Last week we revealed some key points about Hermez, the zk-rollup we’ve been developing in stealth mode for the past year.

Today our Technical Lead, Jordi Baylina, has expanded this information at his talk at EDCON2020. He also introduced one of the key components of Hermez: Proof-of-Donation.

Proof-of-Donation is part of the protocol that governs Hermez’ market of permissionless network coordinators.

It helps to ensure a healthy competition between coordinators and is intended to support the sustainability of Ethereum, the Layer 1 protocol Hermez is built on.

Introducing Hermez Coordinators

The coordinator is the Hermez block producer, the one responsible for running the network. They:

(1) sync the Hermez Network,

(2) receive transaction requests from users,

(3) process them in order to build batches (rollup blocks),

(4) save the Hermez merkle root in L1 together with a zk-proof of correctness and the data necessary to reconstruct the full history and current state.

In exchange for their work, they collect all transaction fees in the batch.

Anyone can become a coordinator by bidding successfully in a decentralized permissionless auction.

To bootstrap the early stages of the network, the Hermez team will maintain a Boot Coordinator that will build blocks while we are still attracting a healthy network of coordinators.

Auction and Proof-of-Donation

We divide time in 10 minutes slots. During this slot, the coordinator can create as many batches as they can, to maximize the profit extracted by keeping the transaction fees. But how can one become a coordinator?

HEZ will be the main token of the ecosystem. Potential coordinators that want to collect fees on the network will have to bid in advance with HEZ, for the right to be the coordinator.

Once the auction for a given slot is closed, the proceeds of the auction will be split the following way:

  • 40% will be assigned to the donations account
  • 30% of the HEZ will be burned
  • 30% will be redistributed to the network

We want Hermez to be a source of funding for Ethereum public goods, giving back to the community as well as helping scale transactions in the network.

For this reason, 40% of the tokens collected from the auction will be donated back to Layer 1. Initially the funds will be used to support Gitcoin Grants, the most successful funding allocation mechanism by the community so far. Hermez won't have any say about how those funds are distributed through Layer 1.

We are extremely excited about making our technology useful for users, while at the same time ensuring a return on the public infrastructure of the Ethereum ecosystem.

Read Hermez in Depth: The Hermez Token for more information about the HEZ token. If you rather know more about the unique properties of Hermez, check out this link: Hermez Value Proposition.

Follow our progress towards layer 2 scaling on Twitter at @Hermez_network and joining our new Discord server.