Quote from: ETFbitcoin on February 13, 2019, 06:33:32 PM

There are few flaws, especially on sharding (which you probably already know). But my biggest concern are :
1. How do we categorize address to different network?

You can add a header to the tx (for efficiency). However, you can already see it from looking at the first (few) byte(s) of any address involved in the unspent outputs and/or source tx. Mixing shard prefix would not be allowed. A single miner can mine for any of the sub-networks. To that effect, he needs to keep multiple blockchain databases (one for each sub-network).

Quote from: ETFbitcoin on February 13, 2019, 06:33:32 PM

2. How will it works when you have addresses on different network and you plan to make payment to multiple address from different network?

The wallet will have to split the tx (automatically and transparently) in one tx per sub-network you are paying to. So, if you are paying to three addresses on three sub-networks, the wallet will broadcast three tx. You will need enough unspent output on each sub-network, but the initial swap will have to make sure of that.

Quote from: ETFbitcoin on February 13, 2019, 06:33:32 PM

Additionally, IMO this sounds like we have n different bitcoin coins.

Technically, yes, but in all practical terms, most probably not.
The atomic swap network would have to treat sub-networks differently, and e.g. charge different swapping fees per sub-network. Why would they do that?
Concerning the user, the user would need to have a preference for a particular sub-network, while they are indistinguishable.

Quote from: ETFbitcoin on February 13, 2019, 06:33:32 PM

Edit : adding reference and similar proposal
https://github.com/ethereum/wiki/wiki/Sharding-FAQs
https://bitcointalk.org/index.php?topic=5060909.0

> A UTXO can be spent to any other zone or region within the network by signing a new transaction that relocates it to a new zone.

I propose to let the atomic-swap network handle this for a fee.

> the zones which users aggregate into will be based on a combination of geography, network topology, and existing economic relationships.

It looks complicated. Why would that even be needed?

> The network incentives need to be modified to incentivize the regions and zones needed for BlockReduce.

In my proposal, the servers on the atomic-swap network can set their own fees and let market competition determine how much those should be.

> ... any excess transaction fees could be sequestered into an escrow account ...

... and who will be sitting on the corresponding private keys?

It is otherwise, indeed, a very similar proposal. I do not see the need, however, for a PRIME network or regional networks, or any other hierarchy. I think that it can be done with just one atomic-swap network.