Quai Network (QUAI): Achieving Scalability Through PoW 2.0

Quai Network is an upcoming crypto blockchain that uses an innovative proof of work (PoW) 2.0 mechanism to achieve limitless scalability without sacrificing security and decentralization. Read on as we cover everything you need to know about Quai Network. 

What Is Quai Network?

Quai Network uses an innovative blockchain design that relies on sharding and the PoW 2.0 consensus mechanism to reduce network congestion and improve transaction speeds across the network.

In a traditional Layer 1 blockchain, scalability issues typically result in high fees and centralization. To solve the problem, Quai Network uses sharding by offering 13 blockchains running in unison. Each blockchain is either a Prime, Region or Zone chain that produces blocks asynchronously, ultimately speeding up block production.

Instead of sacrificing speed for decentralization, Quai Network deploys the PoW 2.0 consensus mechanism and merged mining to keep the network highly decentralized and open-source.

History of Quai Network

Envisioned in 2019, the blockchain project is the brainchild of five entrepreneurs who founded Dominant Strategies: Alan Orwick, Jonathan Downing, Karl Kreder, Yanni Georghiades and Sriram Vishwanath. Quai Network started as a distributed systems research project at the University of Texas in Austin.

After the publication of the whitepaper by its founders, work began on implementing the infrastructure in 2021. In early 2022, testing commenced on the network, which ultimately led to two extremely successful rounds of capital induction from leading venture capital firms Polychain Capital and Alumni Ventures. 

Armed with the needed resources and a stable blockchain, the parent company of Quai Network, Dominant Strategies, is certainly well-equipped to handle the additional workload. As of 2023, it has almost 50 employees working on the Quai Network project, enabling fast, accessible and low-cost decentralized finance (DeFi).

What Does Quai Network Aim to Achieve?

The Quai Network aims to solve the dreaded blockchain trilemma that has dented the progress of popular blockchains such as Bitcoin. 

The blockchain trilemma suggests that blockchains must sacrifice one of the three properties: scalability, security or decentralization. In theory, a blockchain cannot sustain all these three properties together. For instance, typical blockchains can overcome scalability issues by increasing block size allowing a higher transaction rate. However, it will cause a reduction in the number of nodes in a network, which will reduce decentralization. Similar arguments can be made against security and one of the other properties.

Quai Network is built to solve the problem using hierarchical merged mining as a solution to scaling blockchains without sacrificing decentralization and security.

How Does Quai Network Work?

Quai Network uses a pyramid-shaped hierarchical structure. 

Source: Quai Network

Prime Chain

At the top of this pyramid is the Prime chain, which uses a memory-intensive hashing algorithm shared across the network.

Every Quai miner is required to mine the Prime chain. It has a high mining difficulty and a slow throughput of one block every 15 minutes.

The slow throughput is ideal when the entire network is addressed because it's where all the miners mine. On the contrary, the high difficulty and slow throughput of Prime Chain are not ideal for simple transactions and DApps (decentralized apps).

Region Chains

Below the Prime Chain are three Region chains — Cyprus, Paxos and Hydra. These Region chains produce one block every 5 minutes. Accordingly, they have higher throughput and lower difficulty compared to the Prime chain. 

Miners can use these subordinate chains to mine, but it is important to note that a miner can only mine a single Region chain along with the Prime chain at any given point in time. This means that whenever miners are set up on the network, they can only select one Region chain that they wish to use.

Zone Chains

Similarly, there are three Zone chains within every Region chain. Just like Region chains, a miner must select only one Zone chain to mine. At any given time, users of Quai Network can simultaneously mine three chains: the Prime chain, Region chain and Zone chain.

Each Zone Chain outputs a block every 10 seconds making it ideal for day-to-day transactions, contracts and interactions. A Zone chain can also reference other Zone chains in different Region Chains. As a result, the majority of activities on the Quai Network will take place on Zone chains.

Coincident Blocks

Quai Network also uses Coincident blocks to ensure security across the 13-chain topology. A Coincident block is a block that can be used in more than one Quai blockchain. This happens when a miner finds a nonce that meets the difficulty thresholds for more than one blockchain. This is useful because it allows for cross-chain transactions and contract interactions between different chains.

The following are the rules for Coincident blocks:

1. All dominant blocks must be aligned with all subordinate blocks that are directly below it.
2. Subordinate blocks can be mined separately without being included in a Coincident block.
3. For a Coincident block to be considered valid, it must be valid in all relevant contexts.
4. Coincident blocks must be appended at the same time to ensure Rule #3.
5. Coincident blocks will have the same hash in all contexts where it is considered valid, which creates cross-references between different chains.

