DeFi 2.0: An Upgrade to the First Generation of DeFi

This article covers the fundamentals of Defi 2.0 while discovering the need for DeFi 1.0 evolution.

Several crypto users are getting weary of DeFi 1.0 due to its many flaws and inconsistencies. To newbies, these flaws are not obvious, but to oldies, these flaws are very obvious. All of the flaws associated with DeFi 1.0 are due to its instability and lack of popular acceptance. 

Seeing that DeFi 1.0 can’t match the pace of crypto advancement, there is a need to launch into a better crypto world. Hence, the essence for the creation of DeFi 2.0.

DeFi 2.0 is an advanced version of the DeFi 1.0 with several improvements and addition to its networking. As a trader, we’ll recommend that you know so much about this new system network.

In this article, we’ll be discussing DeFi 2.0 in detail and the problems it will be solving. Also, we’ll be discussing how DeFi 2.0 solves these problems and why it is better than DeFi 1.0.

What is DeFi 2.0?

The DeFi 2.0 is an advancement of the DeFi 1.0 with improvement on its liquidity infrastructure layer and sustainability of the Decentralized Financing project. 

DeFi 1.0 offered users liquidity mining, AMMs, lending, and token exchange. The DeFi 1.0 network was also offered alongside many projects that made transactions on the ecosystem comfortable and secured. Some of these projects are 

Although these projects were incredible, there had to be improvements on the DeFi 1.0 ecosystem to accommodate the newly developed projects. The DeFi 2.0 will offer everything DeFi 1.0 will offer and many more. That is, the DeFi 2.0 ecosystem will offer liquidity, AMMs, lending, token exchanges, new finance technologies, user experience, and some improvement to capital utilization. 

To improve on the capital utilization and use experience, DeFi 2.0 will be solving problems DeFi 1.0 couldn’t solve. 

Meanwhile, here are some drawbacks to DeFi 1.0 

These said, just like DeFi 1.0, DeFi 2.0 will come alongside various, better, and more problem-solving projects too. Some of these projects are:

The Next Three Projects in DeFi 2.0

Olympus DAO

The Olympus DAO serves to solve one of the biggest problems with DeFi 1.0. DeFi 1.0 was DeFicient in how it sourced funds for loans. It focused majorly on using funds from users to supply its bridge pool. 

It'll mean that if there is no supply from users, there won't be a supply of funds to the bridge pool. Consequently, there won't be loaning in the network.

To properly handle this, Olympus DAO will be sorting funds for bridge pools without getting any from users. This is why Olympus DAO is often referred to as the alternative model to liquidity mining.

Olympus DAO is an algorithmic protocol that utilizes bond mechanisms to help it serve as an alternative for liquidity mining. It's the first protocol to use this kind of liquidity mining mechanism. 

Olympus DAO can function effectively by issuing its tokens at lower costs for easy purchase. With this, the OHM (Olympus DAO Token), will be able to secure a position in the market to create protocol-owned liquidity. 

Each OHM is oftentimes backed by DAI. It means that one OHM is backed by 1 DAI. So, higher OHM prices will mean more DAI pumped into the pledge contract. Consequently, more returns are available during participation in OHM pledges.

With this mechanism, the price of OHM is constantly maintained above 1 DAI and the market cap steadily approaches the overall asset value of Olympus treasury. 

In addition to all these said about the Olympus DAO, we must mention that users don't own the tokens on this system; it is the protocol that owns the tokens. 

This is an advantage as it helps to prevent selling pressure from immediate liquidity providers. So, it is Olympus DAO filling in the place of liquidity providers.

Abracadabra

Abracadabra works like MakerDAO in that they both are lending platforms and collateralize users’ assets to generate stable coins. Also, they both function by using protocol incentive tokens.

But unlike MakerDAO, Abracadabra collateralizes assets with proceeds such that users can use tokens to mint or borrow stable coins some of the tokens Abracadabra uses are yvUSDT and xSUSHI being tokens. By using these tokens, they can free up assets, liquidity, and user revenue.

Abracadabra has lending advantages too and some of them are:

On the whole, Abracadabra enhances the utilization of funds and reduces the chances of liquidation. 

Convex Finance

Convex finance has embarked on the journey to improve the user experience in DeFi 2.0. It will be doing this by showcasing a one-stop platform for its users for liquidity mining and CRV pledging. 

In the end, convex finance will be developing the CRV ecosystem by balancing CVX tokens by simplifying the CRVA locking, pledging, and process of the curve. 

Recent breakthrough with DeFi 2.0

One of the key indicators of the growth of DeFi 2.0 is the quick growth of its projects on the ecosystem. So far, Convex finances a Total Value Locked {TVL} of 14.55 billion surpassing yearn of .0 billion. 

In the same way, Abracadabra has accrued 4.2 million and Olympus DAO accruing 650 million growth change. All of these are clear indicators of the effectiveness and efficiency of DeFi 2.0.

Which Way to Go? 

We have seen the differences between the two DeFis, weighing their cons and pros, and have submitted our resolution to you to pick which best suits you. 

No one will prefer DeFi 1.0 over DeFi 2.0 seeing its ease of adaptability and its ease of incorporating ability into several crypto networks. You may want to deny it but several applications and transactions will soon wear out your patience for DeFi 1.0.

Instead of sticking to the old man, why not launch into newer experiences and enjoy smooth transactions on DeFi 2.0?

Also Read CURVE FINANCE: Let’s Take A Curve Into Defi Of Stablecoins

Layer 2 Solutions: Taking Scalability to New Heights

In this article we will explore the concept behind Layer 2 Solutions and the problems they are solving in blockchain.

Introduction

According to the CAP theorem (also known as Brewer's theorem) first proposed in 1998 by Eric Brewer before Seth Gilbert and Nancy Lynch propounded it in 2002, a distributed system cannot attain consistency, availability, and partition tolerance simultaneously. This same opinion holds sway among blockchain experts for blockchain protocols. The belief often referred to as blockchain trilemma suggests that blockchain cannot achieve three of its core principles: security, scalability, and decentralization simultaneously.

By implication, the blockchain trilemma said, a protocol can achieve decentralization and security while sacrificing scalability and vice versa. The blockchain trilemma provided an answer to why centralized networks can boast thousands of transactions per second and the blockchain networks like bitcoin and Ethereum can only afford a few tens of transactions per second. In that light, the trading system sacrifices decentralization while achieving high throughput, secure and scalable network. To scale up blockchain protocols, developers began looking to salvage the situation.

So far, to solve the trilemma belief, several approaches are taken. The proposed solutions to achieving scalability are Layer 2 and Layer 1 solutions respectively.

