0chain: What is This Project, and How Profitable will Their Mining Network Really Be?
Before beginning, please note this is not an officially endorsed 0chain article. Though it has not been thoroughly peer reviewed by the core 0chain development, the content has been checked with them — so the figures are quite accurate (for now) but are subject to change. Minor errors may exist.
What is 0chain?
Last December I stumbled on a YouTube video of Vitalik Buterin speaking at a University. He was talking about the challenge of creating scalable consensus protocols. A student asked about Zilliqa’s transaction sharding solution being a threat to what Ethereum is doing. Vitalik responded (paraphrasing), “Zilliqa will still have a ceiling of scalability, particularly as it relates to blockchain bloat — the storage of data accumulated from billions of transactions will pose a challenge for them”. It was at that point that a light bulb went off. I realized that high throughput blockchains are all the rage right now for scaling, but the next roadblock/bottleneck will likely be on-chain data storage. Plasma Cash developer Karl Floersch recently said on an Epicenter Podcast, “trying to deal with data storage (on Plasma) is the bane of our existence.” The reality is, we all want to put so much on the blockchain, but the tech just isn’t there yet to store it — no matter how FAST your blockchain may be.
My fund, Arturo Capital, began to search for protocols that address this problem of scalable decentralized storage. Incidentally, about 4 weeks later, I randomly stumbled into a telegram chat room of 200 people for a Silicon Valley based blockchain project called 0chain.
There was one guy in there, Dr. Saswata Basu. He was answering all kinds of questions related to this highly scalable storage solution he’d created. A couple weeks later, he released their Whitepaper. After reading it, it ticked all the boxes Arturo was searching for: a high throughput blockchain with low latency, fast finality, and scalable decentralized storage. The protocol was organized into three unique buckets of miners, sharders, and blobbers.
Compared to developers, my tech expertise related to consensus and storage isn’t anything special, but the modularity of Saswata’s miners, blobbers & sharders was structured in a way that seemed lightweight and practical. It made sense. Arturo Capital checked out the team — they were all highly educated, capable people who were ex-Intel, Motorola, Service Now, Google, etc. with a background in Cloud and IoT. We were sold, and happily made an investment.
Fast forward nine months, I have taken on an Operations Director role with 0chain, 0chain has launched a functional testnet called Global DevNet , a near complete high speed dStorage protocol, and an incredible token economy that works harmoniously with its storage market.
In a few months, we will launch our mainnet; and miners will be able to stake and earn rewards on the live network. The interesting thing about 0chain though: we raised funds at the peak of the crypto market in early February, and have been developing during the second worst bear market ever for cryptocurrencies. The bad market conditions, paired with 0chain keeping their cards close to their vest until mainnet launch has resulted in no one really knowing anything about the project yet. Even some of my favorite community members in the 0chain telegram don’t know how lucrative mining will be on the 0chain network. So, I’ve sought out to correct this and hopefully shed some light.
Okay, Enough About the Background — Let’s Talk $ and 0chain Mining
So, how profitable will mining on 0chain be? And how easy will it be to do it?
Well, the process is quite simple. You acquire ZCN tokens, and you stake them on our secure software wallet (which will have an awesome UX/UI and will be ready at launch). 0chain will also have a click-and-buy service that links you with an AWS-style data center to match you with a rig to mine (you can also mine with your own rig, if the specs are up to par : a 4-core laptop with a good bandwidth connection).
Once your rig or your mining service is purchased — estimated to be a cost of ~$1500/yr per miner/sharders (you pay a bit less if you use your own rig) — and your coins are staked, you are now ready to participate in the network with your miner.
For the sake of simplicity, I will use estimated figures. The exact numbers can be determined after our Mining protocol paper is released (as well as Mo Siam’s simulation of the token economy, which is another article being worked on presently and releasing soon). Also, for any clarifying questions, please feel free to reach out in our telegram (https://t.me/Ochain).
Reward: 10% of total ZCN stake per year (1m ZCN rewarded to miners/sharders per year for every 10m ZCN staked)
With these two figures in mind, a chart has been assembled (featured below) to illuminate the spectrum of profitability. 8 different token prices (ranging from $0.10 to $100) have been matched with 11 different staking amounts (ranging from 20,000 ZCN to 1M ZCN). I also believe that providing an implied market cap helps give context for token price. For instance, imagining a $5 ZCN token may sound like complete pie-in-the-sky moonboy economics, but this would imply a 275m market cap (with 55m circulating ZCN). DogeCoin is near three times this valuation, and 30 other cryptos are above this market cap. At the end of Year 1, 66m ZCN will be circulating. Since we are in the midst of Year 1, I have done a loose estimation of 55m circulating ZCN and the chart below reflects this.
The above chart does a good job providing context of profitability, but I have also assembled a graph (logarithmic) for better visualization of profitability based on stake and ZCN token price:
I hope this provides some clarity, and don’t forget to stop into our telegram (https://t.me/Ochain) to join our community :)