diff --git a/consensus-engine/Cargo.toml b/consensus-engine/Cargo.toml
index 854123c0..f7bf5734 100644
--- a/consensus-engine/Cargo.toml
+++ b/consensus-engine/Cargo.toml
@@ -7,6 +7,7 @@ edition = "2021"
 
 [dependencies]
 serde = { version = "1.0", features = ["derive"], optional = true }
+blake2 = "0.10"
 bls-signatures = "0.14"
 integer-encoding = "3"
 sha2 = "0.10"
diff --git a/consensus-engine/src/overlay/mod.rs b/consensus-engine/src/overlay/mod.rs
index 2023e2ca..75c0afb7 100644
--- a/consensus-engine/src/overlay/mod.rs
+++ b/consensus-engine/src/overlay/mod.rs
@@ -2,8 +2,11 @@ use super::types::*;
 
 mod flat_overlay;
 mod random_beacon;
+mod tree_overlay;
+
 pub use flat_overlay::*;
 pub use random_beacon::*;
+pub use tree_overlay::*;
 
 use std::marker::Send;
 
diff --git a/consensus-engine/src/overlay/tree_overlay/mod.rs b/consensus-engine/src/overlay/tree_overlay/mod.rs
new file mode 100644
index 00000000..c584f4b0
--- /dev/null
+++ b/consensus-engine/src/overlay/tree_overlay/mod.rs
@@ -0,0 +1,3 @@
+mod overlay;
+mod tree;
+pub use overlay::*;
diff --git a/consensus-engine/src/overlay/tree_overlay/overlay.rs b/consensus-engine/src/overlay/tree_overlay/overlay.rs
new file mode 100644
index 00000000..e505bed3
--- /dev/null
+++ b/consensus-engine/src/overlay/tree_overlay/overlay.rs
@@ -0,0 +1,316 @@
+use super::tree::Tree;
+use crate::{overlay::LeaderSelection, Committee, NodeId, Overlay};
+use rand::rngs::StdRng;
+use rand::seq::SliceRandom;
+use rand::SeedableRng;
+
+#[derive(Debug, Clone)]
+pub struct TreeOverlaySettings<L: LeaderSelection> {
+    pub nodes: Vec<NodeId>,
+    pub current_leader: NodeId,
+    pub entropy: [u8; 32],
+    pub number_of_committees: usize,
+    pub leader: L,
+}
+
+#[derive(Debug, Clone)]
+pub struct TreeOverlay<L> {
+    pub(super) entropy: [u8; 32],
+    pub(super) number_of_committees: usize,
+    pub(super) nodes: Vec<NodeId>,
+    pub(super) current_leader: NodeId,
+    pub(super) carnot_tree: Tree,
+    pub(super) leader: L,
+}
+
+impl<L> Overlay for TreeOverlay<L>
+where
+    L: LeaderSelection + Send + Sync + 'static,
+{
+    type Settings = TreeOverlaySettings<L>;
+
+    type LeaderSelection = L;
+
+    fn new(settings: Self::Settings) -> Self {
+        let TreeOverlaySettings {
+            mut nodes,
+            current_leader,
+            entropy,
+            number_of_committees,
+            leader,
+        } = settings;
+        let mut rng = StdRng::from_seed(entropy);
+        // TODO: support custom shuffling algorithm
+        nodes.shuffle(&mut rng);
+
+        let carnot_tree = Tree::new(&nodes, number_of_committees);
+
+        Self {
+            entropy,
+            number_of_committees,
+            nodes,
+            current_leader,
+            carnot_tree,
+            leader,
+        }
+    }
+
+    fn root_committee(&self) -> Committee {
+        self.carnot_tree.root_committee().clone()
+    }
+
+    fn rebuild(&mut self, _timeout_qc: crate::TimeoutQc) {
+        unimplemented!("do nothing for now")
+    }
+
+    fn is_member_of_child_committee(&self, parent: NodeId, child: NodeId) -> bool {
+        let child_parent = self.parent_committee(child);
+        let parent = self.carnot_tree.committee_by_member_id(&parent);
+        parent.map_or(false, |p| child_parent.eq(p))
+    }
+
+    fn is_member_of_root_committee(&self, id: NodeId) -> bool {
+        self.carnot_tree.root_committee().contains(&id)
+    }
+
+    fn is_member_of_leaf_committee(&self, id: NodeId) -> bool {
+        self.carnot_tree
+            .leaf_committees()
+            .values()
+            .any(|committee| committee.contains(&id))
