[Darpal Ratings] Review Dfinity: a high-performance, decentralized computing internet that can mutually benefit from reinforcing Ethereum
February 20th, 2018; by Darpal review team
These evaluations only represent the author’s personal opinion and are not intended as investment suggestions.
Dfinity’s website: dfinity.org
These evaluations only represent the author’s personal opinion and are not intended as investment suggestions.
Dfinity’s website: dfinity.org
Dfinity (B-investment grade)
Participation Acceptable
Risk: Medium
Popularity: High
As we have seen recently. there is an increased number of projects in the underlying facility sector will overwhelm Ethereum, leading to great innovations. This is good for the long-term development of the industry: more capital, talent, and technology are going to be used to solve those critical problems in the blockchain circle. But with such focus also comes tougher competition. In the blockchain circle, it is difficult for projects to survive. For those projects that are not able to meet their goals, they can only make some insignificant adaptations to previous thoughts or change some past expressions to better create the illusion of an overturn. As a result, they are doomed to fail as time goes by.
Among the projects having recently appeared, Dfinity is notable for its “infinite capacity” and “infinite computing” and deserves our attention. When initially looking at Dfinity’s website, we find that the company still focuses on those long-standing problems of bitcoin and the Ethereum system, problems relating to trade speed, scalability, and self-evolution. Given this, our evaluation will emphasize what we feel are the two most important problems facing Dfinity:
1. Is Dfinity’s plan innovative enough?
2. Can the Dfinity team execute this plan?
For those projects that require a long time from first conception to crowdfunding, the content on its website and white paper may be adjusted over time according to the market, the latest technical developments, consultants, partners, or financing. As we evaluate, we are looking beyond the disclosed information alone, and we may connect the project part directly, or contact managers or persons in charge of the community, in order to gather as much undisclosed information in as much detail as possible.
Vision (weight: 30%, score: 70)
According to its white paper, Dfinity aims to produce a blockchain computing facility that can conduct limitless computing and which possesses limitless scalability. Through its unique “Threshold Value Relaying” technology, Dfinity will deliver better performance than Ethereum internet and provide higher throughput, also shortening computing time and improving governance mechanisms.
Strategic positioning:
Full score: 60 Actual score: 50
At present, supporting plans of Ethereum include Plasma, Raiden, and so on. Meanwhile, underlying facilities like EOS and aelf differ greatly from Ethereum. As a smart contract platform, Dfinity is innovative because of its plan for scalability. According to Difinity’s white paper, apps now existing on Ethereum internet will be highly compatible on Dfinity. Dfinity can take advantage of future technical development and innovations of Ethereum internet while Ethereum can also adopt and learn from the development and breakthroughs of Dfinity.
Dfinity is innovative in two respects:
- The high performance brought about by its threshold relay plan: The threshold relay technology of Dfinity enables blocks to come into being quickly through rapidly generating consensus among a group of verifiers. In terms of scalability, Dfinity layers consensus, verification, and storage. Each layer has its own duty. The storage layer has many child chains which are each responsible for the computing of new trades, while the consensus layer only makes consensus adjustments without doing any data trade or computing.
2. The governance mechanism of “AI represents the law”: here, AI stands for “Blockchain Nervous System”(BNS) put forward by Dfinity. According to the white paper of Dfinity, this system combines protocol management, software upgrading, configuration chane and other functions. It seems very complicated but in essence, it still follows such a rule: community representatives vote to decide the direction of the chain. Its creativity lies in the fact that the objects, which users can vote or which voters can use to represent themselves to vote, are called “neurons”. After voting, machine learning and AI algorithms are used.
In order to evaluate those projects, separate from those underlying blockchain projects’ own situation, we must look at the dynamic changes in the needs of the industry, taking into consideration the practical situation of the blockchain ecosystem. According to the disclosed information, Dfinity is defined as an underlying facility which is used to “solve problems inside the blockchain circle” with its score ranging from 50 to 60. Compared with its competitors, Dfinity is distinctive because of its threshold relay plan and the fact that it can be compatible with Ethereum. It improves performance without lowering security. However, its layering feature is neither new nor original. Moreover, its “limitless scalability” and “limitless computing” features are still under test. According to our evaluation model and the fact that there are various types of public chains standing in the way of Dfinity, in this “strategic positioning” dimension, we determine that Dfinity is an underlying facility with a score of 50.
