3.6. Ledger Technology
Description Of The Distributed Ledger Technology On Which The Tokens Will Be Registered
3.6.1. INITIAL STAGE: USE OF ETHEREUM
Initially, the transactions on our Digital Platform will be executed on the Ethereum protocol. The Ethereum protocol has provided popular and sound software frameworks for the creation of crypto-tokens, their so-called token standards, which BlockchainValley’s native and general-purpose crypto-token, the 4IR Tokens will be based on.
The 4IR Token is built on top of the ethereum blockchain using the ERC 20 open source smart contract framework for token standards. This token standard has become the industry standard for the issuance of tokens and has proven to be the best solution, because of the robustness of the software and the variety of existing support tools such as wallets, exchanges and additional smart contract frameworks.
During the Presale Offer and subsequent IDOs, the total supply of 4IRTokens will be distributed on UNISWAP then through a multichain approach up to 8 different blockchains, such as Coinbase Layer2, BSC, Avalanche, Polygon, etc, and the 4IR Token will be deployed in each one with unique symbols for identification, one chain per month for eight months (although both timeframe or number of chains may change depending on market and other circumstances). In fact, we reserve the right to list the token only in and through the Bitbond platform without using IDs platforms. We don't expect to burn any token from the total supply.
To ensure the scalability of transactions while the token is still based on the Ethereum network, second layer scalability solutions can be used. This should allow for a significant increase in transaction speed and reduction in transaction fees. Upgrades to the Ethereum blockchain are expected in the future. Any future upgrade could result in risks and impact the 4IR Token as described in the "Technological risks" section.
3.6.2. BLOCKCHAIN TECHNOLOGY OF THE 4IR BLOCKCHAIN PROTOCOL
3.6.2.1. Presentation of the 4IR Blockchain Protocol
The long-term development of the project foresees the deployment of the 4IR Blockchain Protocol. Blockchain technology is still in its infancy. However, we are convinced that as soon as the technology and industry have matured, blockchain will become a key part of the new digital infrastructure.
On top of this, pillar Fourth Industrial Revolution technologies such as the IoT, AI, big data, VR & AR, and robotics are set to increasingly converge with one another, requiring trusted, secure and open systems for financial transactions, data sharing, and cooperation on a business-to-business, business-to-consumer and machine-to-machine level, a problem that blockchain has the potential to solve.
With a uniquely customized blockchain, BlockchainValley aims to deliver smart contract solutions, decentralized applications and models for tokenization to all users of the ecosystem and ultimately, to the global Fourth Industrial Revolution. For this, a unique blockchain protocol is required.
Due to its decentralized nature, the blockchain industry works with open-source code, which means that the programmed foundation of each blockchain network is publicly available. This allows new entrants to copy, or clone, existing code bases and expand on those instead of reinventing the wheel. Hence, the foundation of the 4IR Blockchain Protocol will be a clone of Ethereum, which will be fully customized and developed based on the ecosystem’s idiosyncratic requirements. Currently, Ethereum is the most tested and utilized blockchain smart contract framework in the industry, supported by a vast ecosystem of investors, entrepreneurs and developers. However, the network still has several limitations that can negatively affect the success of BlockchainValley.
The most prohibitive constraints are the scalability limitations of the Ethereum network, with less than 50 transactions per second and considerably high fees per transaction for small amounts, and the high dependency on an external network. Ethereum is envisioned to run hundreds of thousands of transactions per second. It will be able to do so when network sharding technologies arrive on Ethereum.The ecosystem would be subject to the market forces determining the prices of the Ethereum network, limit required customizations to the code base and expose us to potential technical and structural problems of the external platform.
Cloning and customizing its codebase will allow us to:
Use the Turing completeness of Ethereum’s smart contracts,
Access Ethereum’s vast library of open-source software,
Integrate existing smart contract frameworks for a range of use cases, such as for token standards and decentralized applications,
Leverage the developer community and upgrades from the Ethereum ecosystem,
Implement all future upgrades to the Ethereum code base,
Establish an independent blockchain ecosystem,
Customize our technological infrastructure to the needs of our Users, eCitizens, and eCompanies,
Control the technological foundation of BlockchainValley,
Ensure scalability.
We want to achieve this by having a strong focus on the interoperability between Ethereum’s blockchain and the 4IR Blockchain Protocol. This would allow us to take advantage of the continuous development of the Ethereum ecosystem, for instance, for scheduled scalability upgrades and new software, without being subjected to its limitations with regard to BlockchainValley’s unique ecosystem.
In further stages of development, resources can be committed to enable interoperability between a variety of other blockchain protocols, as we believe this to be positive for the long-term success of our project. Interoperability between blockchains means that tokens and software can move between different blockchain ecosystems, providing a much larger user and developer base.
