Interview with David Chen- Tokenization, blockchainization & Blockchain-based Tokenization.
What makes blockchain revolutionary is the introduction of tokens for existing and future applications. This greatly promotes the circulation and development of applications through production materials and relations triggered by token dynamics. These tokens play a vital role in this process. Therefore, token dynamics working effectively in an application becomes the key to an application’s success.
The ICO boom that was started last year is the first large scale foray into blockchain applications. Thanks to the simplicity and convenience of token issuance provided by Ethereum, projects can issue tokens at a low cost. Together with the extensive circulation of ETH (Ethereum), it’s easy to receive cryptocurrency financing by issuing tokens through Ethereum, thus providing funds for project development. That’s the core reason behind the ICO boom last year and early this year. But why do most ICO projects become empty currency?
Blockchain Project Flow
There are many things that need to be done under the current architecture in order to implement a blockchain project.
First is the ICO (Initial Coin Offering), which is usually released as an ERC20 on the Ethereum currency in order to obtain cryptocurrency. This phase is relatively easy to achieve.
Second is to connect with exchanges to circulate the ERC20. This stage consumes a lot of resources, because the costs of using big exchanges are enormous.
Third, the project party needs to fulfill its promise by developing its own application and implementing it, and it must be implemented on a blockchain. Most projects currently choose to develop their own blockchain system. This step is extremely difficult, and many projects end up stranded here. This is why most current projects become empty blockchain projects. If you successfully develop your own blockchain, the project must convert ERC20 into their own original currency. Of course, the project doesn’t end here, the project party still needs to continuously invest in maintaining the operation and development of the chain. It is orders of magnitude more difficult to achieve stable and safe operation of an individual blockchain than it is to merely create an application. Using an application team to maintain a blockchain can easily lead to minimal results and a failure to maintain healthy development of the chain.
First and foremost, ICO’s are forbidden in China. In addition, every blockchain has to overcome the problem of circulating in exchanges. But exchanges bring problems of their own, including high transaction costs and ‘black-box’ operations of some centralized exchanges. Currency value management and exchange security issues bring additional risks to the project.
There are currently two topics that are hotly discussed concerning the combination of blockchain and real practical applications. The first is tokenization, and the second is blockchainization.
Tokenization is using the application to convert the token and introduce it into the application. However, the problem with tokenization is the lack of blockchain platforms that meet the functional requirements of the application, making it difficult to truly implement smart contracts, and thus making it easy for the project to become an empty currency.
blockchainization is uploading an application to the chain. In terms of application implementation, blockchainization allows the application to have real blockchain support from below. The blockchain can support the functions required by the application, including consensus mechanisms, status logging, data storage and more.
Blockchainization can be broadly defined into two categories: one is through a token-free blockchain, and the other is through a token-based blockchain. IBM HyperLedger is representative of token-free blockchains. However, because there isn’t a token or any corresponding incentives, such a chain can only exist in the form of a private chain and coalition chain consisting of a small number of access nodes. This makes it less advantageous than traditional centralized solutions. In addition, the cost of establishing a secure blockchain is quite high. The token-based blockchain solution, built on a public chain, is currently only being implement by MOAC’s microchains. Thanks to MOAC’s unique base-chain microchain architecture, the base chain provides the necessary incentives and security, allowing the microchain to adopt a token-free blockchain solution. MOAC’s microchains also allow users to use their own custom consensus mechanism, select the required support nodes, and implement customized application support. In addition, MOAC’s one-click chain creation function greatly reduces the cost of blockchain deployment.
However, tokens are indispensable to making full use of blockchain’s revolutionary nature. The use and circulation of tokens is essential to achieving token dynamics. Therefore, blockchainization of a token-based blockchain will be the final form blockchain applications take. However, token-based blockchainization needs to resolve the problem of illegal ICOs and the numerous risks brought on by exchanges without falling into the trap of token speculation.
MOAC has also proposed a feasible token-based blockchain solution in addition to the token-free public chain solution, which we call blockchain-based tokenization.
First, MOAC offers the first commercial blockchain platform for applications. The MOAC chain has already been able to achieve:
Microchain implementation of shard contracts, with the bottom layer supporting 5,000–10,000 TPS or higher.
Implementation of one-click chains, allowing DAPP to customize their blockchain, including consensus mode selection and customization, consensus node selection, chain state storage and use of the decentralized file system FileStorm, which supports storage of large files. The project party doesn’t need to maintain microchain operations. The microchain consensus nodes are leased out, with the microchains providing a level of security close to the base chain.
The innovative architecture allows DAPP users to use DAPP without consuming any gas, enabling DAPP users to target users without any blockchain knowledge.
Second, exchanging tokens on the exchange isn’t necessary for traditional blockchain projects using blockchain-based tokenization solutions. For most applications, getting the token on the exchange isn’t a benefit, but a burden. This is because the market value of most applications isn’t necessarily high, and liquidity is low. A centralized exchange can’t accommodate all the tokens of a large number of DAPPs. It’s not cost-effective for an ordinary DAPP application’s tokens to be listed on the exchange. But the outside circulation of tokens is a very important part of token economics. If the exchange isn’t necessary, the circulation of tokens can still be achieved, which is very attractive for project parties.
There’s a very simple and effective way to achieve exchange-free transactions on MOAC. The process is as follows: deploy a microchain control contract on the base chain that corresponds to the microchain contract. This control contract is used to control the production of microchains and includes other control logic like the selection of microchain nodes. It also includes logic to periodically refresh the microchain to the base chain. In addition, the microchain control contract can add a reserve pool and trading module. This accomplishes the exchange of native tokens and MOAC tokens within the microchain. By this same logic, the user can lock the microchain’s native token and obtain MOAC tokens according to the market price. The exchange ratio between the two is determined by the usage of the microchain’s native tokens and the project’s reserve. This achieves exchange of the microchain’s native tokens at market pricing.
Third, creating a separate ICO is no longer needed in this case. This trading market module allows any user to enter the application’s microchain at any time and obtain native tokens at the market price by depositing MOAC tokens, thereby doing business with the microchain. This process is continuous, transparent, and open.
This way, the MOAC-based chain link perfectly solves the biggest problems plaguing blockchain projects. The project party can focus solely on the DAPP’s application logic, and the rest is provided by MOAC. On MOAC chain-link based platforms, it’s possible to transform a large number of existing APPs into blockchain-based DAPP for a very low cost, allowing everyone to enjoy the revolution that is blockchain.
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