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When analyzing a project, the Eden Labs team looks for projects that do something unique or do it much better than its competition. Quality projects should be able to explain complex ideas simplified to their audience. In addition, projects that rely heavily on a broad user base have to have an incentive for the first ten people to join the network before a million users is ever achievable. No project will succeed if it requires a million participants to bring any value to its users.
QuarkChain is a high-throughput blockchain that aims to achieve more than hundreds of thousands of on-chain transactions per second. As a high capacity system, they tackle the scalability problem that current main blockchains such as Bitcoin or Ethereum are facing and currently working to solve.
Recently, distributed ledger technologies have begun to redefine the fundamental truths of our current economy, communications, and knowledge. As the global financial transaction volume in electronic payments grows, the low capacity of existing blockchain-based networks will not be able to cover the world’s demand. As millions of users begin using decentralized applications, existing blockchains will show their limitations. Until now, scalability required for large-scale operations could only be achieved by sacrificing decentralization and/or security.
QuarkChain utilizes a two-layered blockchain structure, cross-shard transactions, market-driven collaborative mining, and horizontal scalability, among others, to enable an architecture that achieves thousands of transactions per second, while at the same time remaining appropriately decentralized and secure.
The technology of a platform carefully aligns the actors, incentives, and rewards. A well-constructed marketplace will result in an Adam Smith-style system, one where everyone benefits from the pursuance of self-interest. Misaligned incentives, bad governance systems, and poorly optimized features will lead to winners and losers, and the collapse of the platform.
QuarkChain’s architecture is designed on the following principles:
- Enhanced scalability while ensuring appropriate security and decentralization;
- Enabled seamless cross-shard transactions for user quality of experience;
- Simple account management for clients;
- Open standard to support various Dapps; and an incentive-driven ecosystem.
Ultimately, QuarkChain is attempting to enable a high level of scalability through state sharding. Sharding is a generic term for distributing computational tasks to various areas of a network for increased efficiency. State sharding, in particular, distributes a different state throughout the network. This means that each shard can maintain a different network state. Today, the established distributed ledger technologies are not distributed. They’re replicated. Let’s take Ethereum for example. Ethereum isn’t distributing the network state; it’s merely replicating that state throughout the available nodes. Each node maintains precisely the same state history. This is good for ensuring that no one is cheating, but terrible for scalability. Supporting the entirety of the network state becomes enormously demanding in regards to storage and computation. In addition, funneling all the state changes through the entire network creates substantial bottlenecks, especially when we consider the level of transactions in modern-day economies.
However, state sharding presents its own challenges — particularly: how to effectively enable shards to communicate with each other when necessary, and how to ensure that shards aren’t manipulated or corrupted.
QuarkChain integrates elastic sharding blockchains (also known as shards), as a first layer blockchain, coupled with a root blockchain that confirms the blocks from the shards as a second layer. The rootchain does not need to process any transactions but is strong enough to revert them.
A two-layer solution enables the scalability associated with sharding as well as offers a solution for many of the problems sharding presents. The PoW mainchain provides the security and immutability associated with Bitcoin and other replicated state systems. However, as it is not performing any state changes, nor processing any transactions, it is far more efficient. The rootchain merely stores the headers from the shards. This also enables cross shard transactions. The rootchain confirms the block header of the transaction. In normal transactions, only confirmation within the shard is required.
The key to striking balance between scalability, decentralization, and security is in the variable hash power allocation within QuarkChain’s two-layered structure. Market-driven collaborative mining is achieved through a game theoretic framework where hash power is distributed across shards, with at least 50% of the overall power allocated to the rootchain. Furthermore, QuarkChain enables an open market economic model through which miners can choose any blockchain at an optimal price for their hash power.
These models ensure that the network hashpower is evenly distributed throughout the sharded network. Depending on the configuration of the hash power allocated to the rootchain, QuarkChain can either resemble existing systems as a single-blockchain system, or a multiple independent blockchain system where the full hash power goes to the shards.
An additional feature is QuarkChain’s implementation of linear, horizontal scalability, which prevents the need for expensive super-full nodes, allowing multiple smaller honest nodes to form a cluster running as a super-full node. Shards can be easily added to the network to increase the potential scalability. Decentralized applications built on QuarkChain can decide how many shards are necessary for their scalability requirements. This ensures that applications only pay for what they need.