A strong emphasis will be placed on designing the 4IR Blockchain Protocol to structure 4IR Tokens as a layered token that can ultimately function cross-blockchain. This will allow decentralized applications built on other blockchain protocols to be integrated into our ecosystem.
Once the 4IR Blockchain Protocol, which will be discussed in the technology segment, the conditions to switch to 4IR Blockchain Protocol will be determined. The objective is that the Ethereum-based 4IR Token be converted on a 1:1 ratio for the 4IR Token native to the 4IR Blockchain Protocol. This compulsory migration would be conducted through the BlockchainValley Digital Platform, and possibly through participating exchanges and wallets and will be clearly communicated with all involved parties. From the first day of the migration, 4IR Tokens based on Ethereum become incompatible with the BlockchainValley ecosystem and hence will need to be swapped for the 4IR Token based on 4IR Blockchain Protocol.
There will be no deadline for this process and all the 888,888,888 created Ethereum- based tokens can at all times be swapped for native 4IR. The Ethereum-based 4IR Tokens collected by BV will be destroyed. On a final note, we would like to emphasize that we take a highly flexible and adaptive approach in terms of the blockchain development as the technology is still relatively new and major changes and upgrades are inevitable. A technical document specifying all technological components will be provided later.
BlockchainValley is negotiating with major universities in the UK seeking a long-term collaboration for continuous professional assessment of the project’s evolution on the Ethereum protocol and the technical development of its own 4IR Blockchain Protocol as just described. Partnership with an educational institution would constitute an impactful strategic move resulting in relatively unbiased analysis of and improvement proposals for the initiative, as well as granting access to a pool of qualified graduates and postgraduates for the long-term development of the company.
We also envisage, similarly to Ethereum, that companies can launch decentralized token offerings on our protocol. However, unlike Ethereum and other protocols that are open to just about anyone with no criteria, our 4IR Blockchain Protocol will work differently. As part of our protocol token offering capabilities, any project must strictly follow the same process and standards we have followed, to launch our Offer through jurisdiction of the French AMF regime. Therefore, we plan to be highly selective and have a majority of projects that are approved by credible regulated jurisdictions, launching token projects on our 4IR Blockchain Protocol.
As part of our business model, it is important we aim to set high standards early on and invite service provider partners such as major accountancy firms, reputable law firms, notable PR agencies and developers that meet the criteria we will set for these purposes. Therefore, we believe selected token offerings are likely to become a considerable revenue stream on our 4IR Blockchain Protocol and blockchain.
3.6.2.2. Envisaged timeline
The main focus in the initial stages of the project will be user, eCitizens and eCompanies acquisition. Therefore, only once a certain threshold is reached, will the 4IR Blockchain Protocol development be accelerated. Some basic functionalities are in progressive stages of alpha & beta development to make the 4IR Blockchain Protocol already usable.
In addition, similar Ethereum Standards such as non-fungible tokens (NFT) are being built into the 4IR Blockchain Protocol, such as non-fungible certificates (NFC) to validate certification across all kinds of industries on the 4IR Blockchain Protocol, such as education degrees, birth certificates, vehicle, marriage, health and medical certification, or Covid certificates and Fungible Tickets (FT) to validate millions of tickets for all kinds of events.
A "4IR Developer Network" is also in the progressive stage of development. This will help to organize 4IR Blockchain Protocol global network of nodes, validators, miners and developers, such as university computer scientists.
3.6.3. CONSENSUS ALGORITHM: DELEGATED PROOF OF AUTHORITY
In a decentralized network consisting of unrelated parties, a mechanism to agree on the state of the blockchain’s distributed ledger is required, which is called the consensus algorithm. Ethereum currently employs the Proof of Stake (PoS) consensus algorithm, which relies on the staking of individual token holdings to reach consensus. PoS is not optimal for the foundational requirements of BlockchainValley, which is why the BlockchainValley blockchain would run on a customized consensus algorithm.
The objective for the 4IR Blockchain Protocol is to have a consensus reached through a combination of Delegates Proof of Stake (DPoS) and Proof of Authority (PoA).
The DPoS consensus algorithm is a form of technology-based democracy, employed by networks including Bitshares, Ark, Tezos and EOS, that allows eCitizens to vote for representatives, which are eCitizens responsible for facilitating transactions, adding them to the blockchain and maintaining the decentralized ledger. Reaching consensus among a small group would be much more effective than requiring the agreement of an entire network, effectively allowing for substantially higher transaction throughput than for example PoW and PoS, which BlockchainValley would require once our eCommerce utility scales. Moreover, the DPoS setup would be much more energy efficient than PoW, as it dramatically reduces computational and hardware investment requirements. It allows for a much faster confirmation of transactions, has strong protection against 51% and double spend attacks and establishes a framework for a unique form of democratic blockchain validation process that would be strategically leveraged in our ecosystem to encourage active involvement of participants.
