Token Analysis: Aion (AION)

Tagline

A multi-tier blockchain system designed to address unsolved questions of scalability, privacy, and interoperability in blockchain networks.

Team

The Aion Network is being built by Nuco, a team founded by former Deloitte blockchain execs. Mathew Spoke is the effective spokesperson for Aion, in addition to being the CEO of Nuco he’s a Board member of the EEA and long term Ethereum Community member.

Nuco was founded in 2016 and have been a major player in building enterprise blockchain solutions. The lessons learned will be very valuable when developing the Aion platform, having already built up key relationships with enterprise customers and the wider blockchain community, Nuco will be able to leverage this information into partnerships and a design approach that tackles previously identified pain points of enterprise customers.

Due to their Toronto location they have benefited from engaging with an emerging blockchain ecosystem driven by the emergence of Ethereum and University of Waterloo being positioned close by.

Team Key Stats:

  1. Team Size: 20 to 30 (plans for rapid expansion in 2018)
  2. Location: Totonto, Canada (plans for global offices & distributed team members in 2018)
  3. ~ 50:50 ratio of engineers / other employees
  4. 2 years operating

Token Sale / Funding

Aion conducted 2 separate token sales and canceled a 3rd public sale in December 2017. One private sale sold 30,000,000 AION tokens and a further Pre-Sale sold 10,000,000 AION raising a combined amount of $23,010,994 (I’m unaware if this has been converted from Ether to Dollars — this information would be very useful since the USD value will have > 2X).

The team gave 3 reasons for canceling their public sale scheduled for late December 2017.;

  • The previous rounds had been a success, enough funds have already been raised to build out the platform
  • The market conditions had shifted to high degrees of volatility and uncertainty.
  • It made more sense to focus 100% on building out the team and the product instead of using vital man power on

In truth I believe the public sale was canceled due to AION being traded at < $1 (and effectively even further discounted due to the TRS mechanics) on the open market, having previously put a price floor of $1 on the public sale it was likely that the sale would have been perceived as a failure. I think this is what the team meant by Market conditions had shifted and I agree with their decision to cancel the public sale given the reasons.

Aion made a commitment to conduct any further public sales through the use of existing tokens held by the foundation thereby not further diluting existing token holders.

“Any additional private or public sales will be based out of the founders token supply”

Estimates for Token Supply

  • 30M private sale
  • 10M public presale
  • 185M Aion Foundation — 3 year lockup
  • 120M TRS bonus — to be paid to private / public sale participants who deposit AION — distributed over a 1 year period
  • 120M founders bonus — 3 year lockup
  • 465M total (2020)

The Token Release Schedule (TRS)

An added complexity for the AION token sale and token distribution is the Token Release Schedule. The TRS allowed people holding AION to send them to a contract and receive a greater number AION back at intervals throughout the next 12 months. The below table outlines how this will effect the circulating supply and the relative amounts of AION a TRS/ Non TRS holder will accumulate.

This can be used as a guide to see how much an investor will be diluted over the next year, note the jump in circulating supply at the end this due to the unlocking of the AION founders/ foundations funds.

Funding Key Stats:

  1. $23,010,994 raised
  2. Circulating Supply: 71M AION
  3. Circulating Supply End of Year: ~ 261M AION
  4. Total Supply: 465M AION
  5. Foundation Holds: 185M AION (~$ 925M at current prices), these can be sold to further fund the project

Current Network Status

The AION token currently exists as an ERC20 token on Ethereum, there has been no public testnet or mainnet launch. A beta testnet is expected to launch on February 5th while a private testnet has already undergone significant testing by the Aion team.

If you want to play around on the network you can obtain access to the testnet by signing up to the Beta (applications open Feb 1st) or if you’re less technically inclined I would recommend waiting for the public testnet to launch in March.


Network Features

Aion aims to be a 3rd generation blockchain the primary goal of which is to solve the problems of scalability, privacy and interoperability.

Source: Aion Whitepaper

The Network will be built to with the idea in mind that many unique custom blockchains will need to be built in order to address many different use cases. The network is also being built with the belief that connecting different blockchains has the power to unlock huge amounts of value by anchoring each one to the Aion Network the number of connections will grow exponentially large adding more value to each individual blockchain and the Aion ecosystem as a whole.

The Network will launch with the Aion-1 Blockchain, this will be the first implementation of an Aion connecting network. Aion-1 has the primary goals of:

  • Providing secure communication between blockchains (connected to the Aion-1 network) and external services such as databases or oracles
  • Providing the infrastructure to allow high performance inter-blockchain applications (e.g. a DApp that has elements of the stack in several different blockchains, this would allow for input/output from > 1 blockchain without centralising any aspects). In simple terms Aion-1 manages the logic of: IF f(x) happens on Blockchain A THEN perform f(y) on Blockchain B.
  • Creating a Network with a robust and sustainable economic model to ensure longevity & security of the Network

Aion-1 will be an open network and users will be free to deploy their own adjacent networks. In addition to being a connecting network Aion-1 will also perform as a fully functioning smart contract blockchain — To start it will use an adapted EVM implementation, over time they plan on migrating to an improved AVM (Aion Virtual Machine). The network will maintain backwards compatibility with the EVM.