Layer-1 and Layer-2 Solutions

Although this article focuses on Layer 2 solutions, it will be necessary to lay a background that includes Layer 1 solutions. It will highlight several Layer 1 and Layer 2 solutions as well as references to top Layer 2 implementations you should know about.

Layer-1 Solutions

Often referred to as on-chain solutions, Layer-1 solutions are the scalability solutions that require redesigning the underlying protocols of the base protocol. Look at the Layer-1 solution as say, redesigning Ethereum or Bitcoin protocols to increase throughput and reduce fees. For instance, Visa, MasterCard, and other payment processors process an average transaction per second of 5000 while Bitcoin and Ethereum process 4 and 15, respectively. Going by the current design of these blockchain networks, as users of the networks grow, the TPS will keep reducing and transactions keep getting unnecessarily slow, hence, the need for a redesign. The Layer-1 solution entails redesigning the underlying protocols of the networks to allow for throughput, energy efficiency, and cheaper transaction fees. 

There are thus several methodologies employed to redesign the base protocols. Although some of them are still at their experimental stage, they include: 

Consensus-Based Protocol Redesign

This consists of redesigning the consensus protocol of the base protocol to scale transactions and efficiency. The leading blockchain networks like Bitcoin and Ethereum have leveraged PoW consensus that allows miners to solve cryptographic puzzles to validate and verify blocks thereby making it energy-demanding and tedious. Nonetheless, PoW systems are secured but often characterized by high transaction fees and low throughput when there is network congestion. To mitigate this risk and achieve a scalable network, PoS consensus becomes a good choice. Instead of miners solving cryptographic puzzles using enormous energy, users stake coins on the blockchain.

PoS consensus is set to cut down the high cost of transaction and throughput of the PoW networks. It is yet in its experimental stage, but some protocols are already developing on it. Among the top projects are Solana, Avalanche, and Ethereum. Ethereum termed its proposed PoS version Ethereum 2.0. From a frontier phase, Ethereum will be going full serenity next year by launching a Proof-of-Stake (PoS) consensus algorithm. Unlike the high cost of transaction and low TPS of Ethereum 1.0, Ethereum 2.0 is expected to dramatically and fundamentally increase the capacity of the Ethereum network while increasing decentralization and preserving network security.

Sharding

Also in an experimental stage, sharding is adapted from distributed databases as one of the Layer-1 scaling solutions. Employing a Sharding Layer-1 scaling solution means breaking the state of the base protocol into distinct datasets called "shards". Here, tasks are managed by shards, simultaneously processed in parallel and they collectively maintain the entire network.

Each node in a network represents a shard instead of maintaining a copy of the entire main chain to allow scalability. Each shard across the network provides proofs to the mainchain and interacts with one another to share addresses, balances, and general states using cross-shard communication protocols. Although in an experimental stage, awaiting its launch in 2022, Ethereum 2.0 is exploring the implementations of shards.

Layer-2 Solutions

Instead of implementing the changes of the parent protocols of the blockchain, Layer-2 solutions took scalability to a whole new height. Layer-2 solutions are those scalability solutions that entail adding a layer to the base protocol to increase throughput. They take transactions off the main chain, hence, are called off-chain solutions. 

The off-chain solution doesn't allow base protocol structural changes since the second layer is added as an extra layer. For that reason, Layer-2 scaling solutions have the potential to achieve high throughput without sacrificing network security.

Layer-2 solutions consist of smart contracts built on top of the main blockchain. Those secondary layers are for scaling payments and off-chain computation. Layer-2 solutions can be achieved in various ways. For example;

Rollups

Rollups are one of the Layer-2 scaling solutions built on the Ethereum blockchain. Unlike the Layer-1 solutions, they are secondary layers that allow users to perform transactions off the main Ethereum chain (Layer-1). It is designed to post transactional data on Layer-1 thereafter, hence, inheriting the security of the base protocol. Rollups possess the following properties:

  1.  Executes transaction outside Layer-1.
  2. Proofs transactions on Layer-1, thereby improving the security of Layer-2.  
  3. Using the transactional data on Layer-1, rollup smart contract in Layer 2 enforces correct transaction execution on it. 
  4. Operators stake a bond on the Rollups smart contract which they get incentivized to verify and execute transactions correctly. 

Rollups can either be zero-knowledge or optimistic Rollups. They both differ in their security model:

Optimistic Rollups

Optimistic rollups is a Layer 2 solution designed to enable autonomous smart contracts using the Optimistic Virtual Machine. By default it doesn't perform any computation, hence, can offer up to 10-100x improvements in scalability depending on the transaction. It sits parallel to the main Ethereum chain on Layer-2. Transactions on Optimistic rollups are written on the main Ethereum chain in form of call data thereby further reducing the gas cost. 

As stated ab initio, Optimistic rollups do compute transactions outside of the main layer in the form of batches and submit only the root hash of the block to the main chain. Hence, the need for a mechanism (fraud proofs) to ensure transactions are legitimate That way, when someone notices a fraudulent transaction, the rollups initiate fraud proofs before running a transactional computation using available state data. By implication, Optimistic rollups take significantly longer to confirm transactions than zero knowledge rollups. 

There are currently multiple implementations of Optimistic rollups that you can integrate into your dApps. They include; OptimismOff-chain Labs Arbitrum RollupFuel NetworkCartesiOMGX

Zero-Knowledge Rollups

This is a type of rollup on the ethereum blockchain. It bundles hundreds of transactions off-chain and generates a cryptographic proof known as Succinct Non-Interactive Argument of Knowledge (SNARK), often called validity proof.

The ZK-rollup smart contract maintains and updates the state of all transfers on Layer 2 with validity proof. Instead of the entire transactional data, the ZK Rollups needs only the validity proof, which goes on to simplify transactions on the network. Validating a block is quicker and cheaper in ZK Rollups because less data is included.

There are multiple implementations of ZK-rollups that you can integrate into your dApps. They include; LoopringStarkwareMatter Labs zkSynczkTubeAztec 2.0, and so on. 

Channels

A State Channel is a Layer-2 scaling solution that facilitates two-way communication between the participants which will allow them to perform transactions off the main blockchain. Typically, for a recurring payment State Channel does not require a recurring validation by nodes of the Layer-1 network to improve overall transaction capacity and speed. The underlying blockchain is sealed off via a set of smart contracts or multi-signature seals off. Leveraging the smart contract pre-defined by participants, they can directly interact with each other without the need of the miners. Upon the completion of the transaction or batch of transactions on a state channel, the final “state” of the “channel” and all its inherent transitions are recorded to the underlying blockchain. Some projects including Liquid Network, Celer, Bitcoin Lightning, and Ethereum's Raiden Network are currently deploying state channels scaling solutions.

