Initial commit: OnionCoin prototype with Proof-of-Relay consensusHEADv0.1.0main

OnionCoin is a privacy cryptocurrency that rewards Tor relay operators
through a unique Proof-of-Contribution consensus mechanism.

Core Features:
- Proof-of-Relay: 30% of block rewards go to Tor operators
- Native .onion node identity (no IP exposure)
- Temporal obfuscation protocols
- Dandelion++ over Tor propagation
- Native inheritance system with dead man's switch

Technical Stack:
- Rust workspace with 8 crates
- Ed25519/X25519 cryptography
- arti (Rust Tor client) integration planned
- 10 minute block time, 5-10 TPS design

Status: Prototype
- Consensus logic complete with passing tests (30/33)
- Network layer conceptual design complete
- Tor integration pending
- Testnet launch planned Q3 2026

License: MIT
Author: Gabriele Salati (virebent)
Contact: g48rix@gmail.com
Website: https://www.gabrielesalati.eu
Repository: https://git.virebent.art/virebent/onioncoin

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+# Proof-of-Contribution Consensus
+
+## OnionCoin's Revolutionary Consensus Mechanism
+
+Unlike traditional Proof-of-Work (wasteful) or Proof-of-Stake (plutocratic), OnionCoin introduces **Proof-of-Contribution**: a hybrid system that rewards **actual network contribution**, not just capital or electricity.
+
+## Core Philosophy
+
+> "OnionCoin rewards WORK, not just WEALTH"
+
+A validator with 10 ONC who actively relays traffic can be more competitive than a whale with 10,000 ONC doing nothing.
+
+## Contribution Components
+
+### 1. Stake (40% weight)
+
+**Purpose**: Economic security, skin in the game
+
+**Calculation**: Logarithmic scale to prevent whale dominance
+
+```
+stake_score = log10(stake_amount) / log10(max_stake)
+              × tier_multiplier
+```
+
+**Why logarithmic?**
+- 10 ONC → 100 ONC = 0.1 score increase
+- 100 ONC → 1,000 ONC = 0.1 score increase
+- 1,000 ONC → 10,000 ONC = 0.1 score increase
+
+**Result**: Diminishing returns on large stakes
+
+**Tiers**:
+- Micro (10 ONC): 1.0x multiplier
+- Light (100 ONC): 1.1x multiplier
+- Standard (1,000 ONC): 1.2x multiplier
+- Power (10,000 ONC): 1.3x multiplier
+
+### 2. Tor Relay Work (30% weight) ⭐ UNIQUE!
+
+**Purpose**: Reward validators who relay OnionCoin traffic through Tor
+
+**This is OnionCoin's killer feature!** No other cryptocurrency rewards Tor relay work.
+
+**Calculation**:
+```
+base_score = GB_relayed / 100 (capped at 0.8)
+quality_multiplier = (1 - failure_rate) × latency_factor
+diversity_bonus =
+  - 0.0 for < 50 circuits
+  - 0.1 for 50-100 circuits
+  - 0.2 for 100+ circuits
+
+relay_score = (base_score × quality_multiplier) + diversity_bonus
+```
+
+**Proof-of-Relay**:
+Validators submit hourly proofs containing:
+- Bytes relayed
+- Packets relayed
+- Unique circuits served
+- Average latency
+- Cryptographic proof (hash chain)
+
+**Rewards**:
+- 1 ONC per GB relayed (base)
+- Up to 1.2x bonus for high circuit diversity
+- Quality penalty for high latency/failures
+
+**Example**:
+```
+Validator relays 50 GB with:
+- 150 unique circuits (high diversity)
+- 500ms avg latency (good)
+- 99% success rate (excellent)
+
+Reward: 50 GB × 1 ONC/GB × 1.2 = 60 ONC
+```
+
+### 3. Bandwidth (15% weight)
+
+**Purpose**: Encourage high-bandwidth nodes
+
+**Calculation**:
+```
