Product design and user acquisition methodologies
In the article, we’ll be hearing some excerpts from an interview with our friend and colleague Jack Zampolin, Director of Product at Tendermint
Product design and user acquisition methodologies
04-10-2020
When exploring the world of blockchain, some choices can be less obvious than others. In last week’s article, we discussed how to assess whether or not blockchain is the right fit for your busin...
When exploring the world of blockchain, some choices can be less obvious than others. In last week’s article, we discussed how to assess whether or not blockchain is the right fit for your business (or business concept!). With all the different types of blockchains, protocols and different projects out there, how does one go about choosing the right blockchain to build your application on or integrate your business with? And once you do make a selection, where does one begin?
In the article, we’ll be hearing some excerpts from an interview with our friend and colleague Jack Zampolin, Director of Product at Tendermint, to shed light on these important questions.
The Importance of Scalability
One of the key characteristics that differentiate blockchains from one another are consensus protocols. A consensus protocol is essentially a set of rules that dictate how transactions and blocks are confirmed on the network. A blockchain’s consensus affects how quickly it can process transactions, how many transactions it can process, and where and how transactions on the network are processed and stored. If you can’t tell, these are all critical factors to understand when making a choice.The most used blockchain today is Bitcoin. The Bitcoin blockchain uses a consensus mechanism called proof-of-work (PoW), the original consensus model (or set of rules). In a PoW blockchain, consensus is achieved by participants contributing processing power, or "work" to solve complex calculations that, once solved, serve as proofs of a set of transactions on a blockchain network. Transactions are confirmed by people called miners, participants in the network that run special software (nodes) enabling them to participate in the contribution of "work" to solve complex cryptographic puzzles. In a PoW model, miners are selected to confirm transactions if they are the first ones to solve an extremely. The solution to these puzzles is called a hash, and hashes require massive amounts of processing power to produce.
The problem with a PoW blockchain is that as it grows, more users join and more transactions take place each day, making those cryptographic puzzles become more complex. If the puzzles take too long to solve by the miners, the network slows down and transactions don’t get processed as quickly. For this reason, PoW has received criticism from developer communities for this exact reason: scalability.
As such, many new consensus protocols have been designed for better scalability (the blockchain’s ability to confirm transactions for millions or billions of users without slowing down or compromising security).
Introduction to Interoperability
With a clear understanding of the first critical factor to consider when choosing a blockchain, let’s examine the second: interoperability. Interoperability is the ability of one blockchain network to communicate (or transact with) another entirely separate network.This is especially important for platform and B2B models. While slightly less important for applications, lacking interoperability can stagger growth, and even sink your business. Take a common viable blockchain application: supply chain management. In a future world scenario, it is likely that different stakeholders in the supply chain use different blockchain tools or solutions. Imagine, the manufacturing record of a product is generated on one blockchain to prove when and where a product was manufactured. An e-commerce storefront where people buy that product is running on another blockchain. That manufacturing record is only useful if it can be verifiably tied to a product purchase transaction on the other blockchain. This is what interoperability provides, the ability for blockchains to communicate and exchange information. Without it, the data and records that were produced securely on a blockchain are at risk of corruption and hacking when transferred off-chain.
Due to the nascency of the blockchain space, the idea of interoperability has only been popular for a few years. Some protocols are working on solutions, but it’s not yet a feature of most popular blockchain protocols.
Introduction Delegated Proof-of-Stake (dPoS)
Many entrepreneurs and investors ask our team at Block Blox the same question, “When will blockchain use cases become mainstream?”, and our answer is always the same, “when a scalable and interoperable blockchain protocol is created.”Fortunately, we are nearing that point in time. Several new models are gaining traction and new protocols utilizing them are beginning to appear. Delegated Proof of Stake (dPoS) is one consensus protocol that has begun to excite developers, investors and entrepreneurs in the space due to its potential to solve blockchain’s scalability and interoperability concerns.
If you’re curious about how dPoS works, Tendermint has a very newbie-friendly library on their website. For an oversimplified definition, just as miners confirm blocks by contributing processing power to a proof-of-work network, validators set up similar software to perform transactions for the network. Instead of being selected based on the speed at which a puzzle is solved, they’re selected based on the number of tokens they have staked, or locked up, in their validator account.
Source: blog.cosmos.networkAny individual with the network’s tokens can also bond or “stake” their tokens to a Validator. This contributes to the Validator’s rank, increasing their likelihood to receive rewards. When a Validator gets rewarded, individuals who staked tokens for that Validator earn a commission on the Validator’s reward. Interestingly, validators are one of the groups in the blockchain space that face significant uncertainty and regulatory hurdles, especially in the United States. We’ll dive into validator regulations in a future article!