Sidechain

A Sidechain is a secondary blockchain linked to the main blockchain via a two-way peg. Like most layer 2 scaling solutions, it uses an independent consensus and contracts to optimize throughput. On the sidechain, the main chain takes up security roles, confirming batched transaction records and resolving disputes.  

They are somewhat similar to channels, however, it differs in how they process transactions and the security impacts. Transactions are recorded publicly on the ledger, unlike the private records of the channels. Sidechains enable tokens and other digital assets to move back and forth freely from the main chain. When the sidechain completes a transaction, a confirmation is relayed across the chains, followed by a waiting period for added security. Due to their allowance to move assets around freely on the new network, a user who wants to send the coins/assets back to the main chain can do that by simply reversing the process.

Plasma

Plasma is a secondary chain on the Ethereum blockchain, proposed by Joseph Poon and Vitalik Buterin in their paper Plasma: Scalable Autonomous Smart Contracts. It comprises Merkel trees and smart contracts which create unlimited smaller versions of the main chain (Ethereum), called child chains. Integrating these child chains enables fast and cheap transactions off the main Ethereum blockchain into child chains.

Users can deposit and withdraw plasma chain funds, enabled by fraud proofs. For such a transaction to go on, there has to be communication between the child chains and the root chain, secured by the fraud proofs. Users deposit by sending the asset on the smart contract, managed by the plasma chain. Then the plasma chain proceeds to assign a unique ID to the deposited assets while the operator generates a batch of plasma transactions received off-chain at intervals. On the other hand, the contract initiates a challenging period during which anyone can use the Merkle branches to invalidate withdrawals if they can. 

Conclusion

Like the CAP theorem in distributed systems, the blockchain trilemma suggests that blockchain cannot achieve scalability, security, and decentralization simultaneously. However, the Layer-2 scaling solutions have come to challenge the thought system. It allows the mainchain to take care of security while maintaining scalable networks in its additional layers.

Also Read Arbitrum: Scaling without Compromise

Serum: A Blend of Speed, Convenience and Trustlessness

As the next-generation exchange system, Serum is making waves in proving its credibility in crypto-trading and decentralized finance transactions. It provides faster and frictionless orders with its automated order book system.

Serum provides incentives to its users which in turn favors so many developers. Some of these incentives are Serum Token (SRM) and MegaSerum Tokens(MSRM). With these tokens, one can achieve passive crypto income by staking their tokens on Serum. 

Serum allows every member to stake their tokens. It doesn't only allow members with the highest token to stake, it also allows members with small tokens to stake too. 

Seeing that Serum DEX has so much to offer, there's a need to know so much about it. In this article, we'll extensively discuss Serum DEX and its features. Also, we'll discuss the values and how it relates to other blockchains. Enjoy!

What is Serum?

The Serum is a decentralized exchange system built on the Solana ecosystem to provide unmatched low costs and speedy DeFi transactions. It charges as low as 0.0001 cents for transactions. 

The system aims to offer users faster settlement times and zero centralization. 

In offering a non-centralized side of its architecture, it centralizes price fees even without using Oracles services. Hence, we say the Serum system functions without Oracles. Oracle is a centralized service used by Defi protocols to verify, authenticate and query external data then send them to an already closed system.

Because Serum is based on the Solana blockchain, it offers fully decentralized services that are easy, fast, and affordable to use. 

In Serum DEX, users can easily transfer assets amongst different blockchains and even trade stable coins and wrapped coins or even convert coins from one coin to another. For instance, converting Ethereum to FxT. Some of the projects build on Serum DEX are:

Furthermore, users can create customized financial products as they deem fit. 

The Serum uses native Serum tokens(SRM) as its main governing assets and incentive for its ecosystem. With SRM, users can stake, trade, or participate in burn and buy fee incentives for reduced trading costs.

Also, with the SRM, users enjoy a further reduction in Serum-based transactions.

Aside from all of these, Serum aims to enhance frictionless cross-chain contracts in DeFi while traders trade synthetic assets. It provides many synergies with the Solana blockchain serving as its host application.

Solana Blockchain 

As the fast-growing blockchain system, Solana has secured a spot in the top 10 cryptocurrency projects according to the market cap. Being able to carry out fifty thousand transactions in a second(TPS), Solana blockchain has demonstrated to be the quickest blockchain anywhere on the globe. So, Serum building their project on the Solana network will allow for quick fast transactions on the Serum network. 

Solana, with all of its functions, is a layer-1 blockchain. So, to function effectively, Serum functions solely on a layer-1 solution system without layer-2 solutions. It operates solely on a decentralized clock that monitors time-stamps transactions together with an advanced Proof-of-Stake(POS) mechanism. 

In recent times, blockchain developers have been designing decentralized applications using the Solana blockchain. This widely accepted choice from blockchain developers is due to Solana's reputation in providing fast and scalable smart-contract-enabled blockchain. It's this advanced blockchain system that the Serum network is built on. Clearly, Serum is just a project on the Solana ecosystem.

That said, Serum DEX mirrors the cost and speed of the Solana network. With this, it offers a fully decentralized trading arena with easy trading on centralized exchange systems. It also offers inter-operable features that allow users to exchange assets such as Ethereum (ETH), Bitcoins (BTC), SPL-based tokens, and ERC-based Tokens. 

Serum Token (SRM)

A unique thing about the Serum token (SRM) is its means of collecting values. It accrues values via hyperinflation.

SRM accrues values through adoption and utility. Some are:

That said, most SRM have extensive unlocking terms with all sales fees inclusive. Serum achieves this by locking the tokens. SRM are locked cryptographically in a smart contract. It takes about a year or less to unlock a locked token.

The period where you cannot unlock a locked token is its unlocking period. Most SRM have an unlocking period of one year.

In some cases, some SRM take up to 6 years to unlock. This type equates to 1/2190 SRM in a day.

SRM amount to a maximum of 10 Million tokens, creating about 175 million tokens in its circulation. Because of this high number of tokens in circulation, Serum has been able to provide liquidity to their project. However, several token stakeholders have decided to hold on to a large number of their tokens thereby reducing the number of tokens in circulation. 

Moving on, several traders stake SRM to achieve passive crypto income. They also do this by rescuing fees and staking rewards when trading on Serum DEX. 

Howbeit, traders with SRM can still partake in on-chain governance. Traders who do this will vote on updates to specific markets on the project. 

MegaSerum Tokens (MSRM)

A MegaSerum(MSRM) is equivalent to one million SRM. It means you have to have a million SRM as they'll amount to one MSRM.

