Hedera Review and Rating

The Hedera network, which uses DAG-type modified gossip communication protocol developed by Dr. Leemon Baird and named “hashgraph”.

Every node in Hedera stores and transmits (“gossip”) the so-called “events”, which contains transactions, hashes of two previous events and some other data to another node. After receiving the first event the node forms the second event and transmits it to the next node and so on. The consensus in hashgraph is reached in 4 steps during which “witness” and “famous witness” events are chosen based on 2/3 of nodes’ and events’ “coverage” criteria. Accounts system of Hedera is reminiscent of that proposed by EOS, which doesn’t use keys as account identifiers (as in Ethereum) but name-spaces.

Although, generally speaking, Hedera combines many well-known features of existing networks, the hashgraph itself innovates in the way it sends a whole tree of nodes when a host gossip (they called it “gossip about gossip”), instead of just arbitrary data as in traditional gossip systems. That allows for a “virtual voting”, where a node can take a consensus decision in behalf of all other nodes because it infers their votes based on the already received information. That sets “Engineering” part of the sub-rating to “a — “. “Double minus” is due to the fact that some of Hedera’s elements (besides hashgraph) are questionable.

The most controversial part of Hedera is its term limited, 39-members Governing Council, which has an authority over the codebase and overall direction of the network. The council’s power to vote seems to deliver an outsized influence and potentially greatly undermines network’s immutability, which, obviously, is one of the most important characteristics of DLT. That makes for “b-” on the “Security” scale of the sub-rating.

As for all BFT-like protocols Hedera’s high throughput is one of its crucial advantages over other consensus algorithms. For the test network they claim over 250,000 tps. However, that speed is reached on the limited number of nodes and, as network’s scaling goes on, will, likely, be greatly reduced due to the traditional for gossip-like systems slow-nodes’ bottleneck issue.

Trying to alleviate for that Hedera intends to reach consensus separately on two types of nodes, with high and low productivity. However, this complicated mechanism is yet to be proved on practice. Meanwhile, “Velocity” sub-rating, which measures scalability on a maximum number of nodes, is set to “b”.

As to “Transparency” of Hedera it’s set to “c” because, although, Hedera’s management hints on KYC and AML free subchains in the future, it is now not an example of a highly democratized system, which is, of course, a norm for permissioned networks aimed, mostly, at the corporate members.

Security-Velocity-Engineering-Transparency sub-rating: b-ba — c

Link: https://www.hedera.com/hh-whitepaper-v1.5-190219.pdf

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