DeCyphering Blockchain 3.0
All buzzwords aside, this article will be looking into an interoperable and scalable blockchain project which is due to be released before the end of Q2; Cypherium [CPH].
In a somewhat brief overview, we’ll be looking at:
- The team, advisors, partners and investors
- Fundamental aspects of the project
- The protocol itself
- The current six month lock-up and future potential for investors
The roots
The project itself has origins beginning in 2016. Sky Guo (CEO) was in his last year of Computer Science at Pepperdine University, when he became fascinated with Ethereum. Pepperdine University has ties to Boost VC, a venture capital firm spearheaded by names such as Tim and Adam Draper, who took an interest in facilitating further blockchain exploration for Guo. After finishing his degree, Guo immediately completed Entrepreneurial Studies at Draper University.
Guo had forecast the limitations that Ethereum would pose in the future and brought together two acquaintances in the form of soon to be co-founders; Nate Ren and Solomon Zhang. From here, Cypherium was born.
The team
Ren is another Computer Science graduate from the University of New York, a vital US connection which will be discussed later. He spent a year in 2013 independently developing games before gaining employment with Microsoft as a code auditor/quality assurance manager. After a year here he moved over to Ubisoft to become Technical Designer. At the end of 2016 he left Ubisoft to join Guo as a co-founder on this project.
Unfortunately there isn’t much information readily available about Zhang, so we’ll have to go off his bio on Cypherium’s website:
Zhang ‘is a Ph.D. graduate of the University of Science and Technology of China and a visiting scholar at The University of Massachusetts, Amherst’.
His Linkedin states that he is an autonomous driving full stack engineer, but of course, take that with a grain of salt.
Zhuang is currently in his last year of his PhD in Artificial Intelligence and Deep Learning. This is his first foray into blockchain which can be seen as a negative, however from observing some of his work, it appears he is mathematically and conceptually up to the task of integrating his study interest into Cypherium. His aim is to integrate big data analysis and machine learning into Cypherium post-mainnet for the benefit of the enterprise clients they wish to capture.
Another character with very limited public information on the internet. His bio claims he spent a decade with Microsoft working on their Java Virtual Machine — a major bonus as C++ (Java derivative) is one of the primary programming sets CPH is using for their platform. There are further claims he worked on Bluetooth LE and Amazon Web Services.
The rest
The rest of the development team have vague and unexplained ties to Microsoft, Google and Amazon. If the team can verify these, let me know in a comment below.
The advisors
Emin Gün Sirer
Gün Sirer brings massive credibility to the project and is one of the key influences on why I have confidence with their technological development moving forward. Gün Sirer is the Co-Director for IC3 — the Initiative for Cryptocurrencies and Contracts. IC3 is the brainchild of Cornell University — a program which accelerates the development of its projects with a focus on scalability, privacy and real-world operability. You’d be excused for getting excited when reading their partnership list comprising of IBM, Intel, JP Morgan, Microsoft and Digital Asset.
Furthering Gün Sirer’s CV as a leader in this space, he has been involved with interactions such as;
- Serving as an expert witness in the U.S. lawsuit on behalf of the people who lost money at Mt. Gox.
- Was one of the first to identify flaws in the DAO prior to the hack.
- Is working with Buterin and Zamfir on sharding propositions.
- Is constantly challenging the Bitcoin dev community to improve the status quo of the blockchain, identifying key issues and goals.
Gün Sirer will help facilitate the side chain solution for interoperability with Cypherium’s blockchain
Jeremy Gardner
Creator of the Blockchain Education Network. BEN has facilitated a number of start-ups, most notably Augur, which Jeremy co-founded alongside Joey Krug. He has been a dealmaker for Blockchain Capital, one of the top tier funds in blockchain.
Now one of the youngest billionaire’s alive, Jeremy is focusing on advisory roles and volunteer positions, however his presence in the crypto community and connections for Cypherium shouldn’t be underestimated.
Partnerships and investors
IC3
IC3 will provide the team with a dedicated lab space to run experiments using very high quality resources. The membership doesn’t come cheap at 150k however this is a small and great value investment relative to their capital raise.
Pantera Capital
A fund with an enormous reputation in crypto placed their faith in Cypherium in mid-Feb.
Cooley LLP
One of the premier law firms in the ICO space.
Pseudonym: Doge
An original member of the Dogecoin ‘team’ who is regarded as a thought leader in regards to the decentralisation aspect of blockchain. He wishes to remain anonymous as an investor.
Other ‘high-profile’ investors
According to the telegram admins these people cannot be named.
Government
They have publicly stated in a podcast with Richard Jacobs that they are providing a government agency with a data solution, along with a private enterprise company. Promising news to be released at a later date when they are legally able.
The protocol — A 2 part model
Part 1 — PFBT and consensus component
Cypherium is a hybrid blockchain integrating key aspects of the Proof of Work model and practical Byzantine Fault Tolerance (PBFT). They are utilising PBFT to verify their transactions, with a goal of 100,000 transactions per second. The reason this is possible is because PFBT only verifies the transaction signature to check if the Tx is valid. The Proof of Work layer will provide decentralisation and governance of the blockchain. The end goal for the project is to be a scalable and decentralised platform for enterprise applications to run upon.
They are utilising Gün Sirer’s Bitcoin Next-Gen concept of decoupling key block mining from micro blocks for faster transaction processing.
‘From ByzCoin, we adopt the method of using windows of recent key block miners to elect a group of validators for Byzantine consensus and allow those groups to commit transactions collectively.’
