How to Launch Permissionless Blockchain Projects | Crowd Funding is No Longer Healthy for Today’s Blockchain Industry
14 August, 2019
On August 13, Guang Yang, Conflux Research Director and Shu Shang, the Lead Technical Business Technology Director were invited to the SuperTalk community of Odaily and discussed how public chains can launch successfully.
In the Q&A session, Guang points out that a public chain will most likely achieve large-scale adaption in the fields of banking and finance. He believes that Bitcoin is now used as electronic cash on a large-scale. From fighting against inflation and large-scale remittance to payment in retail stores through the lightning network, Bitcoin is already functioning as electronic cash or even electronic gold.
“Public chains essentially solve the biggest and most costly trust issue. Which industries have a trust issue? The banking and finance industry. From currency issuance, deposit and loan businesses or wealth management businesses to asset securitization business, these are the fields where blockchain and finance become friends." Guang said.
Shu talked about some trending topics in the market, for example, how should the public chain promote the development of their token economy. Also, he talked about weighing the relationships between “token value”, “investor sentiment” and “commitment to projects”, and whether there is a contradiction between “blockchain technology development” and “coin issuance”.
Shu Shang finally revealed to us that the Conflux team promised never to conduct crowd-sourcing or cooperate with any centralized exchange to conduct an IXO.
Below is the record of the Q&A session:
What is Conflux? What problems does Conflux solve?
Odaily Q1: Can you briefly summarize what Conflux does primarily? What were the problems leading to the realization of Conflux?
Guang: Conflux's goal is to provide an underlying public blockchain with high-security and a decentralized consensus mechanism that can provides high throughput and fast confirmation. It gets rid of the problem of low performance, high transaction costs, and failure to support large-scale applications that the existing public chains have. Compare it to a technological jump from 2G to 5G in the telecommunication industry.
Odaily Q2: What is the biggest advantage of Conflux, compared with other famous public chains?
Guang: Conflux is the public chain with the best performance under the premise of ensuring security and decentralization. Conflux uses POW, the most proven and successful consensus mechanism so far, to ensure a high-level of security and decentralization, while out-performing other public chains.
Odaily Q3: What is the biggest difference between the consensus algorithm adopted by Conflux and the Nakamoto Consensus?
Guang: The biggest difference lies in the organizational structure and trade-off model for the block.
All the blocks generated under the Nakamoto Consensus form a tree, then the longest chain is chosen and the remaining forks are discarded. However, Conflux organizes all the blocks in a tree structure and then sorts all the blocks on the entire tree without discarding any honest and valid block. This way, we can make better use of all blocks and achieve higher throughput.
Odaily Q4: Why not choose the “Longest Chain Rule” adopted by Bitcoin (the Nakamoto Consensus algorithm)?
Guang: The Longest Chain Rule adopted by the Nakamoto Consensus protocol is difficult to handle concurrent blocks. Therefore, the block-producing speed has its limits, the bandwidth cannot be fully utilized and the upper limit of throughput is quite low.
Conflux organizes the blocks in a treegraph structure and uses the GHAST rules to sort all blocks, hence, taking good care of concurrent blocks. Therefore, a higher rate of block producing can be adopted while maintaining system security, and both throughput and conformation times are better as well.
Conflux can achieve a throughput equivalent to the node bandwidth, which is about 10Mbps of consensus throughput with 20Mbps bandwidth per node.
Recent developments in Conflux
Odaily Q5: When is the Conflux main network expected to be launched?
Guang: It is expected to be launched between Q4 this 2019 and Q1 2020. The exact time depends on whether bugs are detected in the test network and how the repair progress succeeds. Because underlying public chains have high requirements for security and reliability, we hope that we can come up with a mature and stable version at the beginning of the launch.
Odaily Q6: What is the current state of Conflux’s technological development?
Guang: Currently, the development of Conflux is progressing well, and the consensus nodes on the test network are running stable. Projects that are currently being tested and optimized, including check-point data compression, light nodes, system parameter adjustments, and performance optimization on implementation.
