The blockchain technology has genuine industry disrupting capabilities. As of writing there are multiple blockchains functioning in the real world. Some of them are pure currencies (like Bitcoin) and some are software development platforms (like Ethereum). However, as more and more industries are adopting the blockchain, we may face a potential problem.
Each blockchain becomes its own community. So, we basically have the Ethereum community and the Bitcoin community, but how can someone from one community interact with the other one?
One way to do it is to go to an exchange and interact with tokens of other communities, but therein lies a big problem. These exchanges are centralized, and that in itself goes against the entire philosophy of the blockchain technology, plus they are vulnerable to attacks.
Bancor presented a possible solution with a real time decentralized exchange (DEX) which allows for cross cryptocurrency exchange however, as the ICON whitepaper states: “it faces significant challenges due to the high transaction fees and performance limits when running on Ethereum.”
This is where ICON comes in.
ICON plans to “hyperconnect” these different blockchains using their innovative “Loopchain” technology.
They are inspired by inspired by Gilles Deleuze and Felix Guattari’s rhizome:
“the world with no center point and the world where any point is a mere connection to other points.”
The Team Behind ICON
ICON is a project developed by “theloop”, which is a Korean based company.
theloops’s parent company , DAYLI Financial Group have raised over $100 million from venture capital firms with a valuation of $4 billion.
ICON also has a strong team of advisors on their board.
What Does The ICON Network Consist Of?
The ICON network consists of the following five components:
- Community: A set of nodes which belongs to the same governance system. Eg. Ethereum is a community and Bitcoin is another community.
- Community Node (C-Node): C-Nodes are basically the nodes that belongs to each and every community. The make the consensus decisions of their respective blockchains.
- ICON Republic: The ICON Republic connects various communities with one another. It consists of the C-Reps and the citizen nodes.
- Community Representative (C-Rep): C-Rep’s are representative of their respective communities. They are the ones that become part of the ICON republic.
Think of the United Nations(UN), the UN is an ICON Republic, the countries are the communities and the delegations of each country are the C-Reps.
They are the ones who vote on various issues and affect the governance of the republic.
- Citizen Node: Citizen nodes are part of the ICON republic. It is possible to become a citizen node by creating DAPPs on the ICON loopchain, however, they won’t have any governance or voting powers.
What the ICON network will enable is the possibility of seamless cross-chain communication. The way it achieves that is through real-time smart contracts.
All the communities which will become part of the ICON republic will be interconnected through smart contracts.
Plus, another great aspect of the ICON network design is its contingence for scalability. As more and more communities join the republic, the number of transactions increases exponentially which results in the maximum utility of the network.
ICON gave a very interesting example of their application in their promotional video.
Imagine we are living in a time where the insurance companies and healthcare industry are all based on the blockchain.
Suppose Alice needs to get admitted to the hospital, how is her insurance going to pay her bills seeing that both the hospital and the insurance companies are on separate blockchains?
This is how it works:
- The hospital generates a chain ID for their patient and sends it to the insurance company using the ICON network.
- The hospital takes in the ID and uses their system to authenticate the details. If the details go through, then they process the payment and send the data back to the hospital using ICON.
So, what is chain ID?
Chain ID helps in secure online identification. As of right now, theloop has introduced the Chain ID across 25 banks and securities companies which are part of the “Korea Financial Investment Blockchain Consortium”. Using the chain ID, anyone can access these banks and companies using just one “certificate”.
This is what Jonghyup Kim, the CEO of theloop had to say:
“Chain ID goes beyond merely replacing Korea’s outdated banking certificates. It puts blockchain into the pocket of every Korean, setting the stage for widespread use of blockchain-based transactions in a new blockchain-powered financial ecosystem. Blockchain is the future.”
So, as you can see, ICON can be truly essential in a future that is built on blockchains.
What Does The Icon Architecture Look Like?
The diagram above gives an idea of what the proposed architecture is supposed to look like. Each blockchain will be a community that is linked to the ICON nexus via a portal which is the Community Representative.
The Nexus is a multi-channel blockchain which contains the light-clients of each and every community blockchain. The nexus design is based on a loopchain (more on this later) and consensus is reached via a loopchain fault tolerance algorithm (LFT).
The Portals i.e. the C-Reps are connected to the Nexus via a Blockchain Transmission Protocol aka BTP. The BTP enables cross-chain transaction i.e. transferring the transactions from the transmitter blockchain to the receiver blockchain.
What Is The loopchain?
One of the biggest challenges that ICON had to face was to bring together these different blockchains with their own unique governance and architecture on one platform. The way they did it was by conceptualising the loopchain.
This is what they define the loopchain as:
“loopchain is a high-performance enterprise blockchain with Smart Contract features that can be customized according to operational needs and linked with other distributed ledger networks.”
The loopchain has the following features:
- The loopchain Fault Tolerance Consensus protocol: Enables faster and more secure consensus and finality without the possibility of forks within the system.
- SCORE (Smart Contract On Reliable Environment): Enables high-performing smart contracts to run without the need of a separate Virtual Machine.
- Multi-Channel: Enables the creation of multiple channel within the same Blockchain network. These channels have the capacity to execute request, consensus, and smart contracts.
- Tiered System: Each and every transaction is validated through Public Key Infrastructure (PKI) based authentication (except for the initial authentication process).
What Is The ICON Token?
The ICON token is called ICX and anyone who wants to access the network will have to do so by paying in ICX. Active and regular users will get rewarded for their participation by earning more tokens.
The token allocation looks as follows:
The Token ICO ended on 20th September and they collected $42,750,000.
The ICX token is currently priced at $1.57 and there is a total supply of 400,230,000 ICX tokens. This is what the ICX token graph looks like:
What Is DEX?
DEX stands for Decentralised Exchange.
It enables execution of transactions without relying on a centralized exchange or a trusted third party. All the exchanges happen real time on the blockchain without relying on anyone. This create a trustless system. At the same time, the system is free from server breakdowns and hacks that most centralized exchanges suffer from.
Another intriguing feature of the ICON DEX is that it can establish an AI analysis model. The model goes through accumulated data such as:
- Total call volume.
- Transaction frequency.
- Price involved in transactions among different cryptocurrencies
Based on this data, the system can make real-time adjustments to metrics such as reserve rate and the reserve composition ratio of each cryptocurrency. This helps in creating stability.
The signs are looking good for ICON so far, only time will tell how far it can go. In fact, here is a comparison of ICON with some of its peers:
However, there are a couple of factors that is sure to excite anyone who is interested in ICON.
Along with Aion and Wanchain, ICON has joined the “Blockchain Interoperability Alliance”. The main goal of the Alliance is to pool their resources and knowledge on making cross-chain communications more simple and seamless.
Another major point in ICON’s favour is that it already has the backing of the financial sector and the technology is already institutionalized. They already have a working blockchain engine which which is to be employed in the banking, medical and university sectors. This gives them a major advantage over other ICOs, most of which don’t even have an alpha product in place.
Draft White paper: here