Project necessity:
Full score: 40 Actual score: 20
Here we look at Dfinity from the standpoint of the two greatest values of blockchain: decentralization and non-repudiation. We evaluate the necessity of Dfinity from project orientation and the dependence of its target scene towards the blockchain. In the case of Dfinity, our evaluation starts from its threshold relay framework and the increase of efficiency owing to its compatibility with Ethereum.
- Threshold Relay Framework
The group signature model is formed after a number of members sign their signature. The establishment of this model means there are enough members who have reached a cryptography consensus on such a signature. Because of the characteristics of the BLS signature, all parts affiliated to the group must have a same signature bit. Therefore, a consensus can be reached very fast basing on those signatures. On this basis, with the help of probablistic slot protocol, trades on each block may increase by 25 times. Useless chains on each block may be eliminated after time verification as long as two blocks can agree with each other (7.5 seconds on average). Theoretically, the improvement of performance is logically self-consistent.
2. Compatibility with Ethereum
Dfinity is compatible with Ethereum, thus developers can have another choice. It is also a complementary method to Ethereum Ecosystem.
From what we have mentioned above, we can draw two conclusions:
1. Theoretically, Dfinity can lead to speed improvement. However, owing to the evolution of Ethereum itself and the appearance of its supporting plans such as Raiden and Plas, Dfinity is actually one of the choices, which means it can improve efficiency to some degree.
2. Dfinity doesn’t choose to overwhelm Ethereum but to reinforce it for mutual benefit. As a result, it may influence the whole blockchain sector. However, because Dfinity connects with Ethereum, its ability to overwhelm Ethereum is fairly limited. Therefore, in this “project necessity” dimension, we say Dfinity is only of average necessity compared to the highest score in this range: 20.
Team (weight: 30% score: 89)
According to the information on its website, the Dfinity project is supported by DFINITY Stiftung (the foundation of Dfinity), a nonprofit foundation headquartered in Switzerland. It has collected 20 million dollars and its team members come from several institutions including Stanford University, Google, Yale University, and the University of Chicago.
Technical team:
Full score: 40 actual score: 37
Sometimes the official website and the white paper may exaggerate the information of team members, thus the information may not be wholly practical. When we use such information for evaluation, we will check the information via Linkedin and other channels.
The technical team of Dfinity mainly has 20 members including Cryptologists, mathematicians, and skilled engineers. For example: Ben Lynn, the inventor of BLS cryptography technology from Stanford University; Timo Hanke, the inventor of bitcoin asicboost; as well as cryptography researchers from Yale University and the distributed computing center of École Polytechnique Fédérale de Lausanne (EPFL). Here are some of them:
Dominic Williams, the chief scientist, is a Cryptologist and an entrepreneur. He is also the inventor of Threshold Relay, USCIDs, Validation Towers, Puzzle Towers and Phi. He has used his own distributed system to run MMO and several million users have adopted his system.
Timo Hanke, the engineering supervisor, used to be the professor of mathematics and cryptography of RWTH AACHEN University in Germany. In 2013, he created AsicBoost which helped Bitcoin minors to increase their speed by 20%. He has served as the chief engineer of Dfinity since 2016.
Ben Lynn, the senior engineer of the team, is one of the founders of “BLS”cryptography. With a doctorates degree from Stanford University, Ben joined the Dfinity team after ten year’s spent working in Google as its senior engineer.
Based on the information above, we believe that Dfinity team is experienced in blockchain and software development. In this “technical team” dimension, here are our evaluations:
Operation team:
Full score: 40 Actual score: 34
According to the information on its website, Dfinity is the top choice of Dvolution as this Boston consulting group is looking for a blockchain platform. Dfinity’s operation team mainly includes five people. They all have continuous experience in business startup and operation. They have all once learned about news, content marketing and media production. Here are some of them:
Tom Ding is the co-founder and CEO of String Labs, an incubator, and a distributed computing laboratory based in Silicon Valley. Projects incubated by him include Dfinity’s limitless computing, PHI discentralized commercial banking system, consumer grade security computing equipment, and so on. Tom was the co-founder of blockchain University and the creator of Koinify, a platform specializing in issuing tokens.
