An Overview: Before NEO, there was Antshares.
In February of 2014, Da Hongfei and Erik Zhang founded Onchain, which designs and develops blockchain solutions for businesses. As a company, Onchain envisioned its role to encourage the wide-scale development of “distributed ledger” technologies across private and public sector organizations. A ledger is the mechanism used to record transactions, and when distributed, the record can not be altered across so many computers.
Onchain’s first major project entitled, “Distributed Networks Architecture” (DNA) focused on various scenarios where digital asset applications might support a plethora of businesses through multiple forms of private and public blockchain. The company’s goal is to enhance DNA to the point that comprehensive distributed ledger systems might provide solutions to enterprise-level challenges.
As a company, Onchain believes blockchain must be transparent, and has made Onchain DNA a free, open-source project. This enterprise-oriented company’s dedication to open-source and transparency spawned a public-blockchain called “Decentralized Autonomous Corporation” (DAC), which was later rebranded to “Antshares.” DAC or Antshares was originally funded by one of the two Onchain partners, Da Hongfei.
Antshares (Whitepaper 1.0): A Distributed Ledger Protocol that Digitalizes Real-World Assets into Digital Ones
The public blockchain was founded as an open-source project in compliance with the MIT open-source protocol (permissive free software licensing) and opened a repository on GitHub in September of 2015. In its whitepaper, Antshares offered “digital tokens generated by e-contracts [that] function as general underlying data and [can] be used for recording rights and assets like equities, creditor’s claims, securities, financial contracts, credit points, bills and currencies.” These sort of financial transactions “could be applied for areas like equity crowdfunding, equity trading, employee stock ownership plans, P2P financing, credit points, funds and supply-chain finance.”
Antshares was not designed to be a digital currency, but rather a blockchain protocol that aims to eliminate currency-related legal issues, as well as partner with banks and third-party payment providers. The “transfer and trade of equities on the Antshares is essentially an e-contract digitally signed by parties involved.” To curb concerns about enterprise and third-party partners losing their private keys in case of a faulty transaction, Antshares sought to provide an “asset-retrieving mechanism” developed to save assets inside an address that might’ve been lost.
Antshares (ANS) coins provided partial ownership of the Antshare blockchain, which generated AntCoin (ANT) tokens to be used to develop applications/write onto the ledger. This is the same stake- and utility-token model NEO and GAS use in 2018.
On September 7th, 2016, Antshares closed its initial coin offering (ICO), which raised a total of 6,120.08 Bitcoin (BTC) from 1,493 participants; or, the equivalent of nearly $4 million USD. Additionally, the ICO was conducted with a refund feature that allowed participants to reclaim their investments if they so chose; regarded to be the first fully-refundable token sale.
Antshares was initially focussed on digital assets, not smart contracts.
In the ‘Antshares era,’ as Hongfei has stated, the blockchain was more focussed on digital assets, with less focus on smart contracts. In its whitepaper, Antshares’ goal was to provide access to “digital assets for everyone,” and “build a financial system [to bridge] real-world assets.” To transfer assets on Antshares, ‘e-contracts’ required both the sender and receiver to utilize their private keys as digital signatures.
Digital signatures act as the solution to traditional paper-based financial systems, where “transaction instructions and authentication information (sign and seals) are stored separately” within the parameters of a particular financial institution. Such transaction and authentication information is stored in bundles on a blockchain and stored on nodes, removing the necessity for a trusted third party to verify validity of the sending and receiving parties. It is within this realm digital signatures are able to remove the need for trusted third parties. Digital signatures perform “self-authentication on the [untampered] integrity, and validity (accessible to the signer) of the transaction instructions.” This self-authentication ensures consensus on the content of the transactions, and its validity, on a distributed basis supported by the nodes that store the data.
In blockchain, consensus is simply the general agreement of previous transactions between two parties. As peer-to-peer (P2P) networks have high-latency, the chronological order of transactions may not always be recorded properly. To address this issue of consensus many blockchain projects have used methods such as Proof of Work (Bitcoin, Ethereum), Proof of Stake (OKCash), Delegated Proof of Stake (Lisk, Steem), and the method Antshares adopted, delegated Byzantine Fault Tolerance (dBFT). A whole chapter will be dedicated to the dBFT consensus mechanism.
To link this ideology with the real world, Antshares opted to replace tokens with e-contracts, and user-controlled identity authentication.
Token sales and ICOs have been used to tokenize assets onto the blockchain. Fiat currency can be transferred from the sender to the receiver, with or without the receiver’s consent of the transaction. However other assets such as stock equities, bonds, and creditor’s claims have complications with rights and obligations. Not to mention issues conforming to every jurisdictional law surrounding the transfer of assets. The Antshares white paper sought to address the “transfer of assets [with] the digital signatures signed with the private keys from both the sender and the receiver.”
This allowed Antshares to record the transfer of assets as an “onchain solution to the transfer of offchain assets.” Otherwise stated as, giving a digital identity to real-world, physical assets. Using this method of assigning a digital identity, there are no new legal relationships that parties enter into. This is unlike tokenization (that could be labeled as a security), as flaws in many international laws are now reduced, or even eliminated. Additionally, digital certificates removes the need to trust third-party verifiers, and provides user-controlled identity authentication.
