In our past two SuperNova Solution articles, we have examined how Metaverse puts power in the hands of users by maximizing accessibility, and how our innovative Digital Identity solution works in conjunction with Digital Assets to provide users sovereignty over their data. In this final installment of SuperNova Solutions, we are going to explore two topics that are integral in setting Metaverse apart as a public blockchain: our commitment to decentralization and transparency and the robust functionalities of our Digital Assets. By the end of this third SuperNova Solution article, we hope that our readers will have formed a clear picture of how carefully designed and truly dynamic the Metaverse ecosystem is.
Decentralization is at the core of what made Satoshi’s Bitcoin innovative and continues to be a key characteristic in making blockchain technology so disruptive and valuable. Unfortunately, several prominent blockchain projects have drifted towards centralization, exposing their projects to some of the same issues that blockchain was explicitly designed to solve. In this section, we are first going to describe ways in which other projects have fallen prey to centralization or have implemented centralization by design, in order to then underscore how and why Metaverse is working to remain as decentralized as possible.
Despite Bitcoin’s role as the originator of distributed ledger technology and the first project to solve the Byzantine Generals Problem through the Proof of Work consensus mechanism, it has ultimately faltered in staying truly decentralized. While still in its humble beginnings, a PoW consensus mechanism governed by nodes and maintained by miners worked perfectly for Bitcoin. However, as mining rewards became increasingly valuable, as well as increasingly difficult and competitive to obtain, miners began to pool together to share computational power and rewards. Over time, a handful of massive pools, mostly based in China to take advantage of the country’s low energy costs, have come together to monopolize the mining process.
The consolidation of mining resources among a few huge pools has given these pools undue influence over the security and speed of the Bitcoin network. This influence poses a potential threat to the network, as was evidenced by the hard fork leading to Bitcoin Cash in 2017. For those who are not familiar with this event, the hard-fork stemmed from a disagreement over the optimal way to improve Bitcoin’s network scalability. In general, forks are a healthy way for blockchain users to decide what technology or solution they believe in and want to utilize. In the case of Bitcoin Cash, however, the hard-fork led to miners fervently switching between Bitcoin and Bitcoin Cash based on profitability. Due to the two-week adjustment period for mining difficulty, there were stretches of time where the mining difficulty of Bitcoin was high, and many miners switched to Bitcoin Cash. With fewer miners but an equivalently high difficulty, the block generation speed and transactions per second (TPS) on Bitcoin reduced drastically, leading to very expensive and slow transactions until the next biweekly difficulty adjustment. Conversely, Bitcoin Cash experienced many miners joining the network, which had a low difficulty and high transaction speeds until the next difficulty adjustment. The market was very quick to react, with substantial drops or jumps in the prices of Bitcoin and Bitcoin Cash depending on which one was faster and cheaper to use. This situation highlighted that when miners consolidate significant power through pools, their decisions (in this case, which fork to mine) can have a direct impact on users and on the price of the coins.
Ethereum, a public blockchain known for its smart contract functionalities, provides an especially thought-provoking example with regard to issues of centralization. Ethereum emulated Bitcoin in its efforts to achieve decentralization by implementing a PoW consensus mechanism. Much like Bitcoin, however, the Ethereum blockchain has experienced issues in remaining decentralized. In particular, Ethereum was subject to substantial controversy surrounding its hard-fork between Ethereum and Ethereum Classic in the summer of 2016. This hard-fork stemmed from a disagreement within the community over how to handle a hack that exploited the DAO, a flawed smart contract built on Ethereum that enabled the perpetrators to steal millions of dollars. A proposed solution to this hack, spearheaded by founder Vitalik Buterin and the Ethereum Foundation, was to hard-fork the blockchain before the DAO’s vulnerabilities were exploited, thus allowing the stolen money to be returned. Proponents of Ethereum Classic (where the blockchain was not forked) were ideologically opposed to this solution, as it represented to them an explicit and circumstantial manipulation of the blockchain at odds with blockchain technology’s core principles of decentralization and immutability. Essentially, for Ethereum Classic supporters, the Ethereum hard-fork signified a slippery slope: if the blockchain can be forked at will, where do we draw the line? And can we truly call it immutable or decentralized? Ultimately, in the spirit of decentralization, the decision to switch chains was left up to the community, but the widespread support of Ethereum over Ethereum Classic left a bitter taste in the mouths of blockchain purists.
