ICO Review: Edenchain (Neutral)

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Disclaimer: This is not a sponsored review. I am however considering investing in it myself. This writeup is part of my due diligence process and I am sharing it with my followers.

What is Edenchain?

Edenchain calls itself a programmable economy platform - the next-generation blockchain platform for a decentralized world. So basically it's a Gen 3 blockchain with smart contract capability. The baseline protocol space is getting crowded as I predicted in my previous post The Multi-Protocol World. My opinion is we are far from moving on to killer applications onchain because no project has captured all three vertices of the DCS triangle. Secure, decentralized blockchains like Ethereum have not yet solved the scalability problem. Several projects such as Zilliqa and Quarkchain are introducing interesting solutions such as sharding and parallel chains to achieve scalability.

Lately all of my reviews have revolved around Gen 3 platforms. What does this mean exactly? Let's call Bitcoin Gen 1. A blockchain / distributed ledger that incentivized network participants to validate transactions and secure the network. I'm simplifying of course for brevity. Ethereum introduced Gen 2 by showing the possibilities of creating computation capabilities, through smart contracts, within the blockchain. Gen 3 is trying to tackle the obstacles Ethereum is facing: low throughput (as measured by TPS), while maintaining censorship resistance (via decentralization or difficulty), and expensive computation and storage onchain.

So let's dive in and see what Edenchain does differently. Before we dive into the architecture let's go through the standard token metrics and team backgrounds.

Token metrics?

Sale information:

• Strategic Presale Round A is now open
  • Minimum purchase: $100,000
  • Bonus reward: 20%
  • Contact : [email protected]
• Presale Round B will commence in May 2018
• Crowdsale will be held after Presale Round B

Coin supply:

• Hardcap: $24M
• Tokens to be sold: 40%
• Total Supply: 1 Billion EDN
• Base Price: 1 EDN = $0.06 USD

Inflation Model

• Deflationary

Who is on the team?

Core Team

• James Ahn, CEO. Master’s degree in CS from Korea University and KAIST. 20 years of professiona experience. Authored several books and publications in the fields of machine learning and finance. He has presented at technology conferences including Pycon and Open Technet.
• Jenny Ryoo, co-founder, Bachelor's from Korea Unviserity and Masters' degrees from Dongguk University. Ten years professional experience. Strong background in cloud analytics.
• Kangho Kim, Chief Strategy Officer. Also a Partner at Byzantine Partners (colleague Aaron Tay discussed below is also an advisor). Fixed income and Forex experience at Franklin Templeton.
• Team has a heavy presence in Korea but does have boots on the ground in other parts of the world. The LinkedIn profiles below look created for the purpose of Edenchain. It's likely LinkedIn is not a huge platform in Korea - hence why these profiles are so sparse.
  • Brian Park, developer, South Korea
  • HoKyun Kim, developer, South Korea
  • Jessica Park, marketing, South Korea
  • Kathy Roe, marketing, South Korea
• Incorporated in Singapore, further legitimizing Singapore as the entity domicile of choice for blockchain projects in Asia.

Advisor

• Changki Park, founder of Paxnet and 14 years of experience at Samsung.
• Mirza Uddin, Investor at Two Sigma - a NYC based VC focused on early stage consumer, SaaS, Machine Learning, AI, and Blockchain
• Aaron Tay, Byzantine Partners, a five person team focused on advisory and investments in the blockchain space - based out of Singapore
• Joongheon Kim, Masters and PhD from University of Southern California. Assistant Professor with Chung-Ang University - School of Software (Computer Science and Engineering), Seoul, Republic of Korea, since March 2016; and Director of Distributed Platforms and Security Lab at Chung-Ang University.

Edenchain wrote a blog post digging deeper into their team (see here).

What is their approach?

"According to Ehrsam, 2017, Facebook can handle 157,000 requests per second, and Ethereum can handle 13 transactions per second, and 7 transactions per second in the case of a smart contracted token. In addition, performance and scalability are said to be the most important issues for the blockchain industry."

~Whitepaper page 12

Edenchain attempts to create a blockchain with higher throughput, faster transaction times, and safer than popular protocols such as Ethereum. In order to see how they plan to do this let's break down their infrastructure. Edenchain will be composed of several layers:

1. Distributed ledger layer - where data used in the blockchain are separately stored. Different from Ethereum where data is stored onchain. Why is that important? Storage costs offchain are significantly cheaper.
2. Validation layer - Data transactions are executed and verified here. The EVM (Ethereum's Virtual Machine, explained below) runs the smart contract. To ensure high performance, a transaction scheduler will be implemented. My one question is if this transaction scheduler will be centralized. Is this scheduler a potential point of failure?
3. Bridge layer - Used to securely import data needed by an on-chain smart contract within the blockchain in cooperation with an off-chain. In the bridge layer, nodes naturally exist on-chain and offchain, and an E-Protocol using ECC-TC, which is an encryption technique, is used for reliable communication between these nodes. (direct citation from the whitepaper)

