Research update

Quite a bit of research has been happening in the recent months. This post will summarize and comment on the findings.


A FHNW bachelor thesis about Encointer asking: “Can complementary local currencies with universal basic income reduce inequality?” has been authored by Shayma Lamsallak and was supervised by Prof. Mathias Binswanger.

Shayma revisits the literature on Encointer’s main topics: Cantillon Effect, Universal Basic Income, Negative Interest Rate, Demurrage, Local Currency and Cryptocurrency. she took out interesting interviews with the leaders of Chiemgauer, BerkShares, Exeter Pound, Sarafu Network. She then analyzes the conditions under which the Encointer concept may work.

Statement of the Encointer team: The collection of theoretical background in this thesis is highly valuable to our project and the interviews with experiences from other local currency projects are precious. In our opinion, the final analysis of success factors has to be extended. We will further this work with agent-based simulations in order to get more insight into the economic games at play.

Proof-of-Personhood Security

EPFL student Lucie Hoffmann has written her master thesis on “Security analysis of Proof-of-Personhood: Encointer”, supervised by Prof. Bryan Ford, Louis-Henri Merino, Haoqian Zhang.

Lucie investigates on the economical attack vectors how an adversary group could enrich themselves by collecting more UBI than once per human. She shows that making a profit is possible when bribing a sufficiently large group of participants

Statement of the Encointer team: This thesis adds great value to our project as it puts the attacks into perspective and attempts to quantify the cost of attack – at least nominally. The “real” cost is yet something entirely different as the real value of encointer currencies is based on community commitments and will be zero if trust in the currency is lost. The pre-investment that the thesis quantifies to take out a sybil attack needs a lot of time and will not go unnoticed by the community. This means that such an attack will in reality rather “sabotage” a community currency and will never yield an ROI. Moreover, It is not plausible that minions will accept payment in the same currency that they are effectively sabotaging.


ETHZ student Piero Giucciardi authored his master thesis on “Scalability of Encointer – a
Proof-Of-Personhood Cryptocurrency”
, supervised by Prof. Roger Wattenhofer and Tejaswi Nadahalli

Piero analyzes the computational complexity of Encointer’s core proof-of-personhood protocol and implements concrete solutions to reduce complexity of on-chain actions to a manageable magnitude. The tricky problems are:

  • Verification of geolocations. Distances between any two meetup locations have to be greater than a minimal bound. This O(n²) problem was reduced to O(1)
  • Assigning participants to meetups: A heurisitc algorithm was replaced by modular arithmetic, reducing O(n) to constant time
  • Verification of Attestations: could be reduced from O(n) to O(1)

Statement of the Encointer team: Piero’s work has already been incorporated in our master branch and will be deployed with the next release. Without these optimizations it would not have been possible to operate a Polkadot/Kusama parachain with an impactful number of participants.

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