NEO, another public blockchain based in China, is a great example of a project that has pursued efficiency and scalability at the expense of decentralization. NEO’s unique Delegated Byzantine Fault Tolerance (dBFT) protocol is a consensus mechanism that currently enables transaction speeds of up to 1000 TPS. The costs of this mechanism, however, are that the NEO chain is managed by less than 50 master nodes, a number which pales in comparison to Bitcoin’s 9,000+ and Ethereum’s 15,000+, and that all of these nodes are controlled by NEO and its partners. Ultimately, what this means is that NEO’s team maintains the power to control the network and exchange of tokens at will, completely detached from the principles of decentralization and immutability. NEO has implemented this centralization by design, arguing that by retaining control of the network, they can carefully and incrementally move towards decentralization while properly nurturing the project and its performance. However, for blockchain purists committed to decentralization and immutability, the project’s continued centralization, as well as its lack of progress and opacity surrounding its bookkeeping node election process, do not bode well for a decentralized future.
EOS is a newcomer in the blockchain space. The project launched its mainnet in June of this year after conducting an ICO that raised an unprecedented 4 billion dollars. Following its launch, however, EOS received significant backlash surrounding the centralization of its block validation process, a dPOS protocol managed by 21 elected masternodes. Much like NEO, EOS has implemented this system intentionally, choosing to pursue heightened scalability and throughput, as well as features such as a constitution to solve network conflicts and an arbitration process in the case of a lost key, at the expense of centralization. In the case of EOS, however, the issues stemming from centralization became particularly worrisome and severe during an incident in which 27 accounts on the network were suspected to have been affected by a phishing scam. In order to protect the users, the 21 block producers agreed to lock the 27 impacted accounts. This intervention by centralized powers in all likelihood saved those 27 users from losing their funds, but the knowledge that the EOS block producers can unilaterally lock accounts is extremely concerning: what if, for instance, the accounts of some users are locked for personal or political reasons? This risk of biased or maleficent intervention is deeply concerning for users of the network and is precisely the problem that Bitcoin intended to fix in the first place.
In order to increase usability and facilitate mass adoption, blockchain projects are working to solve limitations of the blockchain network structure — such as inadequate scalability, high transaction fees, potential for scams, and a lack of conflict resolution mechanisms — with new protocols and innovative solutions. However, so far these solutions have entailed a fundamental tradeoff: improving these aspects of blockchain comes at the cost of increased centralization. For instance, EOS’s dPoS and NEO’s dBFT algorithms are very effective at increasing transaction speeds, but they are predicated on concentrating the management of the networks in a few hands.
Metaverse believes that decentralization should be the main concern of any blockchain network; decentralization is the core of blockchain technology and what makes it so valuable and disruptive. The perfect technical solutions to solve these problems haven’t been found yet, but promising new ideas are emerging regularly, such as the Lightning Network and Ethereum’s Casper and Sharding (to improve scalability). Blockchain technology is still very young and Metaverse’s developers strongly believe technical solutions will be found in the future to solve these current problems, without having to give up decentralization.
Metaverse is acutely aware of the dangers of mining centralization and recognizes that our consensus protocols will always have room for improvement. However, by implementing the ETHASH mining algorithm, we are working to avoid potential 51% attacks from Bitcoin and Litecoin mining pools utilizing SHA26. Furthermore, our commitment to decentralization also means that we will continue to improve our protocols to meet the needs of our platform’s users without biased or arbitrary interference with the network. When the time comes for Metaverse to transition to a form of dPoS or an alternative consensus mechanism, we will ensure that all necessary measures are in place for this mechanism to be as decentralized as possible. Indeed, we have already outlined two significant innovations that we plan to employ to reduce financial interference and voter apathy, called “Token-Height” and “Heartbeat,” in our Whitepaper. Moreover, the accessibility and complete decentralization of the current Digital Identity and Digital Asset functionalities, in conjunction with the unparalleled transparency of the Metaverse Explorer — where users can conveniently access details on assets and Avatars within the ecosystem and quickly query for information on any block, transaction, or address — make Metaverse one of the most decentralized blockchain networks today.