+bandwidth_score = avg_bandwidth / max_bandwidth
+                  (10 Mbps = 1.0 score)
+```
+
+**Measurement**:
+- Total bytes sent/received per measurement period
+- Rolling average over 24 hours
+- Peak bandwidth tracking
+
+### 4. Uptime (10% weight)
+
+**Purpose**: Reward reliability
+
+**Calculation**:
+```
+uptime_score = (uptime_percentage / 100)
+               × disconnection_penalty
+               × streak_bonus
+```
+
+**Bonuses/Penalties**:
+- 99%+ uptime: 1.2x bonus
+- 95-99% uptime: 1.1x bonus
+- \>5 disconnects/day: 0.5x penalty
+- 7+ day streak: 1.2x bonus
+- 24+ hour streak: 1.1x bonus
+
+### 5. Storage (5% weight)
+
+**Purpose**: Encourage full nodes with blockchain storage
+
+**Calculation**:
+```
+storage_score = GB_provided / 100
+                (100 GB = 1.0 score)
+```
+
+## Total Score Calculation
+
+```rust
+total_score =
+  stake_score      × 0.40 +
+  relay_score      × 0.30 +
+  bandwidth_score  × 0.15 +
+  uptime_score     × 0.10 +
+  storage_score    × 0.05
+```
+
+Result: Score between 0.0 and 1.0
+
+## Validator Selection
+
+### Algorithm: Verifiable Random Function (VRF)
+
+Selection is **weighted random** based on contribution score:
+
+```
+1. Calculate each validator's contribution score
+2. Generate deterministic random seed from:
+   - Previous block hash
+   - Current block height
+3. Weighted random selection using VRF
+4. Higher score = higher probability
+```
+
+**Example**:
+```
+Validator A: 0.8 score → 40% selection probability
+Validator B: 0.6 score → 30% selection probability
+Validator C: 0.4 score → 20% selection probability
+Validator D: 0.2 score → 10% selection probability
+```
+
+### Fairness Properties
+
+✅ **Deterministic**: Same inputs → same validator selected
+✅ **Unpredictable**: Cannot predict future selections
+✅ **Fair**: Probability proportional to contribution
+✅ **Verifiable**: Anyone can verify selection was correct
+
+## Genesis Mining (Fair Launch)
+
+### Phase 1: 6 Months Genesis Period
+
+**Goal**: Fair initial distribution with NO pre-mine
+
+**How it works**:
+1. Anyone runs a Tor relay for OnionCoin
+2. Record relay activity (bytes, uptime)
+3. After 6 months, distribute 1,000,000 ONC proportionally
+
+**Rewards**:
+```
+base_reward = (your_relay_bytes / total_relay_bytes) × 1,000,000 ONC
+early_bonus = 2x for month 1, linear decay to 1x
+uptime_bonus = up to 20% extra for 99%+ uptime
+
+total_reward = base_reward × early_bonus × (1 + uptime_bonus)
+```
+
+**Requirements**:
+- Minimum 1 GB relayed to qualify
+- Must maintain uptime during measurement
+
+**Why this is fair**:
+- ❌ NO pre-mine (unlike Bitcoin)
+- ❌ NO ICO (unlike Ethereum)
+- ❌ NO founder allocation (unlike most alts)
+- ✅ 100% earned through work
+- ✅ Anyone can participate (just run Tor relay)
+- ✅ Low barrier to entry (1 GB relay minimum)
+
+### Phase 2: Regular PoC
+
+After genesis period, transition to regular Proof-of-Contribution:
+- Block rewards: 5 ONC/block
+- Halving: Every 4 years
+- Validators earn based on contribution score
+
+## Economic Incentives
+
+### For Small Validators (Micro/Light)
+
+**Can compete by**:
+- Running excellent Tor relay (30% weight!)
+- High uptime (10% weight)
+- Good bandwidth (15% weight)
+
+**Example**:
+```
+Micro validator (10 ONC):
+- Stake score: 0.1 (low)
+- Relay score: 0.9 (high - relays 100 GB/day)
