# On-Chain Economics

Enigma uses Ethereum as a settlement and enforcement layer for payments, incentives, staking, and penalties. ENX compensates verifiable work performed off chain, with task completion attested via cryptographic proofs or verifiable signals that Ethereum contracts validate before releasing transaction. Ethereum enforces outcomes, not process: it does not coordinate execution or route traffic, but applies deterministic economic consequences while execution remains off chain to preserve privacy and scalability.

| Layer        | Responsibilities                                                                                                         |
| ------------ | ------------------------------------------------------------------------------------------------------------------------ |
| **Enigma**   | <p>Route traffic<br>Store encrypted data<br>Move workloads<br>Coordinate timing<br>Generate proofs of work performed</p> |
| **Ethereum** | <p>Verify submitted proofs<br>Release payments<br>Provide randomness for timing</p>                                      |

```
// SETTLEMENT PROCESS PSEUDOCODE

function settleWork(node, epochId, workProof):
    // Step 1: Node performs off-chain work
    work = node.performTask(epochId)

    // Step 2: Generate cryptographic proof
    proof = generateProof(work)  // ZK proof, signed receipt, or Merkle proof

    // Step 3: Submit to Ethereum
    tx = ethereumContract.submitProof(epochId, proof, workDescriptor)

    // Step 4: Contract validates
    if contract.verifyProof(proof):
        // Step 5: Release payment
        contract.transferENX(node.address, paymentAmount)
    else:
        // Slash stake for invalid proof
        contract.slash(node.address, stakeAmount)

// SLASHING CONDITIONS
SlashingTriggers = {
    "non_performance":  "Missed heartbeats, timeout",
    "invalid_proof":    "On-chain verification fails",
    "double_signing":   "Equivocation detected",
    "collusion":        "Statistical anomaly detection"
}
```


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