MegaSerums are rare and there are only 10%. This is so as there are just fewer users that show belief and commitment to the Serum network. It's just those 10% that can lock their SRM with MSRM.

Project Serum Cryptocurrency Ecosystem 

The project Serum, built on the Solana ecosystem, provides usable services to developers and other users from the start of their project to its deployment. On a large scale, this ecosystem provides a suitable platform for non-technical users planning on delving into Decentralized Finance(Defi). This they can do on Serum's user-friendly App(dApp).

That said, in the Serum ecosystem, developers are automatically eligible for grants once they build on this network. With this, projects receive the support and funding to enhance their user adoption and brand awareness. 

A good example of a project like this is the Phantom project. The Phantom project is a Defi(Decentralized finance) and NFT crypto wallet. Another example is Coin98 that offers users smooth running payment gateway services. 

Also, Project Serum provides developers contact points and resources. With that, you can view on-chain codes, clients codes, and repositories. The project also offers tutorials for developers which can be found on the "Developer Resources" on its website.

Finally, the Project Serum allows users to comprehensively overview all Serum's tokens and integration within its ecosystem. And to top it all, the project provides a link to its whitepaper.

Serum and Staking Nodes

Before one becomes a Serum node, one must take at least 10million SRM including a minimum of 1 MSRM. However, at 100 million SRM or 100 MSRM tokens, nodes stop staking tokens. 

Nodes collect several rewards based on their network participation, the aggregate of activity, and performance within the Serum ecosystem. Generally, nodes are in charge of some blockchain operations like cross-chain settlement validation.

Staking

Oftentimes, traders can't continue the Serum project and earn passive income via Defi because they can't stake 10 million Serum tokens. This shouldn't be a challenge as there are alternatives to this.

Serum token holders can now stake tokens as regards a node. A node is formed by a leader and consists of members of that network. The node leader doesn't necessarily have the highest tokens. But the leader can be the founder of the node and will receive small fractions of node staking fees.

In a node, anyone or the leader can stake a node on behalf of another member. Still, Serum nodes will offer trading fees and governance rights within its ecosystem. 

However, there're mechanisms to provide an overload of tokens in the ecosystem. As many readers stake their SRM tokens, the system cools down following unstacking tokens. This period, known for just a week. 

Node Rewards

In a node, rewards are distributed through native SRM. However, the nodal leaders receive more proportion of the node than other members. Commonly, the leader receives 15% of the rewards while the 85% is distributed among other members. 

Annually, nodes receive a 2% percentage yield (APY) based on their staked funds. However, this percentage can increase to around 13%. This can only be possible if members of a node increase their performance duties and challenges. Also, nodes get special rewards for special challenges. One of these challenges includes providing collateral for SRM tokens. The aim of this is to prevent funds from burning. 

How to Use Serum

Serum exchange doesn't require that users own an account before a transaction. All you need to transact on Serum DEX is an internet connection, a wallet, and some cryptocurrencies. 

First, if you're carrying out a transaction on Serum, you’ll be needing a Solana wallet. Asides from the Solana wallet, there are other wallets that Serum interacts with.

Some are:

To switch between the wallet, click on the change wallet at the top right corner of the interface. Then pick your desired wallet.

Here is a breakdown of how to use the Serum before we delve into each process extensively.

Create a Solana wallet

Seeing that your cryptocurrency has arrived in your Solana wallet, you can add tokens by clicking on the add token feature on the interface. One may choose to add Serum unwrapped Bitcoin to the Sol.

The next thing to do is to find a Serum-based DEX to connect to this wallet.

Connecting your Wallet to Serum DEX 

Connecting your wallet to Serum DEX shouldn’t be challenging provided you follow these easy steps. Below are simple steps on wallet connection.

The Value of Serum

As of the time of writing this article, Serum values was the 11th most trending cryptocurrency. On the other hand, it was 141st on the coin market cap on that same day.

On the coin market, Serum was $8.10, a market price of $404.8 million, and a 24-hour value of $117.71 million.

To Wrap It Up

Serum DEX offers a platform for developers and other users to trade speedily and conveniently. For developers, it provides contact points and resources. Such that, they can view on-chain codes and attend tutorials. All that Serum offers is because of its conjunction with the Solana network. 

Also Read Solana: Exploring the Blockchain

Mina: The World's Lightest Blockchain

It’s almost impossible for developers to create a protocol with these three important ingredients – security, scalability, and decentralization. These three ingredients, however, exist in ideal cases. Their existence is termed the blockchain trilemma, and this name was given by Vitalik Buterin, the founder of Ethereum.

Since blockchains protocols don’t exist in the real sense but the blockchain trilemma, most blockchains exist as having only two of these three ingredients? That is security and scalability without decentralization or decentralization and security without scalability.

Most blockchains are highly decentralized, but they often face the challenge of overcoming scalability or security.

Bitcoin, for instance, faces a problem of scalability.

However, one blockchain protocol called Mina protocol is promising to solve the problems mentioned above. 

The Mina protocol is a lightweight blockchain that helps to improve the decentralization of codes on the network. Asides from this, the Mina protocol has so many to offer.

In this article, we will be looking at the Mina protocol, its architecture, and the risks associated with the Mina protocol.

Mina Protocol: Architecture and Procedures

Mina protocol is a rebrand from the Coda protocol. It changed its name from Coda protocol to Mina protocol in October 2020.

The Mina protocol is said to be brief, cutting down the numerous requirements for running Dapps effectively. Because Mina Protocol doesn’t require much space, it’s often referred to as the “succinct blockchain”.

Here is a significant problem that the Mina protocol has solved.

Blockchains are developed with high-security measures that protect information locked on the blockchain. These security codes protect transactions on the blockchain too.

Seeing the strong tide of technological advancement, more people have moved to storing and transacting on blockchains.

The sudden influx of users on blockchains has caused a lag in this blockchain technology. This lap is due to the shortening of blockchains sizes due to the high number of users in a blockchain.  

For blockchains like the bitcoin blockchain, larger bandwidth (storage) has been used to accommodate many users on the platform. So, it explains the reason for the large bitcoin blockchain size – 320 GB.

On the other hand, the Mina protocol has a size of 22kb, which is way lower than a bitcoin and other networks. This constant low size of the Mina protocol is attributed to the protocol’s ability to condense its blockchain using zero-knowledge proofs.

Moving on, Mina protocol aims to enhance payment options by advancing its payment system for easy distribution on the platform and the ease of verification of its users. 

On its white paper, you may see this termed as “succinct blockchain”.

