What is Saito (SAITO)? Your ultimate guide
Why is crypto unscalable? According to Saito, it’s all to do with an incentive problem.
Historically, cryptocurrencies have had a pretty straightforward set of economic incentives. On the proof-of-work (PoW) consensus model, nodes are rewarded for mining blocks. On the proof-of-stake (PoS) model, nodes are rewarded for staking the native token.
According to Saito, however, this reward scheme is heavily weighted on mining blocks at the expense of other types of 'work', which means participants are not incentivised to invest sufficient time or energy in ensuring the protocol is working well and will work effectively in the long-term. Instead, miners focus on quick rewards without considering the system's future.
Some critics argue that crypto is the free market gone mad. They point to the lack of regulation, how a few big players hold a large proportion of the wealth and that individuals are rewarded for acting at the expense of system's health.
The Saito platform aims to change this, arguing that it is precisely these market issues that have developed as the crypto sector has matured which will ultimately make it unable to scale to become of any real use to society at large.
So, what exactly is the platform’s offering? How does Saito work? Before we take a deep dive, let’s take a look at the company's history.
Founders of Saito (SAITO)
Richard Parris, originally from Melbourne, co-founded Saito with David Lancashire in March 2018 in Hong Kong. Parris studied mathematics and philosophy at the University of Melbourne. After graduating from Melbourne with an MPhil, he was the founding chief technology officer of Edanz Group. This was acquired by M3 in 2019. Before founding Saito, he launched Parris DaCosta Hayashima, a luxury watch company.
Lancashire is Saito's technology lead. He studied political science at the University of California, Berkeley. Before becoming involved in Saito, Lancashire set up three successful businesses, including Language Systems Ltd.
What does the company do? What is the Saito coin used for? And how does it work?
The Saito cryptocurrency cites two market failures which it says affect all non-Saito blockchains: the Tragedy of the Commons and the free-rider problem.
The protocol argues that as more blockchains scale up, the worse these problems will become.
The Tragedy of the Commons is the name given to a situation where each participant in a system is incentivised to consume a resource, even if it's at the expense of all others. A popular example is if every shepherd allowed their flock to graze freely on common land. This would result in over-consumption. All the grass would be eaten and there would eventually be none left.
Data put on the blockchain requires the management and support of all particpants on the network. But, because only the adding of blocks is incentivized, miners do not have to bear the cost or responsibility of maintenance. As described on the company website: “There is a privatization of gain (today) and a socialization of losses (tomorrow).”
The Saito ecosystem attempts to solve this problem by requiring all nodes that add transactions to the blockchain to bear the responsibility of maintenance for as long as they stay on the blockchain. Currently, individuals get paid to validate data on the blockchain, without considering the fact that everyone will need to pay to support that data in perpetuity.
By making nodes bear the cost of processing those transactions, they will no longer add transactions to the chain that do not pay enough. If they do, they will lose money.
Putting these processes in place, the platform claims, will eliminate “blockchain bloat”.
The second issue is the 'free rider"'problem.
This emerges when a burden on a shared resource is created by people overusing that resource without paying their fair share for it.
Many individuals providing a range of different functions are required to keep a network running smoothly, not simply the nodes authorising transactions. Individuals such as software developers, front-end designers, code auditors and bug fixers are also required. However, in many current blockchains, only miners are rewarded, meaning people are incentivised to spend time on paid work and minimise time spent on other important activities.
Saito attempts to fix this problem by paying nodes in proportion to the value they provide to the network, as opposed to how many blocks they mine. Users pay a fee according to all the services a valuable node provides, including data services and software development, as opposed to just for mining transactions.
Saito’s mission is to create a more scalable infrastructure. It also aims to prevent centralisation of the system. Although blockchains are decentralised, the architecture which surrounds them and the gatekeepers that provide access are increasingly large companies.
What about the system’s native coin, SAITO?
Launched in early 2021, SAITO, the native coin, has performed reasonably well.
In the 30 days covering the end of 2021 and the start of 2022, the coin gained over 15%.
With a maximum supply of 3 billion SAITO coins and a current circulating supply of 1.37 billion coins, Saito cryptocurrency has a market cap of $107.46m. It is currently ranked number 462 on the Coin Gecko platform.
The requirement for cryptocurrencies to become scalable is critical if they are ever going to replace the current system. While some cryptos are focusing on sharding as the way ahead, others, like Saito, are focusing on reforming the material conditions which currently govern crypto.
There is maximum supply of 3 billion SAITO coins and a current circulating supply of 1.37 billion SAITO coins.
Richard Parris and David Lancashire founded Saito in Spring 2018.
The platform approaches the scalability problem by looking at it first and foremost an incentive problem, whereby nodes are rewarded for acting on self-interest regardless of any consequences for the ecosystem. By reforming the business model, the platform hopes to increase the potential for scalability.