Proof-of-Merit : Harnessing the Computing Power used by Blockchain Consensus Mechanisms for Complex Transaction Generation

Existing popular Blockchain consensus mechanisms, such as Proof-of-Work (PoW), are designed to record existing transactions. However, they play no role in the transaction generation process. Many blockchain applications require high computation costs to generate and record transactions (e.g., in the case of PoW). In this paper, we propose an approach that allows us to utilize the consensus generation process to generate transactions by solving complex problems. We call it the Proof-of-Merit (PoM) mechanism - this approach decentralizes the transaction-generation process and selects proposed solutions to the problem based on their merit. We illustrate the PoM mechanism in the context of ridesharing, where a group of solvers provide solutions to the problem of matching riders with drivers. Moreover, we define two objectives - efficiency and equity - to evaluate PoM. We demonstrate PoM’s performance and nuanced properties using agent-based simulation. We show how Decentralized Control Parameter (DCP) influences the intrinsic tradeoffs between efficiency and equity. Further, we explore how to find the proper value of DCP towards achieving a desirable balance of the two objectives