Mina Protocol Architecture

A protocol’s architecture will refer to certain rules that the protocol abides by to function. It is these rules that determine the decentralization activity and security efficiency of a blockchain. Just like every other protocol, the Mina protocol has its architecture.

Block Producers

A Mina block producer produces new blocks for the blockchain. In producing new blocks, it validates the current state of the blockchain. 

A Mina block producer aims to provide security and achieve consensus on the blockchain.

On the Mina protocol, blockchain producers are not limited to certain people. Instead, any with the current state of the block can produce a block.

To produce a block ultimately, one must have enough computing power to reduce a blockchain SNARK within the slot time and connect to peers to broadcast the generated block. The developed connection to peers must be within an acceptable time, as the network consensus parameters state.

Stake Delegation

On Mina protocol, it’s possible to delegate funds and undelegated funds. Delegated funds can’t be spent. To undelegate funds, one must re-delegate them to their original account.

The Life Cycle of Payment

Payment is a transaction that transfers value from accounts to accounts with a transaction fee inclusive. The transaction fee is the charge to be paid by the sender to transfer his value to the recipient’s account.

Payment on the Mina protocol passes through various steps before they’re verified. Here are the payment verification steps on the Mina protocol.

Members of the Mina Protocol can create a payment then share it within the network. The Mina network then stamps it with a cryptographic key that validates the transaction from the sender.

The transaction is then sent to the network for processing by peers on the network. On receiving the payment, each peer gets a copy of the transaction in the local transaction pool. The local transaction pool is a memory store that stores all transactions a peer network has processed.

A block producer’s note is picked for a given time slot, with the active block producer choosing an in-flight payment depending on the payment fees. The active block producer then places the transaction fees on a transition block, also a list.

Also, the block producer defines the structure of a transition by generating a SNARK. The producer then transmits this new information for processing by the SNARK workers.

It’s important to note that block producers earn Mina as rewards when they build blocks.

To prove transactions, worker nodes perform SNARK calculations on each transition block.

These proofs emerge as individual proofs and neighboring proofs of payment. In the end, all payments are verified.

By generating proofs, SNARK workers earn currencies from the paid block producers. They then transmit the evidence over the network.

After verifying, the block producer sends out verification to all members of the block. The members then apply the required changes to their accounts before it reflects.

Proof of Stake Mechanism

The Mina protocol proof of stake functions majorly on the Ouroboros protocol. The Ouroboros protocol extends and modifies the Mina protocol blockchain.

Before now, the Ouroboros protocol was an extension of Praos, but now, it is the Ouroboros genesis.

Being a newer extension of Praos, Ouroboros protocol fixes any vulnerability that involves forks long fork attacks.

Scan State

Scan state refers to a data structure that permits transaction SNARKs production to decouple the output from block producers to snark workers. Also, due to the scan state’s data structure, SNARK proof generalization transactions can be completed and parallelized by several snark workers in a competition.  

Furthermore, because block producers don’t need to produce transaction SNARKs, there isn’t a change in the production time of the block. Also, irrespective of the transaction throughput, there is a constant time for block production. 

Scan state is replete with several full-binary trees, with each node present in a tree being worked on by snark workers. Periodically, single proofs from atop a full-binary tree are returned by the scan state. The proof affirms that transactions done at the tree’s base are correct.

Tokens 

Tokens are an avenue for users to issue and create their unique tokens. However, they require users to open a particular token account. 

Mina protocol allows users to mint their tokens which they can send using specialized token accounts. Mina’s command-line interface, also referred to as CLI, is the major way users interact on Mina’s Blockchain with tokens.

CLI offers an interface that encourages the functional creation of a new token account, new tokens, and minting of non-default tokens. Additionally, CLI features advanced daemon and client commands.

Snapps

Being the lightest blockchain in the world, Mina has a new applications category known as Snapps: Snarkified Applications. 

Similar to Ethereum Dapps, snapps are at a higher level due to their unique and specific properties. These properties,

Typically, snapps can be explained as Snapps = Dapps + Privacy + Off-Chain Data + Scalability. It is important to note that Mina’s snapps are way more efficient than Ethereum Dapps. Mina’s snapps benefit from Mina’s Blockchain scalability potential owing to Mina’s succinct nature.

How Mina Works

The Mina protocol runs on two major components - SNARK and Ouroboros Samasika. It is these two components that give the protocol its uniqueness. 

SNARK, for example, allows the protocol to maintain its small size despite the addition of some blocks to the blockchain. 

SNARK is a type of succinct cryptographic proof, and it validates each block after addition to a blockchain. Through this, it’s easy for nodes to store tiny proofs rather than the entire blockchain. 

On the other hand, the Mina protocol uses a unique Pos mechanism known as the Ouroboros Samasika. The Ouroboros Samasika provides bootstrapping via a genesis block. 

Succinct blockchains carry two significant functions; updating and verification.

In verifying, the succinct blockchain verifies blockchain, verifies consensus, and verifies blocks.

On the other hand, the succinct blockchain updates consensus and chain summary.

Asides from all these, the Mina blockchain also optimizes the storing of transactions. This is done by joining unproven blocks and submitting the process to a parallel prover. All of these it does by using a side-by-side scan. 

Risks Associated With Mina Protocol and Their Complications

More often than not, crashing nodes are due to configuration problems. The problem could be incorrect permission on the private key, incorrect characters, and incorrect peering.

To solve this, you can add your current user to the docker group. You can also add a prefix command, but this is not always recommended.

Keys directory has about 700 permissions, with private keys having 600 key files. All of these commands help to update your keys directory in your home directory.

This clearly indicates the absence of a message for twenty-four hours. That is, you have not received any message from your peers in the last 24 hours.

When writing this article, the current network is 128, including a coin base transaction and other fee transfers.

Often, the transaction was stuck and would indicate pending. Afterwards, the transaction will leave the transaction pool. You may try sending it again.

Payments can be canceled before syncing only if the funds are in the ledger.

To Wrap It Up

Mina protocol has stood the test of time, working efficiently, combining ingredients to allow you to transact easily on a blockchain. When writing this article, the current network is 128, including a coin base transaction and other fee transfers.

Mina protocol has solved lagging problems that arise due to the overcrowdedness of users on a blockchain. It was able to do this while still maintaining the decentralization of nodes.

On Mina protocol, transactions are secured on blockchains, and several blockchains can be added. Anyone can create a block; creating a partnership on Mina protocol is not restricted to a set of people.

Looking at the architecture, Mina Protocol has a bright future in blockchain technology.

Also read: Iron Fish: The Private Cryptocurrency

Iron Fish: The Private Cryptocurrency

Several blockchains have tried to address several issues that face decentralized transactions but none of them have completely addressed the issue. Only one of these blockchains is close to solving this once and for all. This blockchain is the Iron Fish blockchain.