Another point is the optimization of the explorer performance because, in order to keep up with Conflux's speed to index every transaction and support a variety of queries, the back-end database will face a lot of stress.
Odaily Q7: What are the main responsibilities of Professor Andrew Yao in Conflux? How deep is the involvement of Prof. Yao?
Guang: Prof. Andrew Yao is guiding us from a higher stan-point, pointing out the direction in our theoretical research and our future development. For example, Prof. Yao guided us on proving the security of the GHAST rule. Conflux’s research paper on the consensus algorithm that was previously published on arXiv was also completed under the guidance of Prof. Yao.
In addition, in terms of management, Prof. Yao is a member on the Board of Directors, supervising and guiding the fund's use and operation. As for the development of our source code, Prof. Yao certainly does not participate. Prof. Yao is a theoretical computer scientist and not an engineer. Developing engineering systems is not his strength.
Speaking of engineering development, Professor Wei Xu from Institute for Interdisciplinary Information Sciences (IIIS) at Tsinghua University is deeply involved in the design of the Conflux system and has discussed many of Conflux's technical details with our core development team. Mr. Xu gave us a lot of guidance and help, especially in regards to the top-level architecture of Conflux.
Odaily Q8: What are the problems of the public chain ecosystems that the Tree Graph (TG) technology adopted by Conflux solve?
Guang: Compared with other public chains, Conflux's TG structure can support concurrent blocks, which solves the limitation of the fact that block producing speed must be much lower than the block broadcasting speed in the network. Solving this problem greatly improves throughput.
Compared with other public chains that adopt graph structures, the TG structure supports more efficient calculations, lowers the computational burden on consensus nodes, avoiding the computational power of nodes being the bottleneck of the consensus system.
Consensus algorithms for many graph structures have not been implemented because it is very difficult to calculate the necessary information for reaching a consensus on the graph, especially if the entire graph is large and updated on a frequent basis.
Conflux's Tree Graph does not have these problems. If the DAG chart used in the ordinary graph-based blockchain is the textbook for an open book exam, the TG is a textbook where all key points are underlined.
Which application scenarios will the public chain launch first?
Odaily Q9: At present, in which fields are public chains most likely to reach mass-adoption?
Guang: I think the biggest application scenario is still in the banking and finance industry.
Bitcoin is now used on a relatively large scale as electronic cash. From fighting against inflation, large-scale remittances to online payments at retail stores, Bitcoin is already functioning as a medium for electronic cash or even referred to as the electronic gold.
Public chains essentially solve the biggest and most costly trust issue. Which industries have a trust issue? The banking and finance industry. From currency issuance, deposit and loan businesses or wealth management businesses to asset securitization business, these are the fields where blockchain and finance become friends.
As public chains with higher security and better performance are launched, commercial functions of the on-chain banking will gradually appear, develop and grow, especially after ordinary people start to use the blockchain thanks to better user experience. During this process, the centralized entity of banks may gradually disappear in some areas, and the money earned by the banking industry can possibly be divided into the hands the miners who create, join, use smart contracts and maintain the blockchain network, thereby creating a beautiful scenario where everyone can share, participate and maintain the system together.
Odaily Q10: How do miners mine the token in Conflux’s test-net? How to calculate the block rewards?
Shu: Chenxing Li has a video on Confi-TV: "Conflux test network mining tutorial v0.1.6 (no-programming-experience friendly version)" .
Shu: The core goal of Conflux's operations is to [allow the public chain to be used by more people]. This involves multiple aspects:
- Provide developers with development tools
- The underlying infrastructure of public chains (including solutions for Layer 0, Layer 1 and Layer 2)
- DApp development tools (IDE, SDK, etc.)
- DApps public services (wallets, decentralized exchanges, blockchain oracles, etc.)
- Provide collaboration tools for community users
- Collaboration Platform for Community Users (Conflux Bounty Program)
- Provide solutions for "Blockchain+"
- Prof. Yao’s reputation gave us some advantages in our technical background.
- Collaboration with nations or local governments, as well as large enterprises to promote the launch of new projects
- Help the industry initialize sandbox regulations.