Stellar Evolution: Designing Smart Digital Assets
As we touched on in Part 2 of our SuperNova Solution series, Digital Assets on the Metaverse blockchain represent digital stores of value, including both fungible (MST) and non-fungible (MIT) assets, that are tied to users’ digital identity Avatars. In addition to the transparency and security that comes with our unique linking of Avatars and Digital Assets, MST was designed with several other features that set this token standard apart from digital assets on other public blockchains. In total, MST is equipped with eight core functions:
· MST Issue
· MST Transfer
· MST Secondary Issue
· MST Lock
· MST Conditional Unlock
· MST Swap
· MST Burn
· MST Exchange
These features, a few of which we will explore below, were devised with the needs of enterprises and other projects utilizing our network in mind, and our team will continue to iteratively update and improve these functions through Metaverse Improvement Protocols (MIP). By enhancing digital assets through these features, we are creating smart digital assets ready for the New Reality.
When a blockchain project issues a token — whether that token is a stable coin, untethered currency, or measure of utility in the blockchain’s ecosystem such as ETP — the project ultimately creates an economic model that governs the transaction and development of the token over time. For a user of the Metaverse blockchain issuing a MST or MIT, there should be no difference. Thus, our developers ensured that SuperNova provides all of the tools digital asset owners need to effectively and conveniently issue and manage the circulation of their tokens.
A prime example of one of these tools is Secondary Issue. Secondary Issue allows users to release additional tokens after initially creating an asset, thereby increasing the asset’s supply. This feature was modeled after mechanisms employed by modern corporations: whenever businesses conduct a dilutive secondary offering or a stock split, they are utilizing a form of Secondary Issue.
Hence, this capacity for incremental issuance is necessary and valuable in a variety of operational contexts, and projects which do not allow modification of total token circulation after initial release, such as Ethereum and NEO, are severely limiting the strength and flexibility of their digital asset functionalities. For instance, acquiring additional funds through a post-ICO public offering round would be impossible for an enterprise without secondary issue capabilities, leaving that enterprise with inefficient and inconvenient options for raising capital. Secondary Issue is also a useful tool for projects issuing tokens without monetary value, such as the vibrant world-building game LeBlock, which creates new blocks (MST that correspond with in-game building materials) every day to meet the demand of new users.
In the same spirit of accessibility with which Metaverse designed its Avatar, MST, and MIT creation processes, enabling Secondary Issue is as simple as a couple of clicks. As displayed in Figure 1, all users need to do is select “Allow additional issuance in the future” and a dropdown for choosing a Secondary Issue type will be made available. “Secondary issue impossible,” which users should be careful to note is the default option, means that the MST’s Maximum Supply is permanently fixed and the user will not receive a Secondary Issue certificate, which grants the right to conduct additional issuances. Users can also set a secondary issue threshold, which allows a Secondary Issue Certificate owner to conduct an additional issuance only when in possession of a specified percentage of the tokens. This is an important feature to help prevent asset issuers with minority stakes from enacting inflationary measures.
For users looking to conduct a Secondary Issue, the process is just as easy. On the MST creation page, users can navigate to the Secondary Issue tab and immediately have easy access to all of the necessary specifications for creating additional tokens. Here, users can select the recipient Avatar and the quantity being issued, and also have the option to choose one of three Attenuation Models, which will be described next.
MST Lock and Conditional Unlock
In order to meet the diverse needs of businesses using the Metaverse blockchain, the Secondary Issue function also allows a user to choose one of three Attenuation Models to facilitate nuanced control of a token’s circulating supply. By selecting a specific Attenuation Model, users can leverage two of the other core functions of MST: Lock and Conditional Unlock. When conducting a Secondary Issue, the default option is for the additional tokens to be immediately released to the specified Avatars. With the use of the Attenuation Models, however, the specified Avatars can receive locked (“frozen”) MST that are gradually unlocked at a specified rate. The Lock and Conditional Unlock features can be incredibly valuable for certain companies’ business models. For instance, an enterprise conducting an ICO pre-sale might offer investors frozen MST at a discounted price in order to facilitate short-term price stability while entering the market. Freezing assets is impossible on other public blockchains such as NEO, thus diminishing the versatility of financing strategies available to users of these projects. Moreover, locking and conditional unlocking of MST, like all SuperNova functionalities, are very easy to implement — users just need to specify the desired lock time for the asset (in terms of x number of blocks).