The Iron Fish blockchain is a layer 1 decentralized blockchain platform that offers top-notch privacy security to users. It helps in overcoming the challenges of creating P2P connections in a node by eliminating any barriers that may be present. Also, it has been able to create connections in any browser and any CLI environment. 

Surprisingly, the Iron Fish project has so many other benefits it offers its users. In this article, we'll be discussing the benefits, networking mechanism as well as unique features of the Iron Fish blockchain. 

What is the Iron Fish Blockchain?

The Iron Fish project is a layer 1 privacy blockchain that offers users strong privacy transactions and wide expansion to the use of cryptocurrency. As a decentralized Proof-of-Work(POW) blockchain, Iron Fish offers users full-private transactions and supports WebRTC. By supporting WebRTC with WebSockets, it reduces the challenge of creating P2P connections. 

The Iron Fish aims to run a full node directly without future iterations in browsers or CLI environments. By doing this, it makes it easy for any person to create a node and join a node. It does so by lowering barriers to entry. 

Like other blockchains, Iron Fish has six ingredients:

Networking

The Networking component of the Iron Fish gives a run of basic networking startups, stacks, messages types, and sequences. Networking provides information about Iron Fish gossip protocol implementation.

Iron Fish Blockchain has a networking system that enables it to perform its unique functions as a blockchain. 

These functions enable it to carry out functions like node interaction, layers transportation, and nodal gossiping.

In building a decentralized blockchain system, creators have not successfully addressed the network address translation {NAT}. It is with the NAT that users can effectively communicate without firewalls and routers. However, by creating sharp accessibility with a combination of Web Sockets and WebRTC, the Iron Fish blockchain has completely addressed the NAT issue.

Asides from the combined action of the Web Sockets and WebRTC, Iron Fish uses an array of techniques to ensure that users connect freely irrespective of their browser and CLI environment. In other words, Iron Fish solves the problem of connection interjection due to technical faults.

That said, once a node is created, there has to be another node ready to connect to the former node. The latter node is known as Bootstrap which, once connected, connects the former node to another peer to form a network. Below, we discuss how nodes form a network in the Iron Fish blockchain.

Startup sequence

Before a network is set up, there has to be a node that initiates a connection or startup. Once the node initiates the startup, the following happens:

Peer connections lifestyle

During a connection, a node maintains a complete knowledge of its peers and other peers connected to it. They do this by occasionally checking for changes in the nodal connections. With that already said, let’s discuss the modality of nodal communication.

Nodal messaging

A nodal message is a unique format member of a group sends messages in a node connection. These messages are usually agreed upon and only peers in a network understand them.

There are different types of messaging with different styles of messaging.

Nodal messaging styles

Gossip

Gossips occur within networks, sending messages from one node to another. Once a node receives gossip, it forwards it to the nearest connected node. The essence of gossip is to propagate changes that occur in a nodal connection.

Direct RPC

This style of messaging helps to send messages to a specifically connected peer and awaits a response. It does this by its Remote Procedure Call {RPC} stream that comprises a request stream and a response stream.

Fire and Forget

The fire and forget style allows users to send messages to connected peers without any confirmation of receipt. This style of messaging is often useful if users need not worry about the recipient receiving the message.

Global RPC

Messages sent here are sent to specific users and other users in the same network. Global RPC resends the message if there are any errors in the message or if the sender doesn’t get a response. However, this style of message favors known peers over unknown peers.

Mining

The mining section in the Iron Fish blockchain describes how the blockchains construct new blocks for their users. In constructing new blocks, they do this randomly for the sake of proof of work and the miners' reward calculation.

Mining in the Iron Fish blockchain is defined by rules that guide the creation of blocks and verification of peers in an incoming block. While on the other hand, miners are nodes that add new blocks to the blockchain. We say a new block is added if a miner finds a hash of a blocker header below a target.

To prevent block accumulation, the Iron Fish block adjusts the difficulty of mining by 15 seconds. This is done if observed blocks are coming in faster or slower.

To mine on the Iron Fish blockchain, your node must know global data structures and must be familiar with the two most recent blocks.

Storage

The storage section helps users understand the basic structures and models of the Iron Fish. Also, it helps users how this layer is accessible in both browser full nodes and CLI.

In discussing an Iron Fish storage system, we’ll be looking at what the system stores and how the system stores.

What does the system store?

Note

A note is a spendable representation of the payment form. It is quite similar to the UTXO of bitcoin. Nodes are referenced privately and are only referenced publicly on two occasions. The first occasion is when the note is severe as an output for a transaction. The second is when the note is in a hashed form. More importantly, notes are always private.

Nullifier

A nullifier is different from a note and it is unlinkable to a note. A nullifier is a distinct identifier to a note and can only be spent if exposed as part of a transaction.

Once exposed, the nullifier is saved on Iron Fish data structures. These data structures help to keep track of all nodes on the Iron Fish blockchain. And there are two of these data structures

Merkel tree notes

The Merkel tree note as an accumulator data structure presents several elements with a tiny identifier. A Merkel note consists of the following

Merkel nullifiers

The Merkel tree of nullifiers functions like the Merkel tree of notes in that it accumulates too but it accumulates are nullifiers. Although, unlike the Merkel note, it accumulates notes in a series of nullifiers.

Also, the Merkel nullifier is used to track all Merkel notes spent and accompanying notes.

How then does the iron fish store data?

In storing data Iron Fish uses a storage layer that works as a Command Line Interface(CLI) tool and a browser.

Account creation

Just like other blockchain accounts, users can create an account on the iron fish blockchain using a Sapling protocol. To better understand how this and other components are necessary for account creation, going through the account creation layer will do.

All transactions on the Iron Fish blockchain are influenced by the Sapling protocol. This section explains the key components of an account.

Secret key

The secret key is necessary for constructing one's wallet and it's a 32-byte random number.

Spending key

The spending is a direct derivation of the secret key. The spending key is used by users to spend notes associated with accounts. The spending key comes in pairs:

Spending authorization key(ask): This private key in this pair is derived by using the modifier Blake2b and placing hands on a secret key. After this, the key is converted into a scalar for the jubjub curve.

Authorization key(ak): The authorization key is a derivation of the public key by the multiplication of the spending authorization key. 

Nullifier keys

The nullifier keys are derived from the secret keys and are necessary for creating nullifiers and spending a note. The nullifiers' keys are into pairs:

The proof authorization key(NSK): The proof of authorization key is the private component on the pair and it's derived by using the modifier Blake2b and placing hands on a secret key. After this, the key is converted into a scalar for the jubjub curve.

