Quarkchain ICO — Whitepaper Review

Hi Guys, so time for a look at another ICO, this time I will be speaking about a well known project which everybody seems to be talking about lately. All of the top influencers seem to be bullish on this. It is a new blockchain project, which as we all know are the gold standard of ICO’s these days, the hype surrounding this one would suggest this one is no different. Currently they are conducting their KYC round which is heavily oversubscribed.

So that being said I hope you enjoy this look though their whitepaper, it may help some of you who should be studying for the quiz portion of the whitelisting process. This will definitely be one which I will pick up on the exchanges as the chances of getting into the public sale are very slim. I will just be going through the whitepaper here guys and giving my opinion on it, please remember to DYOR.

What it is 

Quarkchain is a high capacity peer-peer transactional system that will target the global financial transaction industry once volume in all electronic payments grows; current blockchain simply won’t have the capacity to cover this. This is essentially a high scalable solution but also aims to keep decentralisation and security a core part of their blockchain. You will discover during this article that often with high throughput/TPS, decentralisation and security is often neglected, but not with Quarkchain. In their own words they are an “innovative permission less blockchain architecture that aims to meet the global-wise commercial standard”. They claim their solution will deliver 1 million + on chain TPS. It will comprise of a 2 layered blockchain:

1. Elastic sharding blockchain (Shards) as the 1st layer.
2. Root Blockchain as the 2nd layer, this will confirm the blocks from the 1st layer.

The Vision

As we all know the advent of blockchain is a train which nobody can stop, it’s just going to keep on coming. The team suggest that all financial institutions in the world are doing their own blockchain research. As can be seen by the below chart the demand for DApps on the Ethereum blockchain is ever increasing.

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The proof of work consensus used by most blockchains today requires a huge amount of hash power which in turns requires a huge amount of power, think of all those mining pools mining bitcoin and Ethereum today. Another well known consensus is called “Proof of concept” which assigns a block reward to the holder of tokens proportionally, this drastically reduces the amount of energy to mine a block. The first 2 generations of blockchain (Bitcoin & Ethereum) cannot scale very high (at present). We are currently in the 3rd generation era of blockchain (Well unless you are Seele…). Quarkchain is one of these 3rd generation blockchains, which will use permission-less blockchain architecture to meet the global demand. The team has a large amount of experience building similar large scale distribution systems in the centralised world.

Pain point

The team cite the 3 main challenges in blockchain today are:

1. Security issues- We all know that blockchain is much safer than centralised systems due to the use cryptography (private & public keys), the more decentralised they are the safer they become, however if 51% of the hashing power falls into the hands of one party then double spends attacks could occur.
2. Decentralised issues- The more the better for security however with POW systems today we are seeing mining operations taking over. They state in their whitepaper that 75% of the hashing power of bitcoin is held by 6 of the top mining pools, which is encouraging centralisation of power.
3. Scalability issues-This is perhaps the largest pain point as numbers of crypto users increases.

Essentially the pain point is that there is a trade off between security, decentralisation and scalability in blockchains when they try to scale. The below graph from their whitepaper shows that a larger amount of data is required for each transaction if one wants to improved security/privacy.

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Solution

Quark chain will use a process called sharding as a solution. They explain in their whitepaper that it is common place for the centralised system to use it for scalability problems. To keep things simple it is basically a process of breaking data into smaller more manageable parts. Overall guys, the team simply want to increase scalability to cater for global demand of blockchain, but not sacrifice security and decentralisation in the process.

How they will achieve it

Their core design is based on:

• Enhancing scalability whilst keeping security and decentralisation a core part of the process (Core aim, as others blockchain don’t do this).
• Allow for seamless cross shard transactions.
• Provide simple account management.
• They will support DApps.
• They will provide an incentive driven ecosystem.

This below chart shows the layers of the blockchain

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Simply put blockchains have 2 functions, to act as a ledger (record transactions) and to carry out confirmations. Ledgers are data intensive, block sizes can become an issue as data increases. The transaction will then be confirmed from the ledger and the blocks mined (with the applicable consensus). For instance with Bitcoin POW is used to make attacks un-economical as it would require too much hash power (work) to alter transactions.

Quarkchain claim that their solution as depicted in the above image can enhance scalability and keep security. Their elastic sharding blockchain layer contains a list of minor blockchain (Shards), these shards can then process a sub set of transactions independently. As shards increase so does the capacity. The root blockchain confirms all the blocks within the shards, it does not process transactions (as it is economically inefficient) and it is difficult enough to prevent attacks. Additional shards can be added to the live network to combat congestion.

Collaborative mining will be used to evenly distribute hash power on the Quarkchain network. All shards will be mined evenly which will increase throughput (TPS) as the number of shards increase the root chain carries over 50% of the hash power to prevent double spend attacks.