As noted above, when businesses use Metaverse BaaS (Blockchain as a Service) and join us in the New Reality, they need to be able to execute flexible procedures to manage their token issuance. In addition to Secondary Issue, Lock and Conditional Unlock, another feature of MST that gives users this flexibility is the ability to Burn an Asset. Just as Secondary Issue allows users to increase the maximum supply of a token, Asset Burning allows the maximum supply to be reduced, an invaluable functionality for several reasons. First and foremost, decreasing a token’s supply is an immediate deflationary measure that increases the value of each token (if there were suddenly only 1 million ETP in circulation instead of 49 million, each ETP would be worth roughly 49 times more in USD). Moreover, much like the Secondary Issue feature, Burn Asset is modeled after traditional financing mechanisms used by corporations, in this case the process of capital reduction. If a publicly-traded company wishes to reduce the equity held by its shareholders, or to utilize its retained earnings to buy what it views as undervalued shares, the company can conduct a share repurchase, and may choose to then retire those shares, aka “Burn” them. Companies also “Burn” shares when engaging in a reverse stock split.
It is possible with other blockchains to burn an asset by sending it to a random, unspendable address, but there is always a very small chance that this address belongs to someone. The advantage of burning an asset via the burn function on the Metaverse blockchain is that it is sent to a unique address that can never belong to a private key, so users are guaranteed that the asset will not be usable again. Moreover, the burn asset function is an incredibly powerful tool for investors in conjunction with Secondary Issue. Take for instance a real estate company utilizing Metaverse’s Blockchain as a Service (BaaS). The company plans to buy a new office building and needs additional capital to fund the endeavor. They begin by conducting a Secondary Issue to raise sufficient funds for the purchase. Then, each month they can buy back their tokens with the rent they receive and burn them, assuming the investors who bought in want to exit profitably. If down the road they ultimately end up selling the property in full, they can simply burn the number of tokens equivalent to the selling price in order to return to their initial circulating supply and counteract deflation. For other blockchains, which do not have Secondary Issue, this convenient business model is an impossibility. Finally, asset burning is an essential tool for projects that have unsold coins at the end of their ICO. In order to maintain trust with their investors and stay true to their outlined token supply distribution, these projects can burn the tokens that went unsold.
Although MST holds a large set of functionalities, we must not forget the important role MIT plays in the Metaverse ecosystem. MIT can be issued by Metaverse Avatars and can represent any asset on the blockchain, i.e. virtual legos (LeBlock), parcels (ParcelX), luxury accessories (Luxchain), gold bars (ZenGold), and artwork ledgers (ZenDao). Going forward, Metaverse envisions that artwork, collectibles, and precious metals, among countless other items, will be tokenized. Each MIT is unique in the sense that there is only one of each MIT in the world. MIT cannot be copied or duplicated, and each digital asset such as a parcel or a luxury good will have its own unique identification number that reflects the real asset. Therefore, MIT will play a significant role moving forward in terms of the tokenization of various real assets onto the Metaverse blockchain.
Screenshots from the Metaverse Explorer page showcase the history of an asset. For example, in this case: CHENHAO.iphoneX.F78PDUVHG5MM.
The pages below showcase users’ ability to see the asset’s owners over time. Understanding owner history contributes to the validity of the MIT asset and provides an example on how Metaverse’s transparency benefits the user experience.
The description of how Metaverse is set to launch is duly explained by digging deeper into the role Metaverse Identifiable Tokens (MIT) will play in enriching user to user interaction and transitioning the Metaverse blockchain into a groundbreaking online marketplace where buyers and sellers can trade in their digital assets using their digital identities. This SuperNova Solution series has outlined core functionalities and discussed how our network is set for expansion. We hope our community of readers has benefitted from our in depth review of Metaverse’s most recent network upgrade and has formed a sound understanding of the Metaverse ecosystem. The future is here. Welcome to the New Reality.
Continue to learn more about Metaverse here:
- Medium: https://medium.com/metaverse-blockchain
- Website: www.mvs.org
- Facebook: www.facebook.com/mvsofficial
- Twitter: www.twitter.com/mvs_org
- Instagram: www.instagram.com/metaverseofficial
- Reddit: www.reddit.com/r/Metaverse_Blockchain
- Discord: www.discord.gg/56ky6fb
- Github: www.github.com/mvs-org/metaverse
- Telegram: www.t.me/Metaverse_Blockchain