Practical Byzantine Fault Tolerance
Advantages:
- It is based around a cryptographic hash-function.
- Relatively proven algorithmic concept — founded in 1999. It is an algorithm for state machine replication that offers both liveness and safety provided when there are less than <1/3 faults in the system.
- On its lonesome, it is capable of extremely high TPS with sub-millisecond increases in latency.
- It’s been used by notable organisations such as NASA.
- Currently used by Hyperledger.
- In its natural state it is a permissioned network — combining this with PoW to make the blockchain permissionless is fairly ingenious.
Disadvantages:
- There is a lack of support for dynamic client management.
- It leaves state management completely up to the application.
- Lack of support for web-based applications.
These 3 above result in a greater need for a hands on approach from the development team for the foreseeable future when it comes to integrating clients onto the network. pBFT also lacks in support for stronger cryptographic principles — it is hard to conceive that any type of privacy element will ever be added to the blockchain.
Proof of Work
Advantages:
- Governance layer: heavily regulated by the people in a far more egalitarian process than PoS. Every miner will have equal rights with no ‘master’nodes or delegated nodes.
- Application layer: the governance here decides the security policy and who can access specific data.
- PoW is the most secure consensus mechanism available in blockchain at the moment.
Disadvantages:
- CPH’s model allows miners to determine block size and gas fees, very debatable.
- Expensive to be a miner, may lead to centralisation in this aspect.
- May get outdated in a few years time.
Part 2: the Cypherium Virtual Machine
Completed in March, the CVM is the component of the platform which allows users to build applications on top of, using Java as the predominant coding language. Their reason for using this language is that many current enterprise applications from outdated legacy systems either use Java or C++ which is a derivative of Java, allowing for developers to easily port their application over to Cypherium’s blockchain. In the future they are planning on having a multi-language library allowing most coding languages to be implemented.
There is also discussion that the side-chain solution discussed previously will be one of their leading features → interoperability with other blockchains.
Some other areas they’re looking to target include:
- Large scale energy manufacturing, data input and output
- Voting
- Financial Instruments
- Direct contracts
- Messaging
- Secure Data Storage
The token sale
Private sale and the ensuing debacle
The team at BlockSmart Capital invested in Cypherium’s private sale in mid December. What has happened since can be described nicely as a PR disaster. The team has essentially put their heads down and worked hard on the product as evidenced by their testnet results above. Unfortunately their communication with the public has been sub-par, with seemingly limited attention provided to their investors who have been waiting 6+ months for some sort of media awareness around the project.
Thanks to Cooley they were advanced enough in their thinking to use a private sale, with regulatory concerns on the horizon. However, they capped their capital raise at 25m USD or 50k Ethereum… ‘whatever came first’. Anyone who has been around for a few months knows that the price rise from $500 to $1000 Ethereum was face-melting, albeit something the team should’ve taken into account when they were raising funds in the midst of this parabolic run.
This presented a few problems, however seemingly only one mattered to the team → Cypherium had lost a huge $ value from their kitty when the price came crashing down from $1000.
Their solution to this was to create a ‘sandbox’ whereby people could get a refund on their tokens. These tokens in the sandbox were then available to be purchased by newer investors, however the sandbox price was 1/10000 ETH/CPH instead of 1/200 (before scale-up, see below) as it was for earlier investors. These details don’t affect the bottom line of the project in a direct way, however it is an example of poor market foresight and token metric planning from the team.
All in the mean time, these things were occuring;
- 2 sets of administration teams came and left the telegram (their main source of ‘communication’).
- They scaled up their token supply by 100x to allay fears from the community that the price per token was too high.
- The co-founders went M.I.A for months as they spent time at Cornell University. I presume they networked with Ren’s contacts in New York as well, they have alluded to New York business meetings in their telegram.
- The original ticker of CYP was taken and forced a rebrand to CPH.
Quite the problem list has surmounted, as indicated above. It will be interesting to see if this has a negative effect on the project once it is firmly in the public eye.
At this stage they are on track to finish their Mainnet by the end of June/start of July, after which they will launch their token as a utility token. Personally we believe this is the smartest way to navigate the regulatory scene and this is a big plus in my books.
Public sale
They have stated that they will hold a ‘public sale’ of tokens *not an ICO?*, after they launch on exchanges. They have also come out in the recent days and said that they’re launching a floor price for these public sale tokens so that private sale investors do not lose their initial capital. How they plan to do this, we will not comment.
Potential areas of concern
An area of concern is the shareholder make-up of the company:
— — — — — — — — — — — — — — — — — — — — — — — — — —
GUO “SKY”, JIAN HUA (DIRECTOR)
Share capital: 9,400
GUO, YANG RUI (??)
Share capital: 599
— — — — — — — — — — — — — — — — — — — — — — — — — —
The other co-founders seem to have no stake in the company.
Also, the company was only registered on the 30th of November, immediately prior to their private sale commencing. This is a red-flag for lack of organisation.
Another major scare is that they collected funds manually, and their 2-year vesting period is not encoded via smart contract — nor is it auditable.
Concluding statement
We at BlockSmart Capital have invested in this project, as we do believe it can see some short to medium term success. The long term potential of this project boils down to two main factors:
1) Their public image, marketing, communication and customer support (the last of which they have publicly identified as a key concern).
2) The ability to keep pace with competitors such as Zilliqa, Thunderella and Storecoin.
Join their telegram to find out more;
https://t.me/cypherium_supergroup
This is not investment advice, just a summary of BlockSmart Capital’s thoughts on the project to date.
