VDF Reserve Ratio

VDF Reserve Ratio is used as the collateral mechanism for the reserve

The VDF Reserve Ratio is a collateral mechanism for the Time Reserve, similar to the reserve ratio used by central banks when issuing the M1 money supply to commercial banks. The TimeReserve.sol contract includes a verification function that allows users of the ecosystem to commit VDF cryptographic proofs, serving as a Proof of Time (POT) mechanism across the entire system.

By design, Verifiable Delay Functions (VDFs) have an immutable time element, preventing manipulation or front-running. Within the context of TimeReserve.sol, this immutable characteristic ensures that the Proof of Time (POT) cannot be faked or accelerated, as the VDF requires a specific and provable amount of sequential computation before generating a hash.

The VDF Reserve Ratio establishes the minimum amount of time collateral that must be held within the system, relative to the circulating time-based tokens. By setting this ratio, the system introduces an additional time-value component and ensures there is sufficient collateral backing the issuance of new tokens.

When users commit valid VDF cryptographic proofs, they effectively demonstrate that they have completed a specific, time-based commitment. This process signals that the required time has elapsed, ensuring that new tokens can only be issued once a verifiable Proof of Time has been met. Thus, users actively participate in the time-reserve backing, enhancing the stability and integrity of the system.