5 Takeaways From Chia Network’s New White Paper

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Written by SciTechNerds

February 14, 2021

5 Takeaways From Chia Network's New White Paper

It would take 21 years for the remainder of the world to mine as much of the Chia (XCH) cryptocurrency as the company behind it will have on the day its mainnet launches next month.

“We believe that chia, a new digital currency built on our new blockchain with radically different features and security than other digital currencies, will ultimately deliver on the promises of ‘magic internet money,’” the company argues in its first model of a new business white paper launched on Wednesday.

The size of the pre-mine is one notable revelation from the paper, during which Chia additionally introduced its mainnet will launch on March 17 or earlier. Farmers (the network’s equivalent of bitcoin miners) will be capable to start farming instantly. The community’s cache of pre-mined XCH, nonetheless, will be governed utilizing a traditional format: Chia plans to take its company public.

Chia was founded by Bram Cohen, the creator of BitTorrent, one of the most influential protocols on the web. The company he founded was later sold to the Tron Foundation in 2018.

Chia first introduced its intention to go public by way of the U.S. Securities and Exchange Commission’s so-called mini-IPO in 2018, however the decentralized internet startup Blockstack won out as the pioneer there, raising $23 million under Regulation A+ in 2019. Last year, Chia raised a fresh round of $5 million in funding led by Slow Ventures.

Plans have shifted since then, with the company now planning to, one way or another, take its offering to a national stock exchange where it can be traded by the general public and the company will be subject to the identical transparency as any publicly traded firm.

One of Chia’s early backers was AngelList co-founder Naval Ravikant, who advised CoinDesk in an e mail, “I backed Chia because I’ve known Bram for a long time and he is one of the greatest living protocol designers (BitTorrent), right up there with Satoshi and Vitalik.”

Chia has previously articulated its technical vision, a consensus model known as Proof of Space and Time (PoST). This new paper articulates Chia’s vision for sustainability.

Chia’s president and COO, Gene Hoffman, advised CoinDesk that the general public ought to control more XCH than the company a lot sooner than 21 years and that the token shouldn’t be the important part of the consensus model anyway.

“Unlike most projects, coin ownership has nothing to do with the protocol – this is not Proof of Stake,” Hoffman explained by way of email. “The chart of ownership percentages of coins in the Whitepaper is a worst case as we expect to use shareholder distribution to migrate XCH out to a broad public shareholder base.”

Listed here are 5 key takeaways from Chia’s new roadmap.

1. The blockchain is designed to make home mining possible once more

PoST depends on loading up unused pc storage space with strings of digits that farmers (what Chia calls blockchain validators) allow to be loaded on their computer systems. The more room, the extra strings, the better their probability of successful  block.

“It is super simple. Just download the Mac or Windows version and double click,” Hoffman advised CoinDesk. “I’m pretty sure this will be the easiest cryptocurrency to validate for normal people ever.”

Different blockchains take a similar strategy, such as Spacemesh. And Filecoin also seeks to capitalize on unused storage space.

In its testnet phases, Chia has reached as many as 1,700 nodes already, which is very likely to indicate something about interest in running a node when mainnet launches next month. Its public chat channel on Keybase has virtually 4,000 individuals in it.

2. Chia favors predictable, steady inflation over a hard cap

Bitcoin maxis fixate on the hard cap, however Chia argues that it’s not a fixed quantity that matters so much as a predictable quantity. Chia has no cap, but it’s also not going to shock holders with unanticipated emissions.

“Being able to directly calculate a shared expectation of the total supply at any given time gives much the same financial and peace of mind benefit,” the white paper argues.

As noted, the company will launch the mainnet with 21 million XCH, a nod to bitcoin, and farmers can begin earning it straight away. Whereas it can take 21 years for the supply to double via farming, Hoffman is aware of that it will likely be very close in only six years. Then emissions will decelerate significantly underneath the halving schedule.

By then, it’s possible that the company could have bought or airdropped a substantial quantity of XCH.

3. Plans to embrace regulators, particularly by leading with an organization that has public reporting requirements

“We have seen the scams and farces that have come before our project in this space and we will instead embrace the regulators,” the white paper states. “It should not be controversial that investors deserve protection through public disclosure and certainly the public shouldn’t be sold investments without that legally required transparency.”

By going with a public itemizing, Chia will basically permit backers to deal with its fairness as an exchange-traded fund (ETF) for the XCH cryptocurrency. That’s as a result of the corporate’s chief asset can be a substantial pre-mine (or pre-farm, in Chia lingo) of 21 million XCH that can be held for the corporate and is slated for use for advancing the community.

“It’s owned by the company and subject to significant corporate controls that will only get more teeth as and when we go public,” Hoffman mentioned. The provisions the corporate is dedicated to require it to solely use its stash of XCH in ways in which profit XCH holders.

“We can use the pre-farm to raise capital that only dilutes the shareholders and not the farmers,” Hoffman famous.

4. The Chia blockchain has a number of native options that should make familiar crypto applications simpler to trust and build

Chia comes with numerous features built in from the get-go that may enhance trust and safety for customers.

Listed here are just a few described within the white paper that jumped out.

  • Clawback escrow: “Withdrawal clawback escrow adds a time period in which the sender can claw back the funds after the initial transfer moves onto the blockchain.”
  • Slow paper wallet: “Slow paper wallets allow you to store a smart transaction that’s capable of starting a time delayed process to recover your funds in your hot wallet but it is not a duplicate of your private key.”
  • Colored coins: Ethereum’s ERC-20 coins are what colored coins were again when they were still an idea. “Chia coloured coins can be used to create ephemeral value and thus applications on the Chia blockchain don’t generally require flash loans. This has been one of the achilles heels of DeFi on Ethereum.”

Flash loans have been the key to assaults on decentralized finance projects such as bZx, Harvest and Yearn Finance.

5. Chia is skeptical about proof-of-stake’s security towards nation-states and other threats

“Their assumptions are inferior as they tend to cause centralization and are not as robust as Nakamoto consensus under international geopolitical pressure,” the white paper says of proof-of-stake (PoS) blockchains (after dismissing private, permissioned blockchains out of hand).

The issue with proof-of-work (PoW), Chia contends, is that it burns too much energy. Nonetheless, Chia additionally writes within the new white paper that its know-how enhances bitcoin, the biggest PoW community.

However PoS, which Ethereum is moving toward, is another matter. Chia doesn’t think the security of this model is adequate. The white paper contends, “A considerable amount of effort is being expended attempting to solve what we believe are intractable problems with Proof of Stake as an alternate strategy to use less electricity securing public blockchains.”

It cites three key points: centralization, where tokens have a tendency to concentrate among a few giant holders; long-range attacks,  the history of the chain can be revised more easily than in PoW as a result of there is no, well, work (to speak of) in PoS; and the inability of PoS networks to recover from a 51% attack.

It remains to be seen until there is real value on the line, however the hope is that PoST can decrease the energy footprint of “magic internet money” without sacrificing the censorship resistance and decentralization that makes cryptocurrency so interesting to the cypherpunk-inclined and those coping with unreliable nation-state currencies.

Within the rapid time period, Chia aims to scale what’s worked about crypto thus far and build on it in a way that’s accessible for everybody. The white paper states:

“Someday we all might buy coffee in San Francisco with chia, but for now we think banks and governments and De-Fi collectives will use it to build new financial technology, solve cross border payments, and invent a new future that doesn’t require trusting so many middle men.”

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