Edenchain is a permissioned blockchain

Take note because this is fundamentally different from Ethereum and Bitcoin. On both those networks, anyone can participate in the network. On Edenchain, network participants will need to receive access from a network administrator. Bitcoin maximalists and decentralization hawks will decry this architecture. It's against the very ethos of censorship resistance. These camps will even say that this is not blockchain since you have to trust the network validators. I do not take sides here but I wanted to bring it up for you to further study both sides of the argument. So why would Edenchain go with a permissioned network? Basically it comes down to speed. To avoid Sybil attacks on permissionless blockchains, a fee is charged to would-be spammers. With a permissioned network, smart contracts will not need to be stored on every single node in the network. It will also lead to fewer incidents of moral hazard where Ethereum miners will execute smart contracts with the highest gas fees. Edenchain's permissioned state allows it to optimize which contracts are to be run and by which nodes.

Fun facts: other permissioned blockchains include Kadena, Tendermint, Hyperledger

Digging in deeper

Through this architecture it will enable a variety of benefits.

• Ability to interface with external data. EdenChain will use what it calls their "E-Bridge layer" to retrieve data when a smart contract is interacted with. The bridge will then encrypt that data with a median voter theorem (MVT) algorithm. This approach differs from Ethereum where computation and storage are run onchain. Ethereum's approach reduces throughput while also serving a very expensive storage solution.
  • Connecting offchain data to onchain computation is called an Oracle. Edenchain calls their Oracle, "E-Oracle". Original, I hear you. It consists of an E-Oracle client and an E-Oracle server. When the E-Oracle client requests external data, the E-Oracle server collects the data and sends it to the E-Oracle client.
• Uses Ethereum's Virtual Machine. Most smart contracts today are written on Ethereum and therefore Solidity is currently the dominant smart contract programming language. Seeding Edenchain's ecosystem will be easier to onramp projects by using Solidity. This is very similar to Qtum's approach (see my past article on Qtum).
• Consensus algorithm is called Proof-of-Elapsed Time (PoET). Right off the bat, I like it because it's punny. Let's compare the original consensus algorithm in Bitcoin. In BTC, the first to solve the cryptographic puzzle becomes the leader of the network, validating the block. In Byzatine Fault Tolerance algorithms, a series of decisions are made by the nodes. Leadership is chosen in stage. PoEt is similar to Raven Coin's X16R and Dfinity's Threshold Relay algorithms. In PoET, the leader is chosen at random. Using random selection will make Edenchain ASIC resistant since validating blocks is not a contest to who solves the puzzle first.

Concerns

1. Is the transaction scheduler in the validation layer a point of risk due to its potential centralization?
2. If Edenchain is permissioned, can we really call it blockchain? Or is a hybrid solution of permissioned and permissionless states the direction crypto projects are heading in?
3. Does Edenchain have plans for smart contract development outside of Solidity?
4. External data processed by the E-Oracle apply an MVT. Basically majority rules. The downside of this is a 51% attack. What happens when a majority of the nodes cannot be trusted? In Bitcoin, a 51% attack is fended off by economic self-interest. I'm not exactly clear how Edenchain will combat this. In their whitepaper here is their response: "In order to prevent such a risk, an E-Oracle consensus module runs programs in the SGX enclave to defend against hardware and software attacks and access external services using HTTPS. Data sources that do not support HTTPS do not allow data the E-Oracle server access." So basically if the data does not have a HTTPS certificate the data will be blocked. I think this is a weak defense. HTTPS is not the end all be all of security.

Why I like it

1. The team has the right set of skills.
2. I'm a fan of random leader selection consensus algorithms.
3. Offchain data storage should provide cost benefits to applications.
4. I'm not exactly gung-ho about permissioned blockchains but if the tradeoff is speed for trust, I could see certain use cases willingly make that tradeoff. Just so you know, I don't believe Store of Value (wealth savings) is one of them.
5. Businesses may view this network as a stepping stone into blockchain. Seeing that only permissioned applications can take part may be comforting to IT departments.
6. Edenchain forked their code from Cryptonote. Cryptonote forked their code from Bytecoin. Solid code base to innovate from. I have not thoroughly gone through the code so it may very well be the open GitHub repo has cosmetic changes to the code such as renaming functions to "EDENxxx". But on the flip side it is a good starting point to work from.

Verdict - I don't have one

I'm not going to leave a verdict here. Sorry. It's far too early right now. They have a code base to work from. They have a really impressive team with strong academic and professional backgrounds. They're in the heart of Blockchain-topia in Singapore. I'd be very interested to hear their game plan to recruit companies to build on their platform. I'd also be very interested in looking at cost structures for applications on their platform as opposed to just launching on a centralized datacenter. I wish the team the very best.

I also welcome the team for an interview or additional commentary!

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