since there is already an extensive pool of consumer owned storage hardware. The Chia business model essentially involves a pre-mine of the token and a maintenance of a significant portion of it - which can then be loaned at interest rates determined by the Chia governing body, rather than a sale event. This confers governing members some influence over the effective cost of Chia, as money and a means of hopefully mitigating volatility of the token (to an extent). The targeted customer of these loans are global corporations, where there is an incentive to adopt in virtue of significant fee savings compared to legacy payments infrastructure for international transactions, in addition to greater security guarantees; while providing Chia with meaningful prospects of adoption - providing the low-fee transactions and security gains outweigh the initial cost of change management.