Blockchain adoption is growing at an incredible pace. More blockchain-powered applications are appearing by the day, each of them with its own community of avid supporters. Hence, intercommunication between each project becomes complicated to say the least.
Bitcoin was the first generation blockchain, establishing means to to transfer value between two addresses without intermediary. Satoshi made that possible, but what he didn’t was allowing conditions to those transfers.
That’s where second generation blockchains came in with smart contracts, helping to exchange money, property, shares, or anything of value in a transparent way while also avoiding intermediaries. Ethereum paved the way from Bitcoin to an architecture far more interesting.
The problem with platforms like Ethereum is having no outlook for scalability, as well as not a clear governance system. While these are topics currently tackled by the Ethereum developer community, they remain at stake for future review.
And that’s where third generation blockchains come in, bringing the hub and spoke model to blockchains for scalability and interoperability (interchain communication). For blockchains to succeed, they must be able to interact with one another and legacy systems, including between private and public blockchains.
The hub and spoke network model is a system where networks are distributed around a central hub connecting traffic traffic through the so called spokes.
Interesting projects aimed at becoming the reference for this new generation of blockchains incluide AION, ARK, and Cosmos. Let’s dive a little deeper into the three.
Aion’s a multi-tier blockchain network that provides systems a method to communicate with each other, and to allow these participating blockchains to create common chains between them to conduct on-chain transactions.
AION’s architecture is based on four key concepts that need to be understood in order to get the big picture of their proposal.
Connecting Networks. Protocols through which blockchains will communicate in the AION blockchain ecosystem. These will allow for the routing of messages, as well as providing the bridging protocol and decentralized accountability.
Interchain Transactions. That allow the communication between blockchains. If Chain A would want to communicate with Chain B, an interchain transaction would get created on Chain A (the source), this transaction would flow through a bridge, and reach the target blockchain, in this case Chain B. Each transaction has a payload, metadata, and a merkle proof.
Bridges, The set of validators determined to oversee and validate interchain transactions through participating and connecting networks. They are visually the link with two main responsibilities: signaling and broadcasting an interchain transaction, and informing the connecting network of the merkle hash updates of the participating network.
Participating Networks. Any network that fulfilled certain requirements needed to become part of the AION ecosystem. These include being decentralized and supporting atomic broadcast and transactions, having the capacity to make the distinction between regular transactions and interchain transactions, or being aware of the consensus protocol used by the bridge.
On top of everything lies the Aion-1 blockchain, the first implementation of the AION connecting network with the objectives to connect participating blockchains with external entities, providing robustness, and creating a maintainable and scalable ecosystem.
ARK aims to create an ecosystem of linked chains and a virtual platform of use-cases that make ARK highly flexible, adaptable, and scalable. Designed for mass adoption without compromising security, and meeting consumer demands.
Their vision lies in that the diversity of altcoins today will not be required in the future to become comercially viable, because of the linkage between today’s incompatible blockchain, meaning users can with the coin of their choice, interact with other blockchains on ARK. As sort of a decentralized exchange marketplace.
They call their technology “SmartBridge”, which is basically just a short piece of code inserted into any blockchain that is listening for incoming or outgoing ARK transactions and converts and executes them. The key here is to ensure quick and easy implementation by all the existing chains.
Another point for ARK is that it’s really fast, bringing 8 second block times, integrating a modified Delegated-Proof-of-Stake (DPoS) consensus mechanism with 51 delegates, which act just like miners in Bitcoin.
The voting system is unique to ARK as token holders choose delegates based on a public voting process. Potential delegates offer proposals, and given the chance of winning, can (not necessarily) share some of the block-creation rewards. To become a delegate is attractive because through ARK they can earn up to +400 ARK on a daily basis, which is at current market price, over $1300.
Cosmos is a decentralized network of independent parallel blockchains, powered by classical BFT consensus algorithms. The first blockchain in their hub and spoke model is the Cosmos Hub, with a native token called Atom. Permisionless, anyone can build a blockchain on it.
On Cosmos, spokes are callled Zones, which are ultimately sovereign blockchains that exchange value through Hubs, and can be private or public. Each Zone can be subsequently a Hub for a subset of Zones, and so on.
Validators are the responsible for committing new blocks and ensuring consensus is reached. Similar to ARK, the defined set of validators is 100, and will increase to 300 at a predefined schedule. The validators are set by who has the most stake delegated, unlike in ARK’s voting sytem. The incentive mechanism is ran through Atom’s a license for holders to stake and vote on the Cosmos Hub.
Cosmos brings interoperability, allowing any independent blockchains – public and private alike – to communicate and exchange value with one another.
And as well, it brings scalability through the connection of Tendermint’s consensus algorithm and inter-blockchain communication. Zones built on Tendermint handle thousands of TPS, and if it slows down as a result of overpopulation, another identical Zone can be added to the Hub and split the users in two.
Other factors of consideration to use Cosmos include its developer-friendliness, as it comes packed with a powerful toolkit based on Tendermint to build dapps, and its permisionless decentralization.
What Do 3rd Gen Blockchains Mean to Cities?
Interoperability is key to the emerging smart city, and one of the most complex challenges. As the world continues to become even more interconnected, technology cannot limit itself to that of a single product alone in a silo. It must tap into a larger and connected ecosystem of products and services to bring its full value.
When cities implement one technology at a time, the goal is to have a horizontal ecosystem of different technologies that all-together improve the efficiency, security, safety and sustainability of a city. Today’s cities are still strongly segmented.
Interoperability can encourage wider adoption of urban technologies, and answer some questions like how devices connect with one another to bring shared value across an urban space. Attention must be brought to the big picture that all technologies will plug into.
Without this interoperability, smart cities will not be able to flourish and bring their real potential.
3rd generation blockchains are the key to this shift towards over-arching structures for urban management, allowing all decentralized applications with their own communities and protocols to talk to each other and set a foundation for smart city projects.
Through platforms like AION, ARK or Cosmos we may finally start seeing proposals of interconnected services on the blockchain at the tables of city halls and governmental bodies. Something that we haven’t been able to do yet, until now.
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