Enjin Coin and Waves sponsor Blockshow Meetup in KL
blockchain community is expanding rapidly in South East Asia and we’re
excited to be a part of it by sponsoring this great event!
Meetups are for unique & cool start up projects, investors,
business owners, blockchain & bitcoin enthusiasts and pretty much
anyone who shares an interest in Blockchain, Cryptocurrencies and ICOs.”
atmosphere was buzzing with the sound of networking and new ideas from
startups competing for the main title at Blockshow Asia 2017.
The pros of Bitcoin are widely discussed. The true power, and I would argue tangible value,
created by Bitcoin rests in the revolutionary ability of the
cryptocurrency to increase financial efficiency on a global scale by
reducing transaction friction. This massive proposition is accomplished
in part by the undisputed trust established by the underlying blockchain
technology which turns traditional financial models inside out. This
mechanism enabled for a new decentralized peer-to-peer approach to
“money” that was capable of bypassing the traditional centralized
system. That’s all great. However, ironically, while Bitcoin diminishes
traditional financial institutional frictions it introduces an entirely
new inefficieny — electricity consumption. In fact, according to a study
done by Karl O’Dwyer and David Malone in 2014 the bitcoin network
consumed about as much energy as the entire nation of Ireland and the
ledger has only grown since then. Furthermore, according to VICE
Motherboard in 2015 a single Bitcoin transaction consumed about the same
amount of energy required to power 1.57 American households for the
day. Simply stated, this energy problem hinders the ability of Bitcoin
to scale on a truly global level. In an era where reducing energy
consumption should be at the forefront of government policy, social
consciousness, and technological innovation serious steps need to be
taken to address this problem if Bitcoin, or another similar
cryptocurrency, is going to have a shot at replacing fiat currency on a
global scale one day in the future.
root of the Bitcoin energy consumption problem rests in the
proof-of-work protocol for rewarding computers, or nodes, on the network
for successfully creating a new block on the chain to store the most
recent Bitcoin transactions. Essentially, every computer on the network
competes to solve incredibly difficult “math problems” to find a number,
called a nonce, that results in creating the correct unique
cryptographic hash for the block. The issue is that this nonce is
extremely difficult to find and as a result requires a ton of
computation power which in turn consumes a ton of traditional energy.
Once a node finds a correct nonce it broadcasts this information to the
rest of the network. The other nodes validate the nonce is correct (a
process that requires significantly less computational power) and once
it is verified the original node is rewarded with Bitcoin for the
computational power it employed in the process.
of the transaction information for the new block, the nonce, and the
previous block’s hash are then hashed and put into the next block that
is mined creating a cryptographically secured chain effect that links
all of the blocks since the genesis block, or first ever block,
how do we tackle this problem? The current solution rests in the
emergence of new protocols that replace bitcoins original proof-of-work
protocol such as the proof-of-stake protocol. In this version of
achieving distributed consensus rewards for block generation are given
to nodes in a quasi-deterministic manner in which the nodes with the
most stake in the cryptocurrency are given higher chances to create the
block and reap the ensuing reward (more units of said cryptocurrency).
Yet, proof-of-stake introduces an irony that counters the very core
theme of the blockchain movement — decentralization. Think about it.
Individuals with more wealth on the network by default have a higher
chance to increase their wealth with each new block. This mechanism
inevitably gravitates wealth overtime towards more central, more
powerful players on the network.
potential solution rests in combining a proof-of-work protocol with
solar energy. A proposed solar chain. If all nodes were restricted to
just consuming solar generated power the environmental footprint of the
network would drastically decrease. While it might be argued that
removing the cost of consuming energy increases security issues in the
form of a malicious player hijacking consensus of the solar chain
(controlling a majority of the nodes) it should be noted that the cost
of computation hardware itself creates significant initial financial
barriers to entry to setting up nodes on a proof-of-work blockchain.