+- Bandwidth: 0.8 (good connection)
+- Uptime: 0.95 (rarely offline)
+- Storage: 0.2 (20 GB)
+
+Total: 0.1×0.4 + 0.9×0.3 + 0.8×0.15 + 0.95×0.1 + 0.2×0.05
+     = 0.04 + 0.27 + 0.12 + 0.095 + 0.01
+     = 0.535
+
+This Micro validator is MORE competitive than a Power validator
+(10,000 ONC) who does no relay work (score ~0.3)!
+```
+
+### For Large Validators (Power)
+
+**Can maximize by**:
+- Large stake (but diminishing returns)
+- Running high-capacity relay
+- Multiple geographically distributed nodes
+- Professional infrastructure (99.99% uptime)
+
+**Best strategy**: Combine capital with actual work
+
+## Attack Resistance
+
+### Sybil Attack
+
+**Attack**: Create many low-stake validators
+
+**Defense**:
+- Minimum 10 ONC stake required
+- Relay work must be genuine (verified through proofs)
+- Bandwidth/uptime must be real (measured independently)
+- Cost of running fake relays > rewards
+
+### Whale Attack (51% stake)
+
+**Attack**: Acquire 51% of all ONC to dominate
+
+**Defense**:
+- Stake is only 40% of score
+- Logarithmic scaling reduces whale advantage
+- Must also provide relay work (expensive!)
+- Slashing for misbehavior
+
+**Example**:
+Whale with 50% of total stake gets:
+- Stake score: ~0.85 (due to log scaling)
+- Total score without work: 0.85 × 0.4 = 0.34
+- Still needs relay/bandwidth/uptime to be competitive
+
+### Lazy Validator Attack
+
+**Attack**: Stake coins but provide no service
+
+**Defense**:
+- Low contribution score → rarely selected
+- No block rewards → no ROI
+- Other validators with lower stake but higher work out-compete
+- Economic pressure to either work or unstake
+
+## Comparison with Other Consensus Mechanisms
+
+| Feature | Bitcoin PoW | Ethereum PoS | OnionCoin PoC |
+|---------|-------------|--------------|----------------|
+| Energy consumption | ❌ Very high | ✅ Low | ✅ Very low |
+| Minimum requirement | $$$ ASIC | 32 ETH (~$50k) | 10 ONC (~$1?) |
+| Hardware | Industrial | Standard PC | Raspberry Pi |
+| Centralization risk | Mining pools | Whale validators | ✅ Distributed (work matters) |
+| Environmental impact | ❌ Terrible | ✅ Good | ✅ Excellent |
+| Fair launch | ✅ Yes | ❌ Pre-mine | ✅ Genesis mining |
+| **Rewards network work** | ❌ No | ❌ No | ✅ **YES!** |
+
+## Technical Implementation
+
+See `/consensus` module for implementation:
+
+- `validator.rs`: Validator tiers and registry
+- `proof_of_contribution.rs`: Score calculation
+- `relay_proof.rs`: Proof-of-Relay system ⭐
+- `metrics.rs`: Bandwidth, uptime, storage tracking
+- `selection.rs`: VRF-based validator selection
+- `genesis.rs`: Fair launch genesis mining
+
+## Future Research
+
+Potential improvements:
+- ZK-SNARKs for relay proofs (privacy + efficiency)
+- Adaptive weight adjustment based on network needs
+- Dynamic tier thresholds
+- Cross-shard relay rewards (if sharding implemented)
+
+## Conclusion
+
+OnionCoin's Proof-of-Contribution is **the first consensus mechanism** to:
+
+1. ✅ Reward Tor relay work
+2. ✅ Make small validators competitive
+3. ✅ Combine security with network utility
+4. ✅ Be truly accessible (Raspberry Pi can validate!)
+5. ✅ Prevent plutocracy through logarithmic stake scaling
+
+**This is not just another PoS fork. This is genuinely novel.**
+
+---
+
+Run the demo:
+```bash
+cargo run --example consensus_demo
+```