Simply put the network comprises of the main root chain and several minor chains (Shards). Miners will be able to choose the most economically viable one for themselves as each blockchain can have a different difficulty and will offer different incentives. The team claim this should make it an “open market economic model”.

According to their whitepaper the root chain runs “POW consensus”, so if a fork occurs, the longest chain (total difficulty) will survive. The shards run a consensus called “root chain first POW algorithm”, if a fork occurs in these a node will compare the root chain first before the forks, so if a root has a longer chain then it will survive no matter how long another fork may be. This makes double spend attacks very difficult.

Their whitepaper states that all of this will run on an 18-node and 8 shard verification network. The 8 minor blockchain will have target block duration of 10s and a height of 3800s. They will be close to each other and have similar work to ensure even mining, giving a throughput of 8x more than a single shard case. The root blockchain duration is 150s and the work is 1.6m (close to the 1.8m half hash power). Minor chains have 15k work every 10 secs and root chain is 15 times longer than minor chains.

By running the network this way, they will not require all nodes to validate all transactions (which is very expensive as huge data requirements and promotes centralisation –via mining pools). The root chain (super full node) validates the shards. It does this by allowing clusters of honest nodes to act as super full nodes, and each node in the cluster validates a sub-set of chains which covers all minor and root blocks. If one fails then the rest of the cluster can pick up the slack.

Furthermore they state in their whitepaper they will have the capability to conduct cross shard transactions (addresses are in multiple shards and confirmed in minutes) and in shard transactions (addresses in 1 shard).

There is also the ability for cross chain transactions between the root chain and other chains, via the use of adaptors which will perform them like cross shard transactions. Off chain transactions will also be accommodated, which is very handy for DApps which may store data off chain.

Another great element to this blockchain is that they will support smart contracts via the Ethereum virtual machine (EVM). So, what this means is that ETH DApps can use the Quarkchain network and be able to avail of the high-scalability features of Quarkchain via a “scalability-aware interface”.

The seamless user interface means users only need 1 account to manage all addresses in all shards and can interact seamlessly between them. There will also be smart wallet applications which will automatically perform cross shard or in shard transactions. This will mean users don’t need to understand sharding. A user can manage all addresses in all shards via a private key. Basically users will have the same number of addresses as the number of shards, but to keep it simple, it is simplified by having 2 types of accounts:

1. Primary (Users address in the default shard)
2. Secondary account (Rest of addresses in rest of shards).

Most transactions will be initiated from the primary account, can temporarily move to an address in the second account if required (for example smart contracts in different shards), if there is any remaining balance in the second account after transactions then the balance will be moved back to primary account (Location for balance all the time). All done via the smart wallet (simplifies the whole process described above).

What sets them apart?

The part of the project that really sold me is that Quarkchain can resemble other blockchains. The 50% hash power of the root chain is fully reconfigurable. For instance, if they made it 100% it can become a single blockchain as no miners will be on the shards, only the root chain. The root chain can also include as many minor blocks as it needs, making the root block an unlimited sized block. Weak miners would need to join pools here in order to participate.

And if they made it 0% each shard would be treated as its own blockchain. Decentralisation would be higher in this instance as weak miners would not need to join pools, but security is somewhat comprised due to dilution of hash power.

To balance it out Quarkchain will use 50% hash power as standard to enhance security beside scalability. Sharding will improve the capacity and it will be more decentralised than a single blockchain as miners won’t need to join pools (centralised).

Token economics

They have a utility token called QKC.

• Initially will be an ERC-20 token until main net release where there will be a token swap.
• It will be used as a unit of exchange between participants.
• Reward for mining will be paid in QKC. Network fees will also be paid in QKC
• QKC will be given as incentives to people who make contributions to the network.
• Hard cap is 20 million dollars.

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Other key points

• Very experienced team with 9 core members. They are mostly from an academic and engineering background at reputable tech companies & universities.
• Their test net is already demonstrating a TPS of 2,000 using just a few AWS nodes. From what I have read this puts it ahead of most other blockchain 3.0 projects with much higher valuations. With more nodes you would assume a higher throughput should not be an issue.
• Quarkchain integrates with Solidity (Most popular programme for DApps) which will be an easy barrier of entry to ERC-20 DApps.

Conclusion

Overall guys this seems like an amazing project with a great team behind it. If hype is anything to go by then this will be one to grab on the exchanges once it lists, as most of us will not have the chance to get into the public sale of their ICO. I am impressed with what I have read in their whitepaper and am looking forward to what they can deliver. I hope that if you enjoyed this summary then you will do your own research into the project.

Further reading

Website: https://quarkchain.io/

Whitepaper: https://quarkchain.io/quark.pdf

For information on whitelisting (If you passed the 1st telegram phase): https://steemit.com/quarkchain/@quarkchain/quarkchain-whitelisting-kyc-process