Blockchain Platforms, Interoperability & Scaling
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The author of this research is looking to invest or is invested in some of the included projects but tends to stay unbiased while researching and writing. This research is not intended as a promotion and is not part of any paid promotion. Cryp2Gem strongly believes in unbiased researching, sharing knowledge and transparency even when possibly invested, which will always be stated.
This is not financial advice, anything you read should not be perceived or conveyed as financial advice. The author takes no responsibility if you choose to invest in any project that we produce a research piece for. Cryp2Gem solely produces research to assist the cryptocurrency community as a whole and will state when invested or looking to invest. It is significant for all to do their own due diligence when considering an investment.
The author of this article is invested in some of the mentioned projects in the following content. The investments are with Matic, Ethereum, Cosmos, Flow, Elrond, Near, Geeq and Aergo. Looking to invest in Solana, IRISNet and Moonbeam in the future.
You can find the Cryp2Gem ALT Report — Part : 2020: A Year in Review, Finance & InsurTech amongst our published articles.
BLOCKCHAIN PLATFORMS
Without any doubt, we believe in the success of Ethereum and their decentralised network. Ethereum has a huge network and support of developers, first mover’s advantage and adopting in so many fields. There are a total of 351,649 ERC-20 token standard contracts and Ethereum’s token ETH has currently almost 11% dominance. Ethereum 2.0 is being developed which will allow staking, higher throughput, sharding and lower gas cost. Gas cost and network overloads are currently the highest problems in the ecosystem. Ethereum also has bridges with other networks via Ethereum Virtual Machine (EVM) as well as enterprise adopting, even permissioned extensions such as Hyperledger Besu.
There are some great projects building solutions that will help the Ethereum ecosystem to be adopted even to a higher degree. Those projects are becoming true pillars of the Ethereum Ecosystem. More about them in the following.
Who can actually compete with Ethereum? There are some interesting tokenized Blockchain-as-a-Service (BaaS) solutions like Morpheus Labs, Fleta and Kadena hybrid platform. Klaytn is another interesting one as it is backed and developed by an S.Korean mobile giant Kakao. They were also discussing the possibilities of launching central bank digital currency (CBDC) for the Bank of Korea. But none of those blockchain service providers can’t be considered as actual competitors, they might find a niche and a specific use case within the fields they want to operate.
True competitors of Ethereum are non-tokenized blockchain platforms and BaaS services such as Hyperledger, Kaleido or R3’s Corda. Those are enterprise private blockchain platforms while Ethereum is public open and decentralised blockchain so those might not be considered as direct competitors. It would be hard to compete with those as enterprises will mostly go for simple non-tokenized solutions. Most of the biggest companies are already working on their own products or are thinking about it. Tokens do complicate things and are usually not even needed. There are way too many projects building products around tokens and not the other way around. Or just force the use of tokens in a form of a Proof-of-Stake (PoS) based consensus mechanism and governance model. I believe that permissioned architecture (with Delegated Proof-of-Stake (dPoS) or Proof-of-Authority (PoA) mechanisms) is much more suitable for enterprise use cases than permissionless. It depends on the cause of use in the end.
There are some other interesting blockchain platforms such as Ava Labs, Solana, Near and Komodo. Komodo and Near are very secure and offer a high level of privacy and anonymity. Near is compatible with Ethereum which means EVM, bridges, tools to make it easy for developers to migrate to Near. The Rainbow Bridge supports tokens (ERC-20, ERC-721) & solidity contracts. Very scalable and low-cost environment. Amongst the project’s building on Near we can find ZED RUN, Flux, Mintbase, Lenara Plantary, Paras, ARTerra and others. They also had an interesting Hackathon recently. Looks like they will have a very fruitful future and will greatly complement the top blockchain ecosystem — Ethereum.
Both Harmony and Elrond are building innovative scalable networks based on sharding enabling high throughput. Elrond had amazing success in the last year and might be worth following in the future as well. Elrond is having an interesting ELGD delegation initiative currently with good incentives.
Our team is proud to have been following Elrond since its token offering era.
