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 and has 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.

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?

Potential coordinators that want to collect fees on the network will have to bid in advance with HEZ, the Hermez Network Token, 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:

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

There’s a bit to unpack here! Let’s go step by step:

HEZ will be the main token of the ecosystem. Would-be coordinators will have to acquire HEZ tokens to participate in the auction.

Finally, 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, initially the funds will be used to support Gitcoin Grants - the most successful funding allocation mechanism by the community so far.

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

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

Follow our progress towards layer 2 scaling on twitter at @Hermez_network and join our Telegram here!