+    }
+
+    fn is_child_of_root_committee(&self, id: NodeId) -> bool {
+        self.parent_committee(id) == self.root_committee()
+    }
+
+    fn parent_committee(&self, id: NodeId) -> Committee {
+        self.carnot_tree.parent_committee_from_member_id(&id)
+    }
+
+    fn child_committees(&self, id: NodeId) -> Vec<Committee> {
+        match self.carnot_tree.child_committees(&id) {
+            (None, None) => vec![],
+            (None, Some(c)) | (Some(c), None) => vec![std::iter::once(*c).collect()],
+            (Some(c1), Some(c2)) => vec![
+                std::iter::once(*c1).collect(),
+                std::iter::once(*c2).collect(),
+            ],
+        }
+    }
+
+    fn leaf_committees(&self, _id: NodeId) -> Vec<Committee> {
+        self.carnot_tree
+            .leaf_committees()
+            .into_values()
+            .cloned()
+            .collect()
+    }
+
+    fn node_committee(&self, id: NodeId) -> Committee {
+        self.carnot_tree
+            .committees_by_member
+            .get(&id)
+            .and_then(|committee_index| self.carnot_tree.membership_committees.get(committee_index))
+            .cloned()
+            .unwrap_or_default()
+    }
+
+    fn next_leader(&self) -> NodeId {
+        let mut rng = StdRng::from_seed(self.entropy);
+        *self.nodes.choose(&mut rng).unwrap()
+    }
+
+    fn super_majority_threshold(&self, id: NodeId) -> usize {
+        if self.is_member_of_leaf_committee(id) {
+            return 0;
+        }
+        self.carnot_tree
+            .committee_by_member_id(&id)
+            .map(|c| (c.len() * 2 / 3) + 1)
+            .expect("node is not part of any committee")
+    }
+
+    fn leader_super_majority_threshold(&self, _id: NodeId) -> usize {
+        let root_committee = &self.carnot_tree.inner_committees[0];
+        let children = self.carnot_tree.child_committees(root_committee);
+        let children_size = children.0.map_or(0, |c| {
+            self.carnot_tree
+                .committee_by_committee_id(c)
+                .map_or(0, |c| c.len())
+        }) + children.1.map_or(0, |c| {
+            self.carnot_tree
+                .committee_by_committee_id(c)
+                .map_or(0, |c| c.len())
+        });
+        let root_size = self.root_committee().len();
+        let committee_size = root_size + children_size;
+        (committee_size * 2 / 3) + 1
+    }
+
+    fn update_leader_selection<F, E>(&self, f: F) -> Result<Self, E>
+    where
+        F: FnOnce(Self::LeaderSelection) -> Result<Self::LeaderSelection, E>,
+    {
+        match f(self.leader.clone()) {
+            Ok(leader_selection) => Ok(Self {
+                leader: leader_selection,
+                ..self.clone()
+            }),
+            Err(e) => Err(e),
+        }
+    }
+}
+
+impl<L> TreeOverlay<L>
+where
+    L: LeaderSelection + Send + Sync + 'static,
+{
+    pub fn advance(&self, entropy: [u8; 32], leader: L) -> Self {
+        Self::new(TreeOverlaySettings {
+            nodes: self.nodes.clone(),
+            current_leader: self.next_leader(),
+            entropy,
+            number_of_committees: self.number_of_committees,
+            leader,
+        })
+    }
+
+    pub fn is_leader(&self, id: &NodeId) -> bool {
+        id == &self.current_leader
+    }
+
+    pub fn leader(&self) -> &NodeId {
+        &self.current_leader
+    }
+}
+
+#[cfg(test)]
+mod tests {
+    use crate::overlay::RoundRobin;
+    use crate::Overlay;
+
+    use super::*;
+    use std::collections::HashSet;
+
+    #[test]
+    fn test_carnot_overlay_leader() {