The nullifier deriving key: This key is a derivation of the public key by the multiplication of the spending authorization key. 

View key pair

The view key pair comes in two and are:

Outgoing view key(ovk): This key is responsible for the decryption of outgoing transactions. 

Incoming view keys (ivk): The incoming view key allows your decryption of incoming transactions.

Transaction creation

This layer gives a run-through on the applications of zero-knowledge in the Iron Fish blockchain alongside its transaction in conjunction with the Sapling method. Also, it gives a run-through on how to validate and balance existing transactions.

Verification and consensus

This final section simplifies the rules on accepting new block transactions. Oftentimes, this is the layer several users visit the most.

Before now, we discussed how nodes are created but didn't discuss why they're created that way. Nodes are created following the blockchain consensus rules.

The blockchain consensus is a verification layer that sets rules on how nodes accept blocks. This consensus layer is what the Iron Fish blockchain operates on. 

Moving on, the Iron Fish block will be accepted if it has a valid header and body. At high levels, verifying headers will confirm the amount of work behind a header. To confirm the amount of work behind a header, the system checks for a hash numerically lower than the target. 

Moving on, the Iron Fish block will be accepted if it has a valid header and body. At high levels, verifying headers will confirm the amount of work behind a header. To confirm the amount of work behind a header, the system checks for a hash numerically lower than the target. 

Validating a block header

To validate a block header, a receiving block header checks all of the following correctly. 

Validating a block body

To validate a block body, the system validates all transactions in the block. This is done by checking the validity of each transaction.

Iron Fish Gossip Protocol

The Iron Fish gossip protocol broadcasts new transactions and blocks to every peer in a network. To do this, nodes in a network verify incoming transactions, then send them to other peers. After broadcasting the transactions, the nodes validate the incoming blocks before signaling the node’s transaction ledger. The essence of a peer broadcast is that every peer receives messages quickly.

Iron Fish Zero-Knowledge Proof

A Zero-Knowledge proof refers to cryptographic techniques that verify and proof statements without exposing their underlying data. For the Iron Fish blockchain, it can do this by using zk-SNARKs. Essentially, zk-SNARKs shields Iron Fish users’ identities and balances. Because of this, you successfully hide your identity and transaction details.

Unlike bitcoins and ethereum, Iron Fish blockchain transactions are not in the permanent ledger. Instead of this, Iron Fish users can transact without it revealing their balance or their identity. Experts even say the Iron Fish blockchain creates platforms for developers to carry out their work. Most especially, this platform will favor developers who have no foreknowledge of cryptocurrency.

The Iron Fish network uses the sapling protocol created by Zcash to verify transactions on its blockchain. In verifying transactions, they protect their clients and offer better services. 

Not only are they important to developers, but they're also important to cryptographers and enthusiasts in the field. For cryptographers, they can create Rust Coding coinage for their work and other systems. 

To Wrap It Up

The Iron Fish blockchain offers several benefits to its users. One of these is the ease of accessibility into networks for node creation. Another one is the advanced level of its decentralized privacy transactions. 

So, don't be caught in the traps of archaic systems that disallow you from using effective software. It's with effective software that developers develop interesting and mind-blowing software for blockchains as well as platforms related to blockchains. Ensure to update yourself on all of these and enjoy advanced technological solutions. 

Also read: Digital Identification on the Blockchain with Microsoft’s ION 

Compound Chain: A Comprehensive Guide

Compound Chain is a distributed ledger with the ability to transfer value and liquidity between peer ledgers. It means that Compound Chain allows users to borrow and lend cross-chain assets from different blockchains like Polkadot and Tezos. It will have its own native token called CASH, which will be used to pay for transaction fees on the platform. 

The traditional Compound Governance structure will still execute the governance of the blockchain. Its traditional governance structure relies on COMP tokens on Ethereum. The team is building a limited-feature testnet implementation that will be released in early 2021. 

According to the statement by Compound's founder Robert Leshner, "we want to announce the designs for a blockchain that can scale Compound ver the next century." The whitepaper revealed that there are three major limitations of the current Compound supported by the Ethereum blockchain. The limitations include high gas fees, the inability to serve assets on other chains, and all the supported assets aggregate each supported asset's risk.

All those new supported assets were not thought to be limited to blockchains of the trustless, permissionless variety as well. The new Compound Chain will support the forthcoming and rumored digital assets from investment banks and central banks. This new blockchain will be a reimagination of the Compound protocol, serving as a stand-alone distributed ledger. 

It will possess the capability to solve the Compound Protocol's limitations by proactively positioning for rapid adoption of growth and digital assets on emerging blockchains like Eth2 and the central bank digital currency ledgers. 

The Compound Chain is now part of the blockchain interoperability efforts. However, it is unique to attempt to do so in an application-specific manner. 

The Governance of the Compound Chain

Although it is an entirely new and standalone blockchain, the Compound chain will be governed by the COMP token. This is the same Ethereum based system that runs Compound v1. Immediately the Compound Chain is live; it will be a considerable new set of powers accruing to the owners of COMP. 

While the COMP token will govern the Compound Chain, the platform also introduces a new cryptocurrency called CASH. The native CASH token will be used to pay for transactions on the network. It will be minted the same way as DAI, as a debt against locked collateral held on the Compound Chain. 

Cash will start arbitrarily pegged to the United States dollar, but its peg will be subject to governance decisions. Unlike DAI, all CASH will earn a yield from a portion of the interest that will be paid against loans on the blockchain. The actual amount will be one of the things that will be determined by COMP holders that take part in governance votes. 

The main essence of the chain is to function like Compound but in a cross-blockchain way. 

How Compound Chain will Improve Interoperability 

Immediately a user uploads an asset on the Compound Chain ecosystem, the asset will also be available or lending to other users. However, users can decide to borrow against their assets or not. While on the Compound platform, such users can be able to borrow any supported asset. They will start with CASH, which is unique to the Compound Chain. 

The one foreseeable prerequisite is that the blockchain should be able to support smart contracts. Smart contracts required for moving assets between Compound and the smart contract chains are all referred to as "starports." According to the Compound whitepaper, "The Compound Governance system on Ethereum established a distributed decision-making process. It is also capable of streaming governance actions to the Ethereum starport, which the Compound Chain validators receive instructions from."

Also, the chain can mint new assets. However, early user's ability to upload assets from other blockchains will be seen as more important. Users can upload an asset by moving the asset into a smart contract on layer-one chains (an example is Ethereum or Cosmos). The Compound Chain validators will witness the assets' move and then mint the corresponding Compound Chain wallet. According to the whitepaper, compound Chain is designed to enable bridging value between its connected "peer" chains. 

