Schelling Coin
In the context of Schelling Coin, a decentralized data feed is referred to as an Oracle. - In a scenario where prisoners are randomly selected and can be released if they choose the same number, the probability of being released is 1/8. However, in reality, most people choose the number 100000, so the probability becomes higher.
- The reason why 100000 is chosen is because each prisoner believes that this number is "special" and that the other prisoners also believe that 100000 is "special". This belief is recursively repeated infinitely, and it represents an example of "common knowledge".
This mechanism is the basis of Schelling Coin. The basic protocol is as follows:
- During even-numbered blocks, all users can submit the hash of the ETH/USD price and their Ethereum address.
- Is this submission done as a validator for the Oracle's current price?
- After the block, users can submit the value of the hash they provided in the previous block.
- H(N+ADDR) is sent in the first block, N is sent in the second block, and both messages are signed/sent by the account with address ADDR, defining the "correctly submitted value" as any value N for which ADDR is one of the allowed participants in the system.
- The correctly submitted values are sorted (if many values are the same, secondary sorting is done using H(N+PREVHASH+ADDR)).
- All users who correctly submitted a value between the 25th and 75th percentile receive a reward of N tokens (referred to as "schells" here).
- This means that validators who did not deviate between the 25th and 75th percentile receive tokens.