Talking about speed, Solana is the fastest out there, a high-speed single-layer blockchain, currently supporting peak capacity of 65k transactions per second and 400ms block times in a globally distributed network with more than 70 nodes. It’s explicitly built to scale transaction throughput with Moore’s Law. There is no sharding required to achieve this throughput. They promise to reduce block times to as low as 80ms even. The ecosystem is already growing. Serum DEX was built on Solana which might become one of the most important DEXs in the near future. Solana also has it’s first NFT marketplace solible.com built by Bonfida. Both might be important for Solana. Bonfida offers a data analytic service. Oracle, exchange data analytics, API documentation. They are already offering a few data feeds and analysis and NFT products for Serum. Some impressive statistics: about 100 project integrations, 350+ validators, 8,3 billion transactions and 54 million blocks produced and more than 1k developers participating in their recent hackathon.
Flow! Developed by Dapper Labs (CryptoKitties and NBA TopShots), big brands licences with NBA, UFC, Dr Seuss and endorsed by Samsung, Animoca Brands and Ubisoft amongst others which shows that some of the top developers and world’s biggest brands are already building on their blockchain. Flow is a layer-1 blockchain with high speed and throughput and complex layered node architecture allowing that. This layered protocol design allows Flow to achieve high performance and low cost without compromising on decentralization or breaking up the network through sharding. No sharding is needed. Flow is a fast, secure, and developer-friendly blockchain designed for high-throughput, low-latency consumer applications, games, and digital assets. Flow might be one of the most important and successful projects in 2021.
As already mentioned 2020 was the year of Polkadot. It was in the spotlight and still, is. All connected with the Polkadot ecosystem is an interesting investment for most now. There is value with a project being built on Substrat. That makes absolutely no sense. Unfortunately, we have seen many of those. But Gavin Wood, founder of Polkadot, has built an amazing interoperable ecosystem with Parity Substrate and Polkadot as a Relay Chain. We shall see the first parachains being added to the Relay Polkadot soon and the growth and beginning of the amazing Ecosystem. Very important for the Polkadot environment is also Kusama, a Polkadot’s canary network used for experimental purposes. It will be a valuable environment allowing projects being launched as a parachain for much more cost-effective terms than on Polkadot.
Cosmos Network is another vast interoperable ecosystem with more than two hundred projects being built with Cosmos SDK and Tendermint. With the recent upgrade of highly anticipated Inter-Blockchain Communication (IBC) called the Stargate upgrade, it will be possible for anyone to create IBC clients, connections, and channels, but not yet possible to transfer tokens to and from the Hub using IBC’s fungible token transfer protocol (ICS 20). Completing the upgrade to its final version will make the Cosmos environment highly interesting for many new projects. Shared security might be introduced in the future as well — so the startups will be able to borrow the security from the Cosmos Hub in a similar way then Parachains will through Polkadot Relay Chain validators. But running a chain on Cosmos and building with Cosmos SDK is a more cost-effective solution and has inter blockchain possibility which might affect the whole crypto ecosystem. On the other hand, Polkadot’s parachains will have high security but the slots will be very expensive, voted upon and offered via Initial Parachain Offering (IPO). Parachain slots share the security with their underlying ecosystem such as in Polkadot where you would need to attack Polkadot itself in order to attack the Parachains, while the blockchains on Cosmos are individual, self-sovereign.
Kusama, a similar environment as Polkadot, makes it cheaper for startups to try out innovative ideas in a relay chain/parachain environment before they go for the very expensive Polkadot parachain slots. Many will stay within the Kusama ecosystem in the end.
Polkadot has about 85 contributors on the Polkadot Github while Cosmos Github shows almost twice as many with 165 contributors. Polkadot has 330+ projects while Cosmos 200+. Polka hype has reflected in the emergence of many empty projects using the hype that don’t have serious long-term plans with development. It will be interesting to follow the upcoming IPO voting and competing for parachain slots. Hopefully, Polkadot will grow in a healthy environment in the end.