A key difference is that whereas DPoS relies on token stakes to ensure positive behavior, the BlockchainValley consensus algorithm relies on identity and public reputation as the stake, as used in the Proof of Authority consensus mechanism in networks such as VeChainThor or POA Network. The main advantages of PoA are its low requirements of computational resources and reduced need for communication between authorized nodes. The combination of these two consensus algorithms comprises the techno-democratic consensus mechanism that should apply for the 4IR Blockchain Protocol.
In the consensus mechanism for the 4IR Blockchain Protocol, the objective would be to have 21 block validators, 21 active and 30 idle that we refer to as the "Guardians", which would be the Users, both eCitizens and eCompanies, or any other 4IR Tokens holders, responsible for maintaining and securing the 4IR Blockchain Protocol.
To become a guardian, a 4IR Tokens holder would have to provide identification documents which would be checked for authenticity, cross-referenced in conditions to be specified and once validated, made publicly available on the network. Through this procedure, 4IR Tokens holders participating in the consensus mechanism would stake their real-world identity and therefore, their reputation. This is expected to be a strong deterrent for bad actors. Once a 4IR Tokens holder passes this check, other 4IR Tokens holders would be able vote for the 4IR Tokens holder and the 21 4IR Tokens holders with the most votes would become the Guardians of the system, effectively creating a technology-based representative democracy. Additionally, the next 30 4IR Tokens with the most votes would be the standby Guardians to ensure the correct functioning of the validation process in the case of technical failure by one of the 21 Guardians.
Guardians would be financially incentivized to maintain the 4IR Blockchain Protocol through 4IR Token rewards per block produced. These token rewards would stem from the continuous second issuance of tokens. If for instance, 1,5% new tokens would be generated, 13,333,333 tokens would be distributed to the Guardians, 75% to the active Guardians and 25% to the standby Guardians.
One key requirement of the guardian position would be to share a minimum of 50% of the tokens received for securing the ledger with voters. This requirement would be in place to incentivize voting participation and prevent voting fatigue and general voting apathy. Voters would receive these tokens from the guardian(s) for whom they would vote and the portion for each individual would be relative to their voting weight to the entire pool of votes for a guardian.
For example, if a guardian received 1,000,000 votes and an individual voter cast 10,000 votes to this guardian, this same voter would receive 1% of the token rewards that are shared. Based on the information provided above, an estimated daily 4IR Tokens' income for both active and standby delegates would be calculated. This example uses a 1,5% inflation rate.
Active Guardians:
888,888,888 * 1.5% = 13,333,333
13,333,333 * 75% = 10,000,000
10,000,000 / 21 active Guardians = 476,190 (average yearly 4IR Tokens reward
per active guardian)
476,190 / 365 = 1,304.6 (average daily 4IR Tokens rewards per active guardian)
1,304.6 * 50% = 652.3 (average daily 4IR Tokens rewards per active guardian minus voter share)
Standby Guardians:
888,888,888 * 1.5% = 13,333,333 13,333,333 * 25% = 3,333,333
3,333,333 / 30 standby Guardians = 111,111 (average yearly 4IR Tokens reward per standby guardian) 111,111 / 365 = 304.4 (average daily 4IR Tokens rewards per standby guardian)
304.4 * 50% = 152.2 (average daily 4IR Tokens rewards per standby guardian minus voter share)
An informational platform would be provided to prevent information asymmetries with all information regarding the eligible Users for Guardian position, including identification documents, past Guardian performance, ecosystem participation metrics and contributions to the BlockchainValley ecosystem. As the network grows, contributions to the ecosystem are expected to become the key metric on which votes are based.
On a final note regarding the consensus mechanism, it must be acknowledged that the perfect cure-for-all consensus algorithm has not been discovered yet. Blockchain technology is still very much in its experimental phase and decentralized systems are still being explored. A key concern of decentralized systems is that once they are launched, control and decision-making is decentralized, making it substantially more difficult to iron out flaws in the design. Hence, Guardians would initially be authorized by BlockchainValley, with continuous iterations towards full democratization and decentralization of the blockchain protocol.
The criteria for the initial selection of Guardians would be their notoriety and general contribution to the public space, thus making the reputation factor a deterrent to bad actions on the Digital Platform. These Guardians could come from any industry or sector, be individuals, organizations, companies, or public entities. A varied set of Guardians to vote for would be more representative of the plurality of the Users on the Digital Platform, with their diverse interests and ideals.
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