Can These Blockchain Protocols Survive a Consumer Facing App? (Part B)
Comparative analysis of notable protocols under requirements of microtransactions and scale
In Part A, we explained why Ethereum’s ERC20 protocol, the industry standard for issuing digital assets and smart contracts, requires a supplement protocol to fulfill our vision of a decentralized marketplace with full-scale consumer facing capabilities. In the following part, we will review 3 additional protocols, the summary will eventually offer a charted comparison of our research.
Waves, The Academic
Waves-NG is a next-generation consensus algorithm, based on the Bitcoin-NG proposal made by Cornell Computer Science academics Emin Gün Sirer and Ittay Eyal.
In the traditional blockchain model, blocks are discovered at roughly similar intervals and the most recent transactions are processed once a miner has earned the right to submit them to the network. This places fundamental limits on the capacity of the chain. Bitcoin, for example, has a theoretical maximum of roughly 3 Transactions Per Second (TPS). This rate is limited by two parameters: block size and block interval.
In the NG model, the next miner is selected in advance. The miner creates a ‘key block’, which is then immediately filled with micro-blocks containing transactions which require no further proof-of-work. This approach increases effective bandwidth and speed of block creation.
Waves’ proof-of-stake approach further improves speed, and increases the capacity of transactions by a factor of a hundred or more, stress tests on the Waves network revealed a speed of 190 TPS.
Waves also provide a full blockchain services pack, such as wallet, Waves Decentralised Exchange (DEX) and custom tokens. It provides all of that with a reasonable transaction fee (min. fee 0.001 Wave, roughly 1/3 of a USD cent).
In our perspective, Waves is indeed a valid option for a microtransaction system.
Stellar, The Popular
Stellar is a protocol for exchanging money using blockchain technology and is popular as a financial infrastructure for nonprofit organizations and businesses.
Stellar has proclaimed itself as a leading Ethereum alternative for launching ICO. Offering a more scalable blockchain, with faster and cheaper transaction designed specifically for frictionless payments. The protocol managed to attract a few significant players such as Mobius and Kik recently.
Stellar’s model for worldwide consensus, Stellar Consensus Protocol (SCP), is an evolution of Federated Byzantine Agreement (FBA). It uses Quorum slices, a set of nodes used for reaching an agreement without requiring unanimous consent from the entire set of nodes. Each node chooses its own quorum slices.
Up to Stellar’s documentation, it can perform 1000 tps today with costs of 100 stroops (0.00001 XLM) or 0.003$ per 1,000 transactions. While Mobius reported they have reached the said transaction speed, we will note that other sources told us they are currently struggling to bring it above 20 TPS.
Stellar Smart Contracts (SSC) are expressed as compositions of transactions that are connected and executed using various constraints implemented by the coder. Such constraints include multisignature, batching/atomicity, sequence and time bounds.
On the one hand, SSC are quite expressive, yet they have some limits and are not as flexible as Ethereum (ETH) smart contracts. On the other hand, due to research and real-life use cases, smart contracts are considered as a security vulnerability. On that regard, SSC limitations also make them less vulnerable to hackers.
Stellar is also planning to integrate the Lightning Network during 2018, as they announced on March 19, in a tentative formal specification. All in all, we find Staller to be a very interesting and efficient solution for a microtransaction, blockchain based system.
NEO, The Visionary
NEO is a non-profit community-based blockchain project which focuses on anticipation of future demands. It utilizes blockchain technology and digital identity to digitize assets and automate their management using smart contracts to realize a “smart economy” with a distributed network.
NEO has been growing very quickly and currently reaches more than 5% of Ethereum’s coin market cap. Both platforms were specifically designed for the development of distributed applications (DApps) and smart contracts, as well as platforms for ICOs. Their competition is so intense that NEO is often referred to as the “Chinese Ethereum”.
NEO uses a delegated Byzantine Fault Tolerant (dBFT) consensus mechanism, an improved version of the Proof-of-Stake (PoS) mechanism. And, it can handle about 10,000 transactions per second, which make it competitively scalable solution.
NEO was instantly adopted by the developer community and supports programming in multiple languages like C++, C#, Go, and Java. It is clearly more developer friendly compared to Ethereum, which supports only its native language, Solidity.
The main disadvantage of NEO is the high transaction fees. The cost of creating or migrating a smart contract is between 100–500 GAS (1900–9500$), depends on additional fees of functions the contract requires. This fact alone makes it an entirely unusable for microtransaction systems.
It seems that with the development of the blockchain ecosystem, many new protocols have been recently introduced. All of them try to address blockchain vulnerabilities with different and creative solutions.
When searching for a suitable solution, it’s important to not only consider scalability and transaction cost, but also implementation and other viability factors, such as network adoption, integration complexity, smart-contract capabilities and product deployment schedule.
In Part C, next week, I’ll go through our notes for 3 more protocols to look into further enlightenment.
ClanPlay Overview
ClanPlay is the highest rated app for gamers with 4.8 stars and 1.5m users. We are introducing a new marketplace for in-game actions, where anyone can pay players for services inside games.
Using Blockchain allows us to service the entire gamer population, including hundreds of millions of unbanked awesome players. It also enables creating smart-contracts that ensure payment and actions are both conducted in a transparent and trust-less manner.
The Good Game (GG) Token
To fulfill our plan, we needed to create a utility cryptographic token that will serve as the basis for all marketplace transactions. We called this token “GG”, a term all gamers have probably used, today.
The GG marketplace will be relying on authorizers, entities with access to either public or private game data. Based on their data, interested parties will write contracts, stating the actions they would like to pay for and these contracts will be picked up by players, looking to fulfill these actions and get paid.
Given the early exposure, this marketplace will get among ClanPlay’s existing audience, we anticipate an immediate need for scalability in support of thousands of transactions per second. The GG contracts will require a blockchain protocol that supports a stateful smart contract mechanism, allowing the authorizers to inject a new state (game data) in order to conclude a GG transaction.
You can read more about the Good Game (GG) token and its contract system in our whitepaper.
