5 Takeaways From Chia Network’s New White Paper

It will take 21 years for the rest of the world to mine as much of the Chia (XCH) cryptocurrency as the company behind it will have on the day the mainnet launches next month.

“We believe that Chia, a new digital currency based on our new blockchain that offers radically different functionality and security than other digital currencies, will ultimately deliver on the promise of ‘magic internet money’,” argues the company in its first version new business white paper published on Wednesday.

The size of the submine is a notable finding from the newspaper, in which Chia also announced that the mainnet will launch on March 17th or earlier. Farmers (the network’s equivalent to Bitcoin miners) can start farming right away. However, the network’s cache with pre-installed XCH is controlled in a traditional format: Chia plans to take the company public.

Chia was founded by Bram Cohen, the inventor of BitTorrent, one of the most influential protocols on the internet. The company he founded was later sold to the Tron Foundation in 2018.

Chia first announced its intention to go public via the so-called mini-IPO of the US Securities and Exchange Commission in 2018. However, the decentralized web startup Blockstack prevailed there as a pioneer and collected 23 million US dollars in 2019 according to Regulation A +. Last year Chia closed a new $ 5 million funding round led by Slow Ventures.

Plans have shifted slightly since then, and the company now plans to take its offering one way or another on a national exchange where it can be traded by the public, and the company is subject to the same level of transparency as any publicly traded company.

One of Chia’s early supporters was AngelList co-founder Naval Ravikant, who told CoinDesk in an email, “I supported Chia because I’ve known Bram for a long time and he’s one of the greatest living protocol designers (BitTorrent) there with Satoshi and Vitalik . “

Chia previously formulated its technical vision, a consensus model called Proof of Space and Time (PoST). This new paper articulates Chia’s vision for sustainability.

Chia President and COO Gene Hoffman told CoinDesk that the public should control more XCH than the company for much earlier than 21 years, and that the token is not the critical component of the consensus model anyway.

“Unlike most projects, owning coins has nothing to do with protocol – this is not a proof of stake,” Hoffman explained via email. “The table of percent ownership of coins in the white paper is the worst case scenario as we assume we are using shareholder distribution to migrate XCH to a broad public shareholder base.”

CoinDesk went through the new Chia white paper with a fine comb.

Here are five key takeaways from Chia’s new roadmap.

1. The blockchain was developed to make home mining possible again

PoST relies on loading unused computer storage space with sequences of digits that farmers (what Chia calls blockchain validators) have loaded onto their computers. The more space, the more strings, the greater the chance of winning a block.

“It’s super easy. Just download the Mac or Windows version and double click, ”Hoffman told CoinDesk. “I’m pretty sure this will be the easiest cryptocurrency to validate for ordinary people.”

Other blockchains take a similar approach to Spacemesh. And Filecoin also tries to use unused storage space.

In its test network phases, Chia has already hit 1,700 nodes, which very likely indicates an interest in running a node when the main network starts up next month. The public chat channel on Keybase has almost 4,000 visitors.

2. Chia prefers predictable, continuous inflation over a hard cap

Bitcoin Maxis are fixing themselves on the hard cap, but Chia argues that it is not a fixed amount that matters, but a predictable amount. Chia has no cap, but it won’t surprise owners with unexpected emissions either.

“The ability to directly calculate a shared expectation of total supply at a given point in time offers almost the same financial and reassuring benefits,” argues the White Paper.

As previously mentioned, the company will launch the mainnet at 21 million XCH, a nod to Bitcoin, and farmers can start earning it right away. While it will take 21 years for supply to double through agriculture, Hoffman knows it will be very tight in just six years. Then emissions will slow significantly under the halving plan.

By then, it is likely that the company will have sold or tossed a significant amount of XCH.

3. Plans to involve regulators, particularly through leadership with a company that has public reporting requirements

“We saw the scams and farces that were going on in this area before our project and we will instead involve regulators,” the white paper says. “It shouldn’t be controversial that investors deserve disclosure protection, and certainly no investment should be sold to the public without this legally required transparency.”

By being listed on the stock exchange, Chia essentially enables lenders to treat their equity as an Exchange Traded Fund (ETF) for the XCH cryptocurrency. That’s because the company’s main asset will be a sizeable pre-mine (or pre-farm in chia jargon) of XCH 21 million held for the company and earmarked for further development of the network.

“It’s owned by the company and has significant corporate controls that will only get more teeth if we go public,” Hoffman said. The regulations to which the company has committed require that it use its XCH supply only in a way that will benefit XCH holders.

“We can use the forefarm to raise capital that will only dilute shareholders, not farmers,” noted Hoffman.

4. The Chia blockchain has many native features designed to make it easier to trust and build familiar crypto applications

Chia has a number of features built in from the start that can increase user confidence and security.

Here are some that are detailed in the whitepaper that pops out.

  • Clawback escrow account: “The escrow account for the redemption adds a period of time for the sender to claim the money back after the first transfer is made to the blockchain.”
  • Slow paper wallet: “Slow paper wallets allow you to store a smart transaction that can start a delayed process to get your money back into your hot wallet. However, it is not a duplicate of your private key.”
  • Colored coins: Ethereum’s ERC-20 coins were the colored coins when they were still a concept. “Chia colored coins can be used to create short-lived value, and therefore applications on the Chia blockchain generally don’t require flash loans. This was one of DeFi on Ethereum’s Achilles heels.”

Flash loans were key to attacking decentralized finance projects such as bZx, Harvest and Yearn Finance.

5. Chia is skeptical about the security of the operational record against nation states and other threats

“Their assumptions are inferior as they tend to lead to centralization and are not as robust as the Nakamoto consensus under international geopolitical pressure,” states the White Paper on PoS (Proof-of-Stake) blockchains (after private, approved Blockchains were fired immediately). .

The problem with Proof-of-Work (PoW), according to Chia, is that it burns too much energy. Nevertheless, in the new whitepaper, Chia also writes that its technology complements Bitcoin, the largest PoW network.

But PoS that Ethereum is moving towards is a different matter. Chia does not consider the security of this model to be adequate. The white paper states: “Significant efforts are being made to address what we believe to be unsolvable issues with Proof of Stake as an alternative strategy to using less power to secure public blockchains.”

Three main themes are mentioned: centralization, in which tokens are usually concentrated on a few giant holders; Long range attacks where the history of the chain is easier to rework than in PoW as there is no work in PoS. and the inability of PoS networks to recover from a 51% attack.

It remains to be seen until there is any real value on the line, but the hope is that PoST can lower the energy footprint of “magic internet money” without sacrificing censorship resistance and decentralization, the cryptocurrency for Cypherpunk newbies and make such so attractive dealing with unreliable nation-state currencies.

In the short term, Chia wants to scale what has worked so far on crypto and build on it in a way that is accessible to all. The white paper says:

“One day we could all buy coffee with chia in San Francisco, but we believe banks and governments as well as De-Fi collectives will use it to build new financial technologies, solve cross-border payments, and invent a new future that doesn’t require it. I trust so many middle men. “

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