Location Proofs
How probabilistic location signals are modeled as soft service proofs and combined with caps and slashing to bootstrap markets.
The problem
Many physical services don’t have cheap, deterministic proofs. For example, “a driver arrived at the right doorstep” is hard to prove cryptographically at low cost.
If every transaction required high-quality proofs, proof generation could break the unit economics of the underlying service.
Proof-of-location as a soft proof
Location signals (GPS, cell triangulation, Wi-Fi, attestations) are often probabilistic. In Local Protocol, these are modeled as edge attributes (service proofs) that affect the transaction graph through:
: higher confidence → higher effective edge weight : disputes/chargebacks → lower effective edge weight
These adjustments feed into snapshot-relative diffusion on the committed graph snapshot.
Why this helps immature markets
In small markets, collusion remains possible even with strong evidence. The protocol therefore combines proofs with:
- anchored diffusion (teleport mass from verified seeds)
- strict caps on claimable rewards
- challengeable claims with bonds + slashing
This allows bootstrapping while keeping dishonest inflation negative expected value.