Blockchain platforms are the most important sector of blockchain and we at C2G follow the development closely. As the Polkadot Relay Chain does not support smart contracts, all the Parachains connected to it need a smart contract solution like Moonbeam Network, Edgeware or others. We anticipate Moonbeam Network with great interest. A blockchain platform that is built on Substrate but has a cross-chain integration. Not just for other Parachains but also for Ethereum, Bitcoin, Algorand. That means an interaction between the Polkadot ecosystem with other networks and their tokens. Tools, tokens, services, dApps that can be used from all the networks integrated. A very useful EVM compatible platform that will offer a bridge between Polkadot and Ethereum (and others in the future) and provide scalability for Ethereum based dApps, liquidity from BTC (and ETH) and bring higher adopting probability for Substrate based decentralised applications (DApps).
Having both private and public hybrid blockchain architecture is very interesting for the corporate, enterprise and finance solutions. There is a very interesting open blockchain platform focusing on the business sector. Aergo allows businesses to build innovative applications and services by sharing data on a trustless and distributed IT ecosystem. With the ability to deploy on either public or private blockchain networks, it gives businesses the flexibility in developing and deploying blockchain applications with unparalleled speed, scalability and performance. Aergo is designed as a flexible, plugin-based smart contract infrastructure. Ethereum Virtual Machine or AergoSQL available. Another hybrid blockchain is LTO Network with a focus on private data Peer-to-Peer (P2P) and Business-to-Business (B2B) sharing. LTO is amongst the top 10 most used blockchains worldwide, achieving the world’s highest blockchain adoption score.
C2G picks: Ethereum, Polkadot & Kusama, Cosmos, Flow, Solana, Elrond, Near, Aergo, LTO and Moonbeam
Far from ignoring: Morpheus Labs
DYOR: Geeq & AVA Labs
INTEROPERABILITY
Already mentioned the greatest interoperable networks Polkadot and Cosmos in the previous section. Interoperability is the key to adopting. Cross-chain support within the ecosystem and inter blockchain connectivity as well as interoperability with other chains but also off-chain systems.
Quant Network is building enterprise-level interoperable blockchain operating system Overledger connecting different blockchains as well as off-chain systems. Quant’s already completed the majority of their product development. Having focus on onboarding clients and building new features and products on top of that. Quant’s highlights are very impressive: Overledged has developed 2 years ago; very successful, experienced and well connected Founder and CEO Gilbert Verdian; impressive partners such as SIA, Oracle, Hyperledger amongst many others; working on interoperability ISO standards; Quant Health vertical in the plan; possible interest of Federal Reserve and FinCEN. Quant’s Overledger Network, a network of networks for community gateways and enterprise gateways which is due to launch soon.
Gilbert Verdian about Overledger Network (OVN) Gateway: “We’re thrilled about OVN and what it’s shaped to be. Since September with the help of the community we’ve been stress testing gateways, updating protocols, Overledger itself and gearing for launch. We’re getting close to it now and looking at a time in the first half of 2021.
What people and enterprises can do with OVN as an ecosystem is exciting. In parallel we’ve been meeting financial institutions, enterprise clients and even Governments to connect to OVN. Our vision is that OVN is going to be the hub that connects the US, China, Latin America, Australia, UK and Europe to interoperate digital assets and cross-border transactions. We’ve had countries approach us to use OVN to enable a data marketplace for all their citizens to interoperate and transact identity and data domestically and across the ecosystem for cross-border transactions. OVN is going to enable all participants, gateway operators and enterprises to transact, consume and sell data, resources and APIs to the ecosystem. Gateway operaterators with the open-source connector and connect any data or resource for the OVN to buy from them. Enterprise clients can come to you to buy or transact with your gateway and what you’re offering — all payable in QNT. We’ve done a LOT of work with the Treasury and payments and have created our multi-DLT payment channels — think of it as multi-chain lightning networks across blockchains. We’ve even managed to bring the enormously high gas fees down and reduced them by up to 93% — streamlining payments for all blockchains. If anyone wants blockchain faster payments they can come to Overledger Network.”
If Quant can develop the OVN and their other features and bring the customers (which should be there already) which would start using the Overledger the sky’s the limit for Quant. Their problem is also lack of liquidity for QNT token and a missing Tier 1 exchange listing. That should follow the release of the OVN in the near future.
We have been following a very interesting interoperable BaaS Vietnamese project since its Initial Exchange Offering (IEO) on Gate.io exchange. KardiaChain is developing an easy and fast implementation of inter-blockchain connections which require no change in participating chains. KardiaChain follows an integration without assimilation approach, which focuses on simplicity and ease-to-use from the perspectives of both end-users and DApp developers.