From bottom to top to C, from top to bottom to B, we are all actively advancing in the directions we set ourselves towards.
What improvements has Conflux made in terms of performance to meet commercial needs?
Odaily Q12: Some people say that the performance and TPS of many public chains on the market are not suitable for basic business scenarios. What improvements has Conflux made to deal with the problem?
Shu Shang: Simply put, we used PoW to outperforme DPoS.
Our technical team, owing several gold medals from the International Mathematical Olympiad (IMO), replaced the original DAG with a Tree Graph structure, the Longest Chain Rule (GHOST) with the GHAST rule (Greedy Heaviest Adaptive Subtree), and made a mathematical proof of the theory under Prof. Yao's guidance. The Impossible Triangle of performance, security, and decentralization cannot be broken, but we push the performance to the current physical limits while maintaining high-levels of security and decentralization.
The failure of the public chains to not gain mass-adoption is conclusive, so in addition to focusing on improving the performance of Layer 1, Conflux is also developing Layer 0 and Layer 2 expansion plans, so that the upper layers do not have to worry about TPS.
Conflux’s real-world applications
` Odaily Q13: What are the use-cases of Conflux in the real world? Which institutions are you cooperating with?
Shu: Currently, our main focuses are on cross-border payments, industrial supply chains, games, evidence preservation, etc. Conflux cooperates with agencies in each scenario. Conflux is very pragmatic in launching the scenarios and will only announce the progress to everyone after there is a solid one.
In addition, we believe that the blockchain is an infrastructure-level revolution. The biggest application scenario may be reshaping the collaborative relationship of all human beings. We are also actively exploring this with our Conflux Bounty Program and exploring the decentralized collaboration paradigm, which is very interesting. We hope to work with the community to advance this revolution.
How to balance the relationship among “token value”, “investor sentiment” and “commitment on projects”?
Odaily Q14: How do you think the relationship among “coin price”, “investor sentiment” and “commitment on projects” should be balanced after the Conflux tokens are issuance?
Shu: The reason why these three are not balanced is because the value of the token is not backed.
We believe that public chains are a platform to help people collaborate more effectively. Whether it is reduction of trust-costs, the reduction of transaction costs or the increase in value flow, they can all be mapped into a decline of collaboration costs. We can't guarantee a clear path to success for Conflux, but we have the ability and hope to involve all members of the community in the construction of Conflux to create value and explore the direction together. As a result, we are working hard to provide a better collaborative platform for the community through our Bounty platform. The Conflux Bounty platform will experience a process, where it will start centralize, become multi-centered and finally decentralized, gradually exploring the way of community collaboration and governance.
Conflux is community-wide, community-built and revenue-shared.
Odaily Q15: Recently, we found many news that the founders of public chain projects have announced their departure from the team. Other projects have been put on hold due to internal disagreements. Some famous public chain projects have been criticized on the secondary market due to poor performance. Many public chains that have made a lot of money during the bull market and still can’t find a good path to gain mass-adoption... Looking at the current public chain market, the situation does not seem to be promising. Some people even think that the current public chain is not as "vigorous" as many permissioned blockchains. What do you think of this distorted cycle of the public chain development?
Shu: Personal choices come from many reasons, and are is not easy to judge.
But for public chains, we think it is important to remember why you started. Regardless of whether a public chain is in a hot spot in the industry, public chains are in the most competitive battlefield of the blockchain revolution. We are committed to the intention and build a technical foundation for everyone to use the blockchain technology. Blockchains are for the community, we will do our best, and the community will have its own will. Do your best, listen to your destiny, haha.
Odaily Q16: Proper governance has always been a difficult aspect in the development of public blockchains. What do you think is the key to a successful “governance model”? Can you introduce the governance mechanism of Conflux?
Shu: The core issue of governance is the voting mechanism. The most difficult question in the voting mechanism is how to allocate voting rights. The innate rights of humans proposed by the United States can be viewed as voting rights allocation: one person, one vote. However, in the decentralized environment of blockchains, it is difficult to prove that "I am me", so how to allocate the voting rights is very difficult.