More Information Underway

At the time of this writing this post, Compound Labs is yet to indicate the type of technology Compound Chain will be built on. They only revealed that it would rely on proof-of-authority architecture. All parameters will be set by the decisions of the participating COMP holders. The proof-of-authority is similar to proof-of-stake, but it is important to note that validators are only selected based on COMP holders. Leshner said that if a user can appoint malicious validators, it is the same as the user stealing all Compound funds. As an incentive to operate the protocol efficiently, validators earn a portion of the interest paid by CASH borrowers, for every block they author. The incentive (reward) for validators scales with the amount of cash in existence, thus increasing as a function of assets.

According to Leshner, proof-of-authority is just the launch setup. The governance can remove itself and switch to a fully open proof-of-stake system. However, this might take a while before taking effect. This system's main intent seems to be to help drive DeFi into all parts of the crypto ecosystem. The compound Chain team is already considering new business lines that could be enabled by this new chain. 

For instance, some centralized digital currencies like the JPM coin may need known liquidators that have passed through compliance checks. This could be the role that the team could play for some more-restricted assets. Upon its launch, the aim is to replicate the user experience of Compound but with a completely clear path to be able to support all blockchain systems and assets. 

The Fear of Centralization by the DeFi Community

Since it announced the launch of Compound Chain, there have been several negative reactions. Many respondents have expressed their concerns regarding the perceived centralization associated with the project. One of the major critics of the project is Set Protocol's, Anthony Sassano. Anthony pointed out that the reason for the expensive Ethereum gas fees is because of its high decentralization. According to Anthony, for Compound Chain to have fewer gas fees means that it will be less decentralized. Also, it is a proof-of-authority chain where COMP governors will choose the validators. 

Conclusion

The new chain adopts a more centralized consensus mechanism, which has received a mixed reaction from the DeFi community. If the interoperability feature is exactly as the whitepaper has described, then it will be a great addition to the blockchain community. 

Also take a deep dive in Uniswap V2 Protocol.

Introduction to The Graph Network [Part - I]

The Graph:

The Graph is an open-source network that decentralizes the query and API of Web 3.0 which uses a decentralized indexing protocol. The objective of The Graph is to empower internet applications so that they will run using public infrastructure. As the service vanishes when a service provider or business fails to keep intact which makes the users suffer. The protocols of The Graph tackles this vulnerability.

The paradigm of the businesses will shift as the consumers will not pay the centralized businesses or service providers, instead consumers will directly pay to the networks of decentralized service providers. In the ongoing version of The Graph, dApp developers can run a Graph node on their own infrastructure or they can use the host service which The Graph provides.

Problem solved by The Graph:

Ever since Blockchain technology made its debut, developers had to set up servers and storage systems of their own in order to interact with data lying on the Blockchain. This nullifies the main reason Blockchain was used for, i.e, decentralization. This requires that the users trust the developers in charge of the servers which again brings back the concept of centralization.

Major problem is that the middle party may modify the data for strategic reasons, get acquired, or simply make mistakes and so the end-user will get the altered data instead of the actual data. The other concern in this infrastructure is that the projects can go out of business anytime.

Therefore, for these reasons, a modern way to replace or modify this structure was much needed.

Subgraph:

Decentralized indexing protocols in The Graph are known as “Subgraphs”. Users can query Subgraphs with the help of standard GraphQL API. The Subgraphs are then deployed and they synchronize the data from the Blockchain. This synchronization by default will start from the genesis block. However, users can also declare the starting block (i.e from what block to start synchronization from) and then use it to query.

To deploy Subgraph locally you can use ganache CLI and graph nodes. However, to deploy it on a hosted service, you need to sign up using a GitHub account.
Uniswap, XIO, DAOstack, Maloch, DAOphoenix, and many more major Ethereum projects have already built Subgraphs for themselves.
You can see them here: https://thegraph.com/explorer/

Future of The Graph:

In the future, dApp developers will deploy their Subgraph to a registry hosted on Ethereum. They will also deposit GRT (Graph tokens) to assist that Subgraph. This curation will indicate the Indexers that this Subgraph needs to be indexed.

Protocol roles:

For the network to function accurately, there are certain behaviors that must be taken part in. These behaviors or roles that integrate the system are as follows:

Query Engine: 

The query engine will allow the end-users to securely query the vast amounts of data stored on The Graph without the need to personally or manually do the work to compute and store that data. A query engine will run on the user's machine for the purpose of querying the decentralized network.
This engine will either be in the browser as an extension or will be embedded in the dApp.

The query engine will also act as a trading engine, for the user’s to decide which Indexers to do business with and at what cost. Users can find these Indexers using the query market.

Query Market:

This is similar to cloud-based applications. The only difference in cloud-based application and query market is that a service provider fetches the data from cloud-storage to provide it to the user, The Graph consists of multiple decentralized Indexers who compete with each other. The more users ask them to fetch queries, the more rewards they earn.

Introduction to The Graph
Source: https://thegraph.com/blog/the-graph-network-in-depth-part-1

The advantage of the query market is it enables the user to query at all times as if an Indexer goes off, the other Indexers can take up the query.

When a single dApp uses multiple Indexers and multiple Subgraphs, the flow will be as follows:

The Graph Functionality
Source: https://thegraph.com/blog/the-graph-network-in-depth-part-1

Among the multiple Indexers, users select which Indexer is proving the best data at the best cost and choose them.

The Graph Functionality
Source: https://thegraph.com/blog/the-graph-network-in-depth-part-1

Along with the price the Consumer is willing to pay, they will also send a query they need an answer to, to the Indexer. This transaction is locked for the time being.

The Graph Functionality
Source: https://thegraph.com/blog/the-graph-network-in-depth-part-1

The Indexer will then either accept or reject the offer. If the Indexer accepts, then they give a response to the attached query and proof that this query is correct as well. This proof will unlock the payment that the user made. This proof is attributed to the Indexer uniquely for verification and serves as a way to resolve disputes in the protocol.

The Graph Functionality
Source: https://thegraph.com/blog/the-graph-network-in-depth-part-1

Graph Token:

In order to support the functionality of the query market, The Graph Tokens will be introduced. Graph Tokens (GRT) settle all the payments in The Graph. However, users will be able to pay using ETH or DAI. 

Conclusion:

This article focuses on the main theoretical concepts of The Graph. 
In Part II we will be focusing on deploying the subgraph as well as how to query it, all by using The Graph hosting service.

Also Read: Hyperledger Indy - Layer of Trust [Part 1]

Xord will help you integrate your business processes with Blockchain technology. Follow the link to connect with us: https://https://xord.solutions/contact/