They are developing mobile payment channels for the largest telecom company in Vietnam — Viettel and are working with LG CNS on smart city solutions and MixMarvel on cross-chain NFT transfers, Geleximco and became a member of Enterprise Ethereum Alliance (EEA).
The last mention under the interoperable section will be IRISNet, a blockchain infrastructure which serves as a communication relayer for other blockchains and their applications. Built with Cosmos-SDK, IRIS Hub is designed to support not only token transfers across different blockchains but also to allow consumption of data and computing resources across heterogeneous systems. The interoperability supported by IRISnet is suitable for applications requiring off-chain and inter-chain information exchange and collaboration. Examples include privacy-preserving healthcare data exchange, the inter-chain marketplace, digital assets exchange for supply chain finance, and more. Probably the most interesting fact is that China’s Blockchain Service Network (BSN) inter-chain communication service hub will use IRISnet’s Inter-Realm Industry Trust Alliance (IRITA). IRITA is a tokenless open-source enterprise consortium blockchain development framework in the Cosmos ecosystem. IRITA’s inter-chain communication protocol will form the foundation for the BSN service hub. Chainlink’s oracle network will be integrated directly to the BSN using IRITA.
C2G picks: Quant Network & KardiaChain
Far from ignoring: IRISNet
DYOR: Cardstack
SCALING
Layer 2 is a term describing secondary solutions designed to help scale your application by handling transactions off the main Layer 1 chain.
Transaction speed suffers when the network is busy and can make the user experience poor for certain types of DApps. And as the network gets busier, gas prices increase as transaction senders aim to outbid each other. This can make using Ethereum very expensive with very high gas fees. Currently, the ETH price is approaching $1,3k and the BTC is above $40k. All networks are super busy and the transaction volume is massive. $45B 24h volume on Ethereum Network. This makes the network clogged and the gas prices as high as 500 GWEI now. Huge gas prices and clogged network are the reasons why scaling solution matter and are necessary for a healthy Ethereum Ecosystem. Ethereum 2.0 is still far from being developed. The development will take another couple years and who knows how long will the DApp migration take.
Matic Network brings massive scale to Ethereum using an adapted version of Plasma with PoS based side chains. Sidechains have a high throughput, as high as 7k transactions per second (TPS).
Some statistics of Matic Network found on their web site: 2M+ tx, 100k+ daily tx, 60+ validators, 50+ dApps (11 gaming, 9 DeFi) including Decentraland, Somnium Space, Terra Virtua, The Sandbox, NeonDistrict. We can easily say that Matic is becoming a very important part of the Ethereum Ecosystem and even a pillar and the first choice as a scaling solution.
It is important to mention that USDC is now available on Matic Network to enable frictionless transfers. Tether (USDT) is available on Matic Network to overcome Ethereum’s performance constraints as well.
Matic is also endorsed by Indian state government-led blockchain accelerator T-Block who will use Matic Network to ramp up blockchain growth (as well as Aeternity and Harmony). Matic joined forces with LTO Network to launch an advanced NFT-integrated supply chain solution. NFT for every QR code is the motto! Matic is currently the most adopted layer 2 solutions! Matic provides developers with a scalable sidechain on Ethereum enabling cheaper and faster transactions. Developers deploying on Matic’s sidechains get access to a host of support services including meta-transactions, wallet integrations, oracle services, native NFT marketplaces & DEx’s.
Another Ethereum Layer 2 scaling solution is Skale. Compared to Matic it offers the creation of custom made elastic sidechains. The Skale Network consists of a large set of nodes, all running concurrently and independently, validating transactions within the elastic sidechains they are overseeing.
The promising scaling solution zkRollups was already described in the Finance section with Loopring. Many startups are building Ethereum layer 2 scaling solutions with zkRollup, Optimistic Rollups (Matter Labs, OmiseGo, Aztec, etc.)and Plasma. Uniswap is looking into integrating Optimistic Rollup technology into its V3.0. They seem to be considering Optimism.
Cryp2Gem picks: Matic & Loopring
Far from ignoring: Skale