Arthur Falls, the media director, once worked on news, content marketing and media production as well.
Based on all the information above, we know that Dfinity founders once had rich experience in entrepreneurship and have accumulated some valuable industry resources. Arthur Falls, a member of Dfinity’s operations team, has real media resources in the blockchain sector. Here are our evaluations on the operations team of Dfinity:
Investors(and consultants):
Full score: 20 Actual score: 18
The investors of String Labs are all famous venture capital companies both inside and outside of this industry. Distributed capital works fairly well inside this industry. Polychaon, IDG, ZhenFund and Amino Capital have plenty of investment experience and good resources inside the internet industry.
Therefore, here are our evaluations:
Based on what we mentioned above, in the “team” dimension, the scores are:
Current progress(weight: 10% Score: 40)
According to the information on Dfinity’s website, this project is going to be divided into three phrases: Copper, Zinc and Tungsten.
1. Working well at present. Technologies now used by Dfinity are being published on the public internet. Is is estimated that at the end of the first quarter of 2018, Copper Release, the client software could be used to establish a beta internet. This software may be launched at the end of the second quarter.
2. Later, in the Zinc phrase, efforts will be mainly spent enabling software on the private Dfinity internet to invoke software on the public Dfinity internet.
3. In the final Tungsten stage, Dfinity will be introduced to enable the internet and miners to improve scalability through technologies such as USCIDs, Validation Towers, Validation Trees and micro-shards
According to our evaluation model and under the principle of trusting the disclosed information from the project part, we say the current stage of Dfinity is “DEMO stage”.
Community governance(weight: 30% score: 65)
As for burgeoning projects, we will focus on evaluating their community management system. We will focus our attention on their financing volume, capital management and whether they have self-consistent closed-loop logic to help revalue tokens.
Financing volume and disclosed budget:
Full score: 30 Actual score: 15
Regarding Dfinity’s financing, the team previously raised 3.9 million Swiss francs in a seed round with a 1 million soft cap for the ICO. Although the scale is not large, they raised over 390 percent and did not refund.
Dfinity seed round Screen shot, Difital Image. Dfinity Seed ICO Raises 3.9 Million CHF at Close. https://btcgeek.com/dfinity-seed-ico-raises-3-9-million-chf/
According to their February 8 tweets, officials believed that the main fundraising round of 20 million Swiss francs was too low and decided to have a “strategic” fundraising by introducing Polychain Capital, the highly successcful crypto hedge fund backed by well known investor Andreessen Horowitz, Sequoia, USV, Founders Fund, and others.
Polychain will conduct a relatively small round of financing and will help create a substantial “DFINITY Ecosystem Venture Fund,” which will fund projects on the DFINITY Internet computer or otherwise support it. Taking into account the “DFINITY Ecosystem Risk Fund,” DFINITY will have a total financing of more than $ 100 million.
(Source link: https://medium.com/dfinity/announcing-dfinity-fundraising-plans-and-a-massive-welcome-to-polychain-capital-and-andreessen-2ceb34769cd3)
In conclusion, apart from the seed round which raised 3900000 Swiss francs, Dfinity will still be raising 95,800,000 USD. However, the Dfinity team still hasn’t given us a full picture with a clear scale of financing. Therefore, in this category, we give Dfinity a medium rating of 15 points.
Fund supervision:
Full score: 30 actual score: 15
We have made some adjustments during this evaluation.
1. If it is clearly stated that no fund supervision information will be released on the website or by the Dfinity team, then we say in this dimension, Dfinity “has no effective fund supervision” with a score raging from 0 to 10.
2. If the disclosed information doesn’t contain information about the fund supervision system, as according to the website or Dfinity team the current white paper isn’t the latest version which will be released later, then at this stage we can say that Dfinity only gets the average score: 15. Once news about fund supervision is given, we will change the score accordingly.
There is no precise information about the fund supervision system in the white paper or on the website. And we know from the telegram group that some details will be given later along with the white paper. Therefore, for this part, we determine that it “cannot be evaluated now”, and we shall only give a default score: 15.
Token revalue logic:
Full score: 40 actual score: 35
Retail investors taking part in the crowdfunding of blockchain projects can get a proof of stake given by the project part — — the token. Therefore, as we evaluate project investability in this dimension, it is an essential factor whether the project’s community ecology design can lead to a closed-loop incentive logic on token revalue.