Features of Quai Network

The merged mined structure of the Quai Network enables it to natively bridge between chains. As a result, it's possible to invoke cross-chain contracts and move assets between chains. The following are the three most critical elements of the Quai Network:

Proof of Work 2.0

Quai Network uses the concept of combined CPU mining power to secure the blockchain. Using the Blake3 hash function, the Quai Network PoW 2.0 framework improves the speed and security of PoW 1.0 used by similar blockchains. The increased block space can also accommodate global demand without high gas fees. Furthermore, with a higher capacity, the PoW 2.0 framework reduces the carbon footprint for every transaction. This ties in with one of Quai Network’s aims of becoming a carbon-neutral blockchain.

Sharding

Using a pyramid structure, sharding helps split resources horizontally through the creation of new chains, which increases transaction speed and reduces network congestion.

With sharded chains, validators can easily store and run the data for individual shards they are validating without having to use expensive and powerful computers. In fact, they may eventually be able to run Quai Network on their smartphone. This lowers the barrier to entry for network validator participation due to the reduced hardware requirements, which in turn leads to greater decentralization, thereby increasing network speed and security.

Merged Mining

Merged mining refers to sharing hash rates across different blockchains. Unlike most other blockchains, the Quai Network header contains data for all three chains: Prime, Region and Zone. Miners use the Quai Manager to mine the combined header block.

When mining on Quai Network, miners can choose from nine different "slices,” enabling them to find and mine the header of Prime, Region and Zone based on the difficulty requirement associated with each chain.

Quai Network Road Map

The launch of the Stone Age Testnet in November 2021 was the first step in building a robust foundation for Quai Network’s development and stability. At the time, miners could earn QUAI tokens native to the Quai Network in exchange for validating and making transactions on the network.

The successful implementation of the Stone Age Testnet was followed by the Bronze Age Testnet in February 2022. By taking part in the development, participants earned rewards for running a miner or node, deploying smart contracts and sending transactions on Quai.

During the Bronze Age Testnet phase, the network reached 1.4 million total blocks mined, 110K transactions, and 1,700 nodes within a month. 

Just a month into these developments in March 2022, Dominant Strategies received $8 million from Polychain Capital, a renowned U.S. crypto venture capital firm. The investment proved a major landmark in the subsequent development of the Quai Network, enabling the project to hire additional members and complete future milestones.

In May 2022, two months after the first major funding, the project raised another $2 million in funds from Alumni Ventures — the third most active capital venture firm in the world. In a public statement, the management of Alumni Ventures praised the novel approach of Quai Network in solving the blockchain trilemma through its shared security via merged mining.

As Quai Network grew from the inflow of funds, the team launched the Quai Ambassador Program and the Social Media Rewards Program. The highly selective ambassador program selects influencers from around the world to create content, host meet-ups, engage the local community and create developer-friendly resources. In exchange, they get to earn exclusive rewards.

Similarly, Quai Network oversees a very active social media community across several platforms including Twitter, YouTube, Reddit, TikTok and Instagram. Community members get rewards in the form of QUAI tokens.

To improve coordination among community members, the developers released a beta version of the Quai Dashboard in October 2022. The Quai Dashboard lets users check their social media rewards and interact with testnets.

Today, Quai Network has achieved global scalability while remaining incredibly secure and decentralized. Going forward, it seeks to achieve limitless scalability by deploying its mainnet.

QUAI Tokenomics

The QUAI token is at the heart of the Quai Network ecosystem. The network has hard-capped the token supply to 100 million, which should decrease inflation in the short term. In the future, the limited supply of QUAI will also address any concerns surrounding deflation.

Here is how QUAI tokens are distributed:

• Adoption Incentives: Approximately 25% of tokens are reserved for adoption incentives in the form of partnerships with private entities, government and underserved societies.
• Mining: Miners will get a 20% share of QUAI tokens. Block rewards are distributed depending on the chain used to mine the token.
• Foundation: The Quai Network Foundation will receive 15% of the token share. There is a 10-year vested period. If unallocated, the remaining tokens will be burned.
• Strategic Partners: Strategic partners who contribute to the development of the ecosystem are offered a 15% share.
• Infrastructure Partners: Anyone who helps in creating the infrastructure will receive a share of 5.5% of the tokens. These services include node hosting, mining pool operations, RPC and more.
• Founders and Bounties: Founders of the Quai Network will get 5% of the total share.
• Miscellaneous: Content creators, core contributors, and community members will share 5%, 4%, and 3% of the token supply, respectively. The remaining 2% is allocated to provide liquidity, while 0.5% is reserved for the participants of testnets.

Is QUAI a Good Investment?

If you're patient and believe in reaping investment rewards in the long run, QUAI bears the hallmarks of a good investment. It has all the traits to develop into a meaningful project.

The Quai Network has a strong team that is actively working on improving the blockchain. The backing of major investors, a strong community and a clear roadmap are factors that make QUAI a viable investment for your portfolio.

The Bottom Line

From an investment perspective, QUAI can provide a solid return on investment (ROI). Its mainnet launch is a much-awaited event, which can stimulate more investment opportunities and potentially result in a high price of the QUAI token.