+        let nodes: Vec<[u8; 32]> = (0..10).map(|i| [i as u8; 32]).collect();
+        let overlay = TreeOverlay::new(TreeOverlaySettings {
+            nodes: nodes.clone(),
+            current_leader: nodes[0],
+            entropy: [0; 32],
+            number_of_committees: 3,
+            leader: RoundRobin::new(),
+        });
+
+        assert_eq!(*overlay.leader(), nodes[0]);
+    }
+
+    #[test]
+    fn test_next_leader_is_advance_current_leader() {
+        let nodes: Vec<[u8; 32]> = (0..10).map(|i| [i as u8; 32]).collect();
+        let mut overlay = TreeOverlay::new(TreeOverlaySettings {
+            nodes: nodes.clone(),
+            current_leader: nodes[0],
+            entropy: [0; 32],
+            number_of_committees: 3,
+            leader: RoundRobin::new(),
+        });
+
+        let leader = overlay.next_leader();
+        overlay = overlay.advance([1; 32], RoundRobin::new());
+
+        assert_eq!(leader, *overlay.leader());
+    }
+
+    #[test]
+    fn test_root_committee() {
+        let nodes: Vec<[u8; 32]> = (0..10).map(|i| [i as u8; 32]).collect();
+        let overlay = TreeOverlay::new(TreeOverlaySettings {
+            current_leader: nodes[0],
+            nodes,
+            entropy: [0; 32],
+            number_of_committees: 3,
+            leader: RoundRobin::new(),
+        });
+
+        let mut expected_root = HashSet::new();
+        expected_root.insert(overlay.nodes[9]);
+        expected_root.extend(overlay.nodes[0..3].iter());
+
+        assert_eq!(overlay.root_committee(), expected_root);
+    }
+
+    #[test]
+    fn test_leaf_committees() {
+        let nodes: Vec<[u8; 32]> = (0..10).map(|i| [i as u8; 32]).collect();
+        let overlay = TreeOverlay::new(TreeOverlaySettings {
+            current_leader: nodes[0],
+            nodes,
+            entropy: [0; 32],
+            number_of_committees: 3,
+            leader: RoundRobin::new(),
+        });
+
+        let mut leaf_committees = overlay
+            .leaf_committees([0; 32])
+            .into_iter()
+            .map(|s| {
+                let mut vec = s.into_iter().collect::<Vec<_>>();
+                vec.sort();
+                vec
+            })
+            .collect::<Vec<_>>();
+        leaf_committees.sort();
+        let mut c1 = overlay.nodes[3..6].to_vec();
+        c1.sort();
+        let mut c2 = overlay.nodes[6..9].to_vec();
+        c2.sort();
+        let mut expected = vec![c1, c2];
+        expected.sort();
+        assert_eq!(leaf_committees, expected);
+    }
+
+    #[test]
+    fn test_super_majority_threshold_for_leaf() {
+        let nodes: Vec<[u8; 32]> = (0..10).map(|i| [i as u8; 32]).collect();
+        let overlay = TreeOverlay::new(TreeOverlaySettings {
+            current_leader: nodes[0],
+            nodes,
+            entropy: [0; 32],
+            number_of_committees: 3,
+            leader: RoundRobin::new(),
+        });
+
+        assert_eq!(overlay.super_majority_threshold(overlay.nodes[8]), 0);
+    }
+
+    #[test]
+    fn test_super_majority_threshold_for_root_member() {
+        let nodes: Vec<[u8; 32]> = (0..10).map(|i| [i as u8; 32]).collect();
+        let overlay = TreeOverlay::new(TreeOverlaySettings {
+            current_leader: nodes[0],
+            nodes,
+            entropy: [0; 32],
+            number_of_committees: 3,
+            leader: RoundRobin::new(),
+        });
+
+        assert_eq!(overlay.super_majority_threshold(overlay.nodes[0]), 3);
+    }
+
+    #[test]
+    fn test_leader_super_majority_threshold() {
+        let nodes: Vec<[u8; 32]> = (0..10).map(|i| [i as u8; 32]).collect();