Dfinity tokens have several main functions:
- Consumed during Smart cooperation
- A certificate to use all parts of the central system
- A certificate to use the private cloud internet of Dfinity
Looking at the disclosed information from Dfinity, we find that it is normal for tokens to serve as the consumption in smart contracts or to help use the parts of the central system, because these two functions are similar with those of Ethereum internet. However, the efficacy of the third function may change according to how many tokens are taken by those investors. This is a reasonable incentive model and a closed loop is formed because tokens are logically self-consistent. With the number of token users increasing, the value of tokens will improve as well. As tokens are highly compatible with Ethereum, developers don’t have to spend too much to move their Dapps under the circumstance that the performance of tokens is verified. Both the use of tokens and the movement of Ethereum ecology Dapps can bring resources for Dfinity to work in its earlier stage. In summary, we say the logic of token revalue is reasonable and tokens have much room for improvement. In this dimension, Dfinity gets a score of 35.
Here are our evaluations:
Independent dimension: risk
As for risks of the independent dimension, we pay attention to these several factors during our evaluation:
Policy risk: zero
Risks on team capability and project practice
The Dfinity team is powerful enough to handle this tough project. Its core members have worked in the blockchain industry for a long time. And thanks to the chief engineer of Dfinity, this project has already taken shape since 2015. What’s more, the core team members of Dfinity are already confirmed and will continue to enrich from the second half of 2016 to January in 2017. Therefore, it is sure that Dfinity is not just following suit to create a blockchain project.
Competition risk
Though it has some strong competitors like EOS and aelf, Dfinity doesn’t compete directly with Ethereum. So there is a high chance that it may become a “brother public chain” of Ethereum on its Ecosystem and complement Ethereum on supporting commercial applications. Dfinity and Ethereum may be helpful to each other on resources and technical interoperation, so there may be huge competitive potential.
Speculation risk
Dfinity has a reasonable plan. It is introduced mainly on Facebook and Twitter without excessive media marketing.
Based on the information above, we say that Dfinity is a technical project whose team can sustain itself. It has no huge risk from competition and speculation. Taking all aspects into consideration, we find that the only uncertainty lies in the rationality of financing volume. If this volume doesn’t jump too much in the new financing plan than in the original, and it is clearly stated that Dfinity won’t accept more funds than the hard cap, then in this dimension, the risk may be “low”. However, Dfinity hasn’t released such information yet, so we shall say Dfinity has a “medium” risk in this dimension.
Independent dimension: Popularity
When evaluating Dfinity’s popularity, we mainly look at its official social media such as the activity of its telegram group, Slack group, Twitter and Facebook.
Up to February 21th 3 PM (UTC), 2018, we were able to gather the following data:
Telegram group
From t.me/dfinity: 21439 people, chat history of three days, over 1000 pieces of news per day,
18100 followers, 127 pieces of tweets, an average of nearly 20 likes, reposts and comments before November, reposts and likes on recent tweets increasing gradually
Taking all the information above into consideration, Dfinity is very popular.
Final evaluation
After summarizing those evaluations in all dimensions above, here we give our final evaluation:
After summarizing those evaluations in all dimensions above, here we give our final evaluation:
Darpal Rating: Dfinity is innovative because it enables blocks to come into being faster while at the same time its random principle based on Cryptographic mechanisms does no harm to security. Also, its improvements based on underlying technologies lead to better performance. After evaluating all parts respectively, it is our belief that the Dfinity team is strong enough to deal with such a difficult project. At present, Dfinity works stably and has the potential to reinforce each other with Ethereum on supporting commercial applications.
Notes:
Our evaluations in all dimensions are being upgraded. We will try our best to ensure that our information resources are objective, reliable, and can be quantified. Due to the fact that details relating to Dfinity’s public financing are undetermined, we give it a default score in the first two aspects of community governance. After we get the detailed information, we will upgrade the information and change the score accordingly.
Price may change around value, especially under human intervention. However, in the long run, price will match value. We aim to evaluate project investability for their long-term value. Therefore, our opinions are referential only for long-term token holders and those who do short-term trading can learn nothing from our words (we strongly oppose short-term speculations on tokens).
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