Barriers that still remain on the solar chain.
employing the MyBit platform to democratize the ownership of solar
powered miners would decentralize the process even further. Mybit is an
Ethereum based platform for democratizing the ownership of machines that
autonomously generate revenue (such as Bitcoin miners). Well, that
sounds fancy — but what does it really mean? It means that any
individual that wants to set up a mining rig on the solar chain but
can’t afford the fixed cost of solar panel installation now has the
ability to crowdsource the resources to do so. It also means that
individuals across the globe who want to invest in the revenue stream
created by nodes (machines) earning revenue in the form of block rewards
on the proposed solar chain now have the ability to contribute to that
very crowdsourcing on a micro financial level. But what it really means
is more solar panels and a step in the right direction towards solving
the energy inefficiency problem that proof-of-work protocols today face.
Sharpe - Leveraging the Bancor Protocol: Providing Continuous Liquidity for SHP Tokens
Sharpe Capital, we understand the importance of providing continuous
liquidity to newly issued tokens. Within the current regulatory
landscape, the delay between token generation and listing on traditional
exchanges is increasing, resulting in market failure.
decentralised exchanges do go some way to solving this problem, the
requirement for a counterparty with whom to trade still exists. In
emerging community economies, this can often result in illiquid markets. Enter: Bancor Protocol and smart tokens.
Why use Bancor?
team behind Bancor have developed a ground-breaking protocol for
providing liquidity to tokens on the Ethereum blockchain through the use
of currency reserves. Smart tokens act as an exchange medium between
themselves and their reserve tokens (e.g. ETH, BNT or any other ERC20
token). Market participants will always be able to liquidate or purchase
SHP tokens without having to find a counterparty to buy or sell the
achieve this with an asynchronous price discovery mechanism. In a
nutshell, this provides a mechanism to determine token price as a
function of the amount of SHP tokens being sold or bought, the total
supply of SHP tokens, the reserve balance, and the constant reserve
ratio. The constant reserve ratio defines the level of liquidity for SHP
tokens, and can be changed dynamically to ensure stability.
Arbitrageurs will maintain price equilibrium between the smart token,
traditional’ and exchanges.
Our Commitment to Utilising Bancor
have stated an intention to make all funds raised above our $45MM
requirement for delivering the Sharpe Platform and its associated fund
available for use in Bancor reserves. With a target in the region of
$60MM, this provides a maximum reserve size of $15MM. The diagram below
illustrates our budget assuming the upper target of $60MM is raised.
The Sharpe Capital budget allocation.
size of the reserve and the CRR are critical in determining both the
degree of liquidity (meaning the capacity for trading to move the token
price). Therefore, this will be distributed between a BNT reserve, a SHP
reserve, funds allocated to providing the price floor, and a private
reserve that can be utilised to ‘top-up’ liquidity under changing market
conditions. The following section describes our approach to finding the
optimal CRR and allocation of these reserves.
Determining Reserve Sizes and the Constant Reserve Ratio
is important to strike a balance between the size of the currency
reserve and the CRR. If the reserve balance is too high, relative to the
CRR, then price action is restricted and even large sales or purchases
of SHP would not have a large effect on the exchange rate. Conversely,
if it is too low, this will result in high volatility for those who use
the smart token to buy/sell. In a bearish market, this could quickly
drive the token to its price floor. Likewise, in a bullish market, the
price of SHP would rapidly increase. However, providing there exists
sufficient volume on other exchanges, arbitrageurs would drive the token
price to an equilibrium.
believe that the reserve size and CRR should be determined once the
total raise from the token generation event is known. To ensure trust in
the implementation of our smart token, we will create well-defined
rules for dynamically determining the optimal CRR value.
that end, we are working on development of a Monte Carlo trading
simulator utilising the Bancor Protocol, evaluating how various supply
sizes, reserve sizes, price floor mechanisms, and varying CRR values,
will affect the exchange price of an ERC-20 token utilising the ‘token
changer’ smart token method outlined in the Bancor white paper.
Our aim is to identify the optimal CRR and reserve size under varying
market conditions, from extremely bearish to extremely bullish.
tool will provide a mechanism for anyone using the Bancor Protocol to
provide continuous liquidity via the Token Changer smart contract to
determine the optimal values for their specific circumstances under
current market conditions. We will make this tool available for the
community to use once it’s in beta stages.