+        let overlay = TreeOverlay::new(TreeOverlaySettings {
+            nodes: nodes.clone(),
+            current_leader: nodes[0],
+            entropy: [0; 32],
+            number_of_committees: 3,
+            leader: RoundRobin::new(),
+        });
+
+        assert_eq!(overlay.leader_super_majority_threshold([0; 32]), 7);
+    }
+}
diff --git a/consensus-engine/src/overlay/tree_overlay/tree.rs b/consensus-engine/src/overlay/tree_overlay/tree.rs
new file mode 100644
index 00000000..076633fe
--- /dev/null
+++ b/consensus-engine/src/overlay/tree_overlay/tree.rs
@@ -0,0 +1,190 @@
+use crate::{Committee, NodeId};
+use blake2::{digest::typenum::U32, Blake2b, Digest};
+use std::collections::{HashMap, HashSet};
+
+fn blake2b_hash(committee: &Committee) -> [u8; 32] {
+    let mut hasher = Blake2b::<U32>::new();
+    let mut tmp = committee.iter().collect::<Vec<_>>();
+    tmp.sort();
+    for member in tmp {
+        hasher.update(member);
+    }
+    hasher.finalize().into()
+}
+
+#[derive(Debug, Clone)]
+pub(super) struct Tree {
+    pub(super) inner_committees: Vec<NodeId>,
+    pub(super) membership_committees: HashMap<usize, Committee>,
+    pub(super) committee_id_to_index: HashMap<NodeId, usize>,
+    pub(super) committees_by_member: HashMap<NodeId, usize>,
+}
+
+impl Tree {
+    pub fn new(nodes: &[NodeId], number_of_committees: usize) -> Self {
+        assert!(number_of_committees > 0);
+
+        let (inner_committees, membership_committees) =
+            Self::build_committee_from_nodes_with_size(nodes, number_of_committees);
+
+        let committee_id_to_index = inner_committees
+            .iter()
+            .copied()
+            .enumerate()
+            .map(|(idx, c)| (c, idx))
+            .collect();
+
+        let committees_by_member = membership_committees
+            .iter()
+            .flat_map(|(committee, members)| members.iter().map(|member| (*member, *committee)))
+            .collect();
+
+        Self {
+            inner_committees,
+            membership_committees,
+            committee_id_to_index,
+            committees_by_member,
+        }
+    }
+
+    pub(super) fn build_committee_from_nodes_with_size(
+        nodes: &[NodeId],
+        number_of_committees: usize,
+    ) -> (Vec<[u8; 32]>, HashMap<usize, Committee>) {
+        let committee_size = nodes.len() / number_of_committees;
+        let remainder = nodes.len() % number_of_committees;
+
+        let mut committees: Vec<HashSet<NodeId>> = (0..number_of_committees)
+            .map(|n| {
+                nodes[n * committee_size..(n + 1) * committee_size]
+                    .iter()
+                    .cloned()
+                    .collect()
+            })
+            .collect();
+
+        // Refill committees with extra nodes
+        if remainder != 0 {
+            for i in 0..remainder {
+                let node = nodes[nodes.len() - remainder + i];
+                let committee_index = i % number_of_committees;
+                committees[committee_index].insert(node);
+            }
+        }
+
+        let hashes = committees.iter().map(blake2b_hash).collect::<Vec<_>>();
+        (hashes, committees.into_iter().enumerate().collect())
+    }
+
+    pub(super) fn parent_committee(&self, committee_id: &NodeId) -> Option<&[u8; 32]> {
+        if committee_id == &self.inner_committees[0] {
+            None
+        } else {
+            self.committee_id_to_index
+                .get(committee_id)
+                .map(|&idx| &self.inner_committees[(idx / 2).saturating_sub(1)])
+        }
+    }
+
+    pub(super) fn parent_committee_from_member_id(&self, id: &NodeId) -> Committee {