Not only is dPoS a more scalable model that PoW or even PoS (proof-of-stake), it’s design also is more human-focused and sustainable by nature. How so? Before dPoS, a protocol had never enabled an individual to be rewarded by a network reward so easily. At a business level, many entrepreneurs are finding great use cases for incentivizing different customer types. At an investment level, many investors are finding that those models, if designed and implemented properly, are inherently good for the long-term growth and sustainability of the businesses they support. If we trickle down to the level of the token economy, not only do staking and delegation ensure reasonably sustainable buying and holding pressures, newcomers are attracted by the incentivized model and are increasingly focused on these tokens for both short and long-term returns.
Introduction to Tendermint
Tendermint is the largest dPoS network running today. Before we take a closer look into what makes Tendermint special, we’d like to note that there is no one blockchain that is a perfect fit for all businesses. However, if you’ve identified scalability and/or interoperability to be important for your business, Tendermint is a great blockchain to work with. We aren’t getting paid to say that and have no promotional arrangements in place with Jack or any of his team or its affiliates. Tendermint is simply one of our favorite technologies in the market right now and we want to encourage more people to develop or participate in the development of use cases that add value and drive adoption.Having been involved with Tendermint at the ground floor, Jack explains how Tendermint’s founding goals were pretty close to what we’ve just discussed: Developing an efficient and scalable dPoS network model and then making all networks using the model interoperable between each other.
Source: blog.cosmos.networkJack explains how Tendermint is the blockchain layer of their product (the scalable dPOS network) and COSMOS is the application layer or software development kit (SDK) that helps developers build on and use the network. The Tendermint dPoS blockchain was launched early in 2019, and to date has proved to meet the scalability requirements of dozens of enterprise-level solutions. So far, goal #1 achieved!
As followers of Tendermint know, Jack and his team have been focusing on their second goal of interoperability with a project called Inter-Blockchain Connectivity (IBC). IBC is near ready to launch and Jack’s team will soon begin public testing.
This means that Tendermint will soon be the first blockchain to achieve both scalability and interoperability. This is an exciting time for the entire community due to the potential for mainstream adoption we might see over the next months and years.
With IBC testing beginning soon, as an entrepreneur or a developer this is the perfect time to get involved with what Tendermint is doing. Tendermint takes a unique approach to prototyping and testing. When Tendermint tested its blockchain layer, a competition called Game of Stakes was launched to incentivize people to test the network. This produced great results, and translated into thousands of followers, dozens of use cases building on Tendermint, and the excitement of a large part of the greater blockchain community.
Game of Zones
As Tendermint prepare’s for its launch of IBC, Jack and his team will launch its next development competition, the Game of Zones (GoZ). This time, developer teams will compete to create “zones”, networks running the new IBC protocol capable of communicating with other competing zones. The competition enables teams to test the new IBC functionality while experimenting with the interoperable functionality and then develop rapid prototypes.The cash rewards for the competition have not been announced yet, but Jack tells us that prizes will be published soon and that they’ll likely be ATOMs, Tendermint’s native cryptocurrency. We’ll also be covering the competition on Twitter, so be sure to give us a follow! Beyond the cash reward though, teams that performed well in last year’s Game of Stakes competition experienced countless promotional and strategic benefits. This year’s Game of Zones should be no different for the competing teams.
The competition will span for three weeks. Winners will be selected based on:
- The number of transactions sent by the zone in week 1
- Number of transactions sent and received by the zone in week 2
- The bugs identified
To close, we asked Jack to clear up a question that our team at Block Blox receives frequently, especially from newcomers to the space who have just learned about Game of Zones, “do I need to have something pre-built in order to compete in Game of Zones?” Jack’s answer was no, but he did point out the importance of having a clear idea (preferably some documentation) and a team that’s experienced with Tendermint’s technology.
If you happen to have an idea, but no specifications or team, our Tendermint/Cosmos team at Block Blox is well equipped to support you in the competition.
Even if you’re unlikely to compete in the competition, keep an eye on GoZ as it will surely produce some exciting news, use cases and partnerships!
Conclusion
We’ve discussed the myriad benefits of dPOS blockchains and just dove deep into a great example of how anyone can get involved and learn more about blockchain by taking part in Game of Zones!We hope you gained value from this article, and hope you’ll share what you learned with us on our socials!
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