As we mentioned before, we are currently rolling-out a Conflux Bounty Program. The core principle is to use the actual labor to participate in the community building to get the token. This kind of token truly represents the contribution value of everyone. We may consider adopting this method to allocate voting rights in the future.
The contribution value may be a way of assigning voting rights, but we are still exploring.
Odaily Q17: How do you view the token economics of the public chains? Do you think there is a contradiction between promoting technological development and issuing tokens?
Shu: I think there is no contradiction. Technology and economics should be complementary.
The three most important elements of blockchains are tokens, incentives and the community. Tokens carry the value, incentives lead the way for cooperation, and the community is the fertile ground for value creation. Technology is the foundation for all of this to happen. To achieve commercial success, it must not be unilateral.
The Conflux team promises never to go public offering and IXO
Odaily Q18: The Conflux team has a strong academic background. Recently, there are some other hyped projects with strong academic backgrounds that have been hyped by the community, but have encountered difficulties and have been questioned, including conflicts with private investment institutions, problems or loopholes in crowd-funding, huge market value fluctuation after the tokens launching on exchanges, etc. What do you think?
Shu: First of all, we can't speak for other public blockchain projects, but we do have some ideas to deliver. I, on behalf of Conflux, would like to express our team's consensus:
Every Conflux member has never forgotten their original intention, and our goal is actually very simple – We hope Conflux can grow into a “useful” platform for everyone and thrive because of everyone's attention towards this “usefulness”. Every Conflux member will do their best to advance the project with respect of the market and regulatory rules.
It should be noted that I think crowd-sourcing is no longer a healthy form for today's blockchain industry. At present, Conflux has enough resources to realize the ideal public chain platform in my heart, so we promise that we will never do crowd-funding, nor conduct any IXO with any centralized exchange.
Friends who are interested in Conflux can participate in Conflux through community contributions or by providing security to the network after the main-net launches.
Finally, I would like to remind you that investing in cryptocurrency is highly volatile and is accompanied by high risks. This includes existing blockchain assets such as Bitcoin and ETH, as well as assets that may be derived from Conflux after the main-net launch.
As a decentralized public chain, we are unable to determine or control where Conflux's future assets may be and how they are traded. Not mentioning this is extremely irresponsible to the community.
We want to be responsible for all members of the community today and in the future, and please focus more on the technical aspects of Conflux. At the same time, I would like to say to all the friends who care about Conflux, thank you for your company, we are confident that Conflux will bring you enough surprises with technologies and applications, thank you!
Community Q1: Please briefly introduce GHAST.
Guang: In a nutshell, it is similar to GHOST, but it can achieve better performance and security through dynamic adjustment, especially against attacks such as balanced attacks.
When the honest computing power is concentrated, each block in GHAST has the same weight and a high TPS and therefore, fast confirmation can be achieved by rapid block generation.
In case the honest computing power is forked, GHAST will adjust the block weights while keeping the block-generating speed. This way only a small part of the blocks have a very heavy weight, and the displayed blocks participating in the consensus mechanism are similar to Bitcoin, which is beneficial to the rapid concentration of computing power. After the concentration, it will return to the mode of quick confirmation.
Community Q2: What are the problems that GHAST cannot solve?
Guang: GHAST cannot solve the problem of a 51% attack. It cannot solve the problem of the consensus forking when the network is blocked for a long time either.
Community Q3: Although the main network of Conflux is not yet launched, I am curious to know if in the future, Conflux plans to incubate any application, and what areas will it focus on?
Shu: The Conflux Foundation considers hatching a batch of applications for two purposes: 1. To set an example for everyone; 2. To incubate a number of applications of public services, making it easier for everyone to start a business in Conflux.
Community Q4: A while ago, we saw a lot of chain targeting specific industries, I want to know what Conflux is focussing on. Developing applications or making better cross-chain solutions?
Shu Shang: De-Fi is the area that we are currently focusing on, but the industry is changing very fast, and we will have to adapt our strategy with the dynamics of the industry.