+        let Some(committee_id) = self.committee_id_by_member_id(id) else { return HashSet::new(); };
+        let Some(parent_id) = self.parent_committee(committee_id) else { return HashSet::new(); };
+        self.committee_by_committee_idx(self.committee_id_to_index[parent_id])
+            .cloned()
+            .unwrap_or_default()
+    }
+
+    pub(super) fn child_committees(
+        &self,
+        committee_id: &NodeId,
+    ) -> (Option<&[u8; 32]>, Option<&[u8; 32]>) {
+        let Some(base) = self
+            .committee_id_to_index
+            .get(committee_id)
+            .map(|&idx| idx * 2) else { return (None, None); };
+        let first_child = base + 1;
+        let second_child = base + 2;
+        (
+            self.inner_committees.get(first_child),
+            self.inner_committees.get(second_child),
+        )
+    }
+
+    pub(super) fn leaf_committees(&self) -> HashMap<&[u8; 32], &Committee> {
+        let total_leafs = (self.inner_committees.len() + 1) / 2;
+        let mut leaf_committees = HashMap::new();
+        for i in (self.inner_committees.len() - total_leafs)..self.inner_committees.len() {
+            leaf_committees.insert(&self.inner_committees[i], &self.membership_committees[&i]);
+        }
+        leaf_committees
+    }
+
+    pub(super) fn root_committee(&self) -> &Committee {
+        &self.membership_committees[&0]
+    }
+
+    pub(super) fn committee_by_committee_idx(&self, committee_idx: usize) -> Option<&Committee> {
+        self.membership_committees.get(&committee_idx)
+    }
+
+    pub(super) fn committee_idx_by_member_id(&self, member_id: &NodeId) -> Option<usize> {
+        self.committees_by_member.get(member_id).copied()
+    }
+
+    pub(super) fn committee_id_by_member_id(&self, member_id: &NodeId) -> Option<&[u8; 32]> {
+        self.committees_by_member
+            .get(member_id)
+            .map(|&idx| &self.inner_committees[idx])
+    }
+
+    pub(super) fn committee_by_member_id(&self, member_id: &NodeId) -> Option<&Committee> {
+        self.committee_idx_by_member_id(member_id)
+            .and_then(|idx| self.committee_by_committee_idx(idx))
+    }
+
+    pub(super) fn committee_by_committee_id(&self, committee_id: &NodeId) -> Option<&Committee> {
+        self.committee_id_to_index
+            .get(committee_id)
+            .and_then(|&idx| self.committee_by_committee_idx(idx))
+    }
+}
+
+#[cfg(test)]
+mod tests {
+    use super::*;
+
+    #[test]
+    fn test_carnot_tree_parenting() {
+        let nodes: Vec<[u8; 32]> = (0..10).map(|i| [i as u8; 32]).collect();
+        let tree = Tree::new(&nodes, 3);
+
+        let root = &tree.inner_committees[0];
+        let one = &tree.inner_committees[1];
+        let two = &tree.inner_committees[2];
+
+        assert_eq!(tree.parent_committee(one), Some(root));
+        assert_eq!(tree.parent_committee(two), Some(root));
+    }
+
+    #[test]
+    fn test_carnot_tree_root_parenting() {
+        let nodes: Vec<[u8; 32]> = (0..10).map(|i| [i as u8; 32]).collect();
+        let tree = Tree::new(&nodes, 3);
+
+        let root = &tree.inner_committees[0];
+
+        assert!(tree.parent_committee(root).is_none());
+    }
+
+    #[test]
+    fn test_carnot_tree_childs() {
+        let nodes: Vec<[u8; 32]> = (0..10).map(|i| [i as u8; 32]).collect();
+        let tree = Tree::new(&nodes, 3);
+
+        let root = &tree.inner_committees[0];
+        let one = &tree.inner_committees[1];
+        let two = &tree.inner_committees[2];
+
+        assert_eq!(tree.child_committees(root), (Some(one), Some(two)));
+    }
+}