Bridges

Bridges are the mechanism that connect blockchains on Aion-1. Anyone can create a bridge to any network/blockchain as long as it is Aion compatible. A lot of existing blockchains will not be fully compatible however compromises can be made and blockchains can adapt to add compatibility. It’s expected that Aion-1 will launch with a bridge to the Ethereum Blockchain.

For more detailed information visit the Aion Whitepaper


Why the Token has Value

The AION token is comparable to ETH or similar tokens in it’s utility, additionally it has some incentives that aren’t included with ETH. Aion derives it’s value from the ability to:

  1. Move Value Around the Aion-1 Blockchain
  2. Pay for Operations Within the Aion-1 Blockchain
  3. Deploy Software Applications
  4. Establish & Secure Bridges between Blockchains
  5. Customise, Create, and Connect New Participating Blockchains
  6. Staking/Validating to Secure the Network Integrity (PoS style)

Visit the AION Token Use Paper to explore each use case in more detail.


Notes on Consensus

Aion-1 must maintain consensus for both on-chain transactions and interchain transactions. It’s important to distinguish between each since consensus failure of interchain transactions does not result in a failure of the on-chain consensus.

Consensus for on-chain transactions will be solved through a mixture of BFT, a form of Delegated Proof of Stake and a new neural network inspired verification algorithm called proof-of-intelligence. Holders of the AION token will be able to become a backer of a validator in 2 ways: (1) a traditional staking method and (2) a new solving mechanism where the backer runs the proof-of-intelligence algorithm. The long term goal of proof-of-intelligence is to enable deep neural net capabilities on top of Aion-1 and eventually run artificially intelligent applications on top of the blockchain.

Additionally Aion-1 will employ a reputation system for that allows potential backers to view various statistics about validators to minimise the risk of selecting bad actors.

Interchain transactions are managed by bridges. Bridges use a distinct consensus mechanism from the main Aion-1 chain and each bridge is secure by an individual consensus. Bridges will be secured by a lightweight BFT based protocol whereby a transaction is deemed valid if > 2/3 of validators vote to approve. Bridge validators will be rewarded by interchain transaction fees and potentially a portion of block rewards.

The fine details of these consensus mechanisms have not been released yet however do consult the technical whitepaper for more specific information.


Community / Social Media

Aion have an active community and are currently ramping up community efforts in anticipation of the testnet and mainnet launches. They have begun organising public meetups and recruiting community representatives globally. Matt Spoke, posts weekly updates which keep stakeholders up to date on the project and are popular amongst the community, the easiest place to find these is youtube.

To follow the project more closely use the following links:

reddit || twitter || medium || youtube || telegram

Competing Projects

Aion has serious competition in the Blockchain interoperability space. Competitors include:

  • Polkadot
  • Cosmos
  • Icon
  • Wanchain
  • Ark
  • Cardano

Partnerships

Vital to Aion’s success will be partnerships, early on these will help to bootstrap the network and in the process highlight the advantages that using Aion will bring.

Aion have announced the follow partnerships:


Overview

Aion has a strong team who are well positioned to understand and deliver on the unique challenges of blockchain interoperability, in particular how private/permissioned chains might interact with their platform.

Advantages/Pros

  • A lock up period will incentivise early (TRS) investors to hold AION and become long term supporters of the project.
  • A good sized list of partnerships pre-launch that will catalyse activity on the network.
  • Private & consortium blockchains will have an easy route to connecting to public chains through Aion-1. Bootstrapping a private chain will become simpler through Aion.
  • There are multiple incentives to hold AION with real use cases.
  • Relatively small current market-cap, the successful launch of a mainnet would likely result in an increase.
  • Several issues regarding oracles and getting data onto blockchains are solved through Aion Bridges.
  • The advantages of building on multiple blockchains with varied consensus mechanisms allows for mainstream DApps to achieve scalability.

Risks/Cons

  • The new proof-of-intelligence mechanism is currently experimental and could fail.
  • The platform is not currently released, delays are possible.
  • Some features are being rolled out over time (see timeline), the blockchain
  • Many competing platforms may take market share away from Aion.
  • A low circulating to total market cap ratio disguises the total market cap making the project seem more undervalued than it truly is.

Overall I view Aion as one of the most promising routes to interoperability in the space, through solving interoperability, scaling and privacy can also be partially addressed. Competition is high and it remains to be seen if they will deliver on what has been promised but the team has so far been reliable and they are well positioned to gain a significant share of the market.

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