Finality, bookkeeping, and consensus
The finality mechanism for Antshares was detailed in the whitepaper as “One Man Bookkeeping vs. Joint Bookkeeping.” In One Man Bookkeeping, a single node performs the bookkeeping of a block, but other nodes might add transactions to the blockchain. Blockchains such as Ethereum, and Bitcoin utilize the One Man Bookkeeping standard. However Joint Bookkeeping introduces the ‘weak trust’ concept, such as to believe that no major number (1/3 or more) of the bookkeeping nodes may act in a nefarious manner. This requires identity authentication of the controlling parties of the bookkeeping node to judge on their reputation and technological capacity. Also, should the nodes act in a nefarious manner, cryptographic evidence will be available for future investigation. This leads to the conclusion that Joint Bookkeeping is suited for public blockchain with identity information or for Consortium/Private blockchains.
These bookkeeping nodes were designed to be the center of the Antshares blockchain, and to convey a clear division of the system’s workload. Full (bookkeeping) nodes were designed to store the entirety of a blockchain — even after its data is large after years of use and attached data- and in reaching consensus and building new blocks. The full node operators were to act as service providers, who store complete historical data; whereas individual users could access the network with their own web browser or mobile application. As Antshares adopted a weak-trust-based Joint Bookkeeping methodology, the digital signatures of the bookkeeping nodes are included in blocks. Users do not have to download full historical data to verify the current block.
The Antshares consensus mechanism was built to account for the weak-trust; it has low-latency (high volume of data messages with minimal delay) and high-throughput (the amount of computing resources dedicated to accomplishing a computational task). At the time, the latency was set at 15 seconds to generate a block, and a bandwidth of 100 megabytes per transaction. This meant with external cryptographic computing hardware, “the Antshares Blockchain was capable of handling thousands, if not tens of thousands, of transactions per second.”
Financial and real-world application scenarios
Application scenarios envisioned of the Antshares whitepaper included crowdfunding and trading of stock equities, credit point management, supply chain finance, and employee stock ownership programs (ESOP) and cap table management.
The Antshares platform sought to allow companies to launch their own funding campaigns, which would provide companies the opportunity to register the ‘stock equities’ on the Antshares blockchain and issue them to the investors. “With Antshares, start-ups could acquire a market evaluation and liquidity of their equities while the users are granted with an exit mechanism, which is the pain point of stock equity crowdfunding.”
Blockchain-based ESOP programs would aim to remove the single-point issue with current ESOP provider, that if the server is hacked, the equity and data of client companies have been compromised. Additionally, the Smart Contract functionality was designed to provide companies with flexible control over equity transfers, limits on stock equities that can only be held by designated employees or investors, or the establishment of limits on a number of equities that are transferrable or tradable.
The Antshares whitepaper sought to make “Antshares-registered claims became transferrable, eligible for mortgages, and even programmable.” Users of the platform would be able to purchase long-term claims, without worrying about emergency monetization. For example, long-term bonds could be monetized under discount, or even mortgaged. Companies that might utilize the Antshares platform for their equity management could mortgage those equities to issue company bonds.
The whitepaper had also outlined how the databases for a company’s credit point management exist within silos. Airlines, telecom operators, banks, and hotels issues credit points as a means to attract and retain customers, but the silos make it very difficult for two separate companies to interoperate their customers’ credit points. As the Antshares blockchain is open, transparent, and can be reviewed by any users, there could be potential new markets for multiple kinds of industries that utilize credit points.
Another real-world application scenario involves supply chain finance. Supply chain finance is a culmination of a set of solutions businesses utilize to lengthen payment terms to their suppliers, while creating options to pay their large or small and medium-sized enterprise (SME) early. This can include multiple types of business uses that include “factoring, trade finance, warehouse receipt finance, accounts receivable finance to corporate notes and credit financing in the supply chain.” Blockchain-based solutions can provide cost-efficient solutions fo “participant verification, transaction validation, timeliness validation, bank due diligence and corporate financing documentation, thus enhancing the general efficiency of the supply chain finance.”
The Antshares economic and token distribution model
The Antshares platform built two assets into the blockchain: Antshares (ANS) and AntCoins (ANT). ANS stakeholder-token model was adopted so coin holders could vote in elections, bookkeeping, and generating dividends (for holding ANT). Whereas ANT utility-tokens were to be utilized to pay for system process fees.
Such systemic fees included “accounting charges collected by bookkeepers” and “extra services charges collected by Antshares holders.” Accounting fees were to be charged to compensate bookkeepers for their storage costs, connection, and computing resources. The charging rates would be determined by the bookkeepers, as long as 2/3 agreed. Additionally, AntCoins could purchase advanced functionality of the Anthshares blockchain such as “asset creation and registration for bookkeeper nominees,” and potential future “altering, writing-off, and freezing of assets.”
A total of 100,000,000 Antshares coins were created at the genesis block, with no plans to alternate the amount of coins created. Each ANS coin was made to be indivisible, which meant no coin could be less than the value of 1.
100 million AntCoins were coded to be generated at the onset of every new block. However, since block generation would slowly decrease in pace over time, ANT generation would take 22 years from start, to token number 100,000,000. Using a predictive model to establish how long blocks would take to generate in the future, 16% of ANC would be created in Year One, 52% created by Year Four, and 80% created by Year 12.
Distribution plan for ANS coins:
- 10% provided to the early supporters of Antshares
- 17% for participants of the first ICO round
- 23% for participants of the second ICO round
- 50% to be held by the Antshares team, locked for the first year, then later to be used on projects in the Antshares ecosystem
What was to come next?
After studying Ethereum, the Antshares team diagnosed Ethereum’s potential issues surrounding its consensus mechanism (Proof of Stake), and opted to take a different approach through a Virtual Machine (VM). The VM uses compilers, which allows for the input codes of various programming languages, to go through the VM’s compilers and create an output of a single language that can operate on the blockchain.
This concept, among others was further described in the NEO (Whitepaper 2.0) documentation released when Antshares was rebranded. Antshares was upgraded and renamed to NEO on August 8th, 2017.