The crypto space is increasingly becoming an important element of our economic and technological reality. However, despite the higher awareness of its existence, there are so many projects in it that it may be hard for the relative outsiders and even people in the space to figure out which of them are truly important and promising. Here, I will try to add my 5 cents and draw attention to a bunch of crypto undertakings that those interested in crypto do not want to miss.
I will start with my list of three favorite projects: RChain, RealT and Etherisc.
RChain and the Quest for Scalable Distributed Compute
A brainchild of computer scientist and mathematician Greg Meredith, RChain is a public blockchain platform running on mainnet. In some ways, it is similar to the eventual Ethereum 2.0, as it features proof of stake consensus and sharding, as well as a Turing-complete distributed computation layer. However, there is also a difference that could make all the difference.
RChain seems to me one of the very few projects that take seriously the fundamental scalability of distributed computations. In my view, Greg Meredith has persuasively argued (mostly into the void) that the approaches run by other projects (including, say, Ethereum and Polkadot) will at some point run into fundamental differences. The key problem, according to Meredith, is that the computational model relied upon by most other projects is fundamentally sequential. And even when they try to parallelize, like Polkadot seems to with independent parachains, they will face the problems of composability.
As I understand it from what is admittedly a non-technician’s perspective (based largely on this wonderful tutorial), RChain’s computational model implemented in the Rholang smart contract language and other aspects relies on three key elements: processes, channels and cryptographically protected names. Processes and channels can be made available to other processes as names. Unless a process has received a message on a special channel, it has no relationship to the relevant other process. This system where computation is segmented via names appears to allow genuinely concurrent computation and even organically arising sharding.
Recent research by the RChain team also seems to point at the possibility of using Rholang as a query language for databases containing sophisticated, complex data types, including things like 3D models of cars and program code itself. The opportunities this could unlock are difficult to even comprehend.
It should be noted that I remain a big fan of the RChain project, despite several questionable management decisions that severely limited the funds available to its development and marketing. I also completely disagree with the community’s emphasis on the supposed climate emergency. I believe that outside a few places on Earth, there is no emergency, really, and where the current ways of living are threatened, people have ample time to relocate and adjust. I am also very sceptical about the cooperative model of governance.
However, in my view, what matters the most for public blockchain projects is the tech, and RChain’s tech is extremely intriguing.
RealT and the Really Useful Tokenization and DeFi
The other two of my top choices are DApps, the first of which is the Ethereum-based RealT. RealT is the platform for tokenizing real estate and unlike many other STO projects, it has actually managed to get traction and continues to regularly onboard new properties. The latter are rented out to third parties with the rental income minus the costs going to the token holders. You can find the list of the current property tokens by typing “realtoken” in the Coinmarketcap’s search field.
The property tokens powered by RealT are relatively easily tradable and they also include a mechanism for their holders to receive their proportionate share of the rental income in the USDC stablecoin. Even more intriguingly, RealT recently announced its partnership with the Aave distributed lending protocol, aimed at enabling the use of RealT properties’ tokens as a form of collateral for crypto loans.
The possibilities RealT’s work could unlock seem to be arresting. First, real estate, and especially commercial real estate, assets in many countries are not very liquid, and the access to them is usually limited to a small circle of accredited investors from a given country. Unlocking and globalizing those markets could bring significant benefits and allow a lot of people to better allocate their savings, no matter their amount. Secondly, the introduction of crypto-friendly real estate collateral into DeFi could go a long way towards solving its key problem — the overcollateralization of loans.
Currently, lenders in DeFi protocols have no realistic recourse to the patrimony of their borrowers in the case of a failure to repay. In this situation, the only simple way of reassuring them is to arrange for more crypto collateral than the value of the loan because the prices of the collateral can be highly volatile. As the value of property tokens will tend to be much more stable, there will be no need for overcollateralization, especially for relatively short-term loans.
Etherisc and On-demand Insurance for All
Insurance is one of the key and most underappreciated elements of the modern economic order. If implemented correctly (and not imposed by the state, as in the US medical insurance’s case), it allows people to solve an important coordination problem and keep much less money under the mattress collectively than they otherwise would. Thus, the existence of insurance makes everyone richer.
However, effective insurance options are, sadly, still unavailable for hundreds of millions, if not billions of people around the world, especially in the developing countries. Some other types of insurance, even when they are available are needlessly red-tape-ridden and costly.
The Etherisc protocol attempts to employ blockchain technology for massively boosting the so-called parametric insurance. The term refers to all kinds of insurance coverage where the occurrence of the insurable event can be effectively verified by a computer program, in this case a smart contract. Etherisc creates a system of incentives for the various service providers (including outcome reporters) on the protocol using its DIP token.
Unlike many other crypto projects, Etherisc already has working prototypes for several directly usable parametric insurance products, including the insurance against flight delay and crop insurance against bad weather for Sri-Lankan farmers. Until recently, Etherisc’s progress had been somewhat hampered by the legal uncertainty over Etherisc’s business model. In brief, fulfilling the regulatory requirements would have been very hard, if Etherisc attempted to be a blockchain-using insurance company. However, the German financial regulator BaFin seems to have cleared the way for Etherisc to function without becoming an insurance company.
There are, however, not just three projects that I believe deserve more attention in the crypto space, so I will cover three more as honorable mentions.
What I like about Blockstack is that it seems to offer an ingenious way to bring smart contracts to the Bitcoin ecosystem, without putting any significant additional strain on the consensus resources or full nodes. Blockstack’s proof-of-transfer (PoX) consensus mechanism ingeniously uses Bitcoin’s consensus for securing transactions on its platform, while the number of Bitcoin transactions needed for it to function does not seem to depend on the transaction activity on Blockstack. Put briefly, the way this works is that the validators send BTC transactions to the STX holders staking (or stacking) their STX. They are rewarded in the STX issued with the blocks they create in exchange for their BTC.
This innovative bootstrapping of Blockstack’s block creation to Bitcoin could enable the creation of a substantial smart contract ecosystem secured by the might of Bitcoin, without placing an additional burden on the latter and angering any significant constituencies within the Bitcoin community.
Augur is one of the most longstanding projects in the crypto space developing a distributed prediction markets platform on Ethereum. Distributed, permissionless prediction markets enable people to bet on the outcome of almost any event imaginable. They could be used for replacing some aspects of the legacy financial system and even for a science-fictionnish-sounding form of governance called futarchy.
The reason I did not include Augur into the top 3, despite its clear massive promise, is that it is still unclear whether a lot of people actually crave the opportunity to use prediction markets. So far, the use of Augur has been somewhat disappointingly limited to voting on election outcomes. However, one could hope that with higher scalability, better UX and higher awareness, we may soon learn whether the promise of prediction markets is legit.
The aspect of the semi-permissionless Hedera Hashgraph platform that I am fond of is its Consensus Service (the CS). Not to be confused with its unique consensus mechanism, the Hedera CS allows applications, including other blockchains that are otherwise completely separate from Hashgraph, to secure the ordering of important events they track via Hashgraph’s consensus.
At a high level, what happens is that an application can encrypt certain transactions, send them to Hedera and get them back in their true temporal order. This could even be an alternative way for addressing the distributed computation scalability problem I mentioned when discussing RChain. The use of the Hedera CS seems to allow applications to avoid using a replicated virtual machine.
P. S. Disclosure: I am currently not invested into the tokens of any of the projects mentioned in this article.