The rootchain runs the Proof of Work algorithm, and each shard on its own runs the root-chain-first Proof of Work algorithm. As described in the whitepaper, given two forks on a shard, nodes compare their corresponding root chains before comparing the forks. This design forces a double-spend attacker to create the minor blocks that revert the transaction, as well as a longer root chain fork that includes the minor block headers. This ensures that attacks can’t manipulate the sharded architecture to execute double spend attacks.
Lastly, a note on smart contracts. QuarkChain supports Turing-complete smart contracts and has adopted EVM. This provides a massive advantage for dApps looking to migrate to a platform accepting ERC-20 compatible apps that can deliver faster speed capabilities than Ethereum at the time being. Applications should be able to transfer to QuarkChain seamlessly.
QuarkChain has put together a unique architecture proposal to tackle the well-known scalability problem present in the leading platforms. As the first blockchain technology to support state sharding, turing-complete smart contracts, and clustering as “masternodes;” we will have a better sense of the implementability of this technology as new audits, tests, and technical documentation come into place.
The roadmap does not provide much information besides the key milestones QuarkChain aims to achieve, with the most significant developments scheduled for the end of this year. Until then, we’ll be able to review some test results and see the beginning of their smart contract integration. The mainnet release will be a development to monitor closely.
QuarkChain tokens (QKC) are ERC-20 compatible tokens distributed over the Ethereum blockchain. At mainnet, tokens will be converted through premining. Future QKCs are to be produced by miners.
The intrinsic value of the token is to be a non-refundable functional utility token used as means of exchange between the participants in the QuarkChain Network. Main uses referenced include use as a value carrier, transaction currency, and contribution incentive to promote the development of the system. Just as with Ethereum, miners are incentivized through fees and the QKC token is required as “gas” to execute smart contracts and transactions.
The ICO ended June 30th, 2018, under a total supply of 10 billion QKC, and the marketcap of the circulating supply is around $60M (volume in past 24 hours).
The token distribution is as follows:
- 45% towards mining, community, and marketing
- 20% towards the token sale
- 15% towards the team
- 15% towards the foundation with a lock up period of 2 years
- 5% towards advisors with a lock up period of 2 years
Recognize, that the circulating supply of QuarkChain is low as a result of the significant lockups on early contributions.
As a platform utility token, the QKC has a clear value positioning within the described architecture. While it hasn’t hurt the investment hype, the number of available tokens for purchase during the sale at 20% is low compared to other ICOs, which stand on rates from 35% to 65%.
Ecosystems & Rivals
QuarkChain is entering an increasingly competitive market of distributed ledger technologies tackling the same scalability problem, including established players such as Ethereum (in the works) or Zilliqa.
In regard to the relationship with single-blockchain or multiple-blockchain systems, QuarkChain presents a solution that is adaptable to any need. As described above, the hash power allocation determines the level of scalability of their two-layered platform. The concentration or dilution of hash power does have tradeoffs; it can make QuarkChain’s sharding more scalable, but at the same time potentially more insecure.
The current stake is positioning 50% of the hash power on the rootchain for a well-balanced default. This option provides system security, as well as a higher level of scalability and more decentralization than most single-blockchain systems. It compromises on the overall hash power needed from an attack from 50% to 25%, but the increased decentralization increase the difficulty of successfully coordinating collusion.
Ultimately, it is unlikely that any single platform monopolizes the emerging decentralized economy because of the inherent tradeoffs platforms must make. Depending on the application, some tradeoffs are more appropriate than others. EOS, NEO, and Hashgraph sacrifice full decentralization for scalability and safety. Ethereum sacrifices scalability for decentralization and safety. QuarkChain is sacrificing an element of safety for scalability and decentralization, with the logic that increased decentralization will compensate for the decreased security. Their hybrid approach towards scalability and a customizable network ensures that QuarkChain can be suitable for a variety of applications.
In addition, it’s important to note that linear scalability is what’s important, not the demonstrated level of throughput. What is important is that the network scales linearly with the number of nodes, and that on-boarding these nodes is simple, efficient, and minimally impactful on the performance of the nodes’ devices. Thus, the comparison should not be made between the throughput of present platforms, but rather how easily these platforms enable linear scalability. QuarkChain, through its sharded architecture, collaborative mining, and “pay for what you need” model, ensures that more nodes equal more shards which equal a higher potential throughput.
QuarkChain is and will be facing strong competition in this market. That said, they have also demonstrated over 2,000 TPS on their closed testnet while using AWS nodes, setting it in front of most blockchain 3.0 projects with stronger valuations. But more importantly, QuarkChain is linearly scalable. And the more nodes involved in the process, the higher the scalability. In addition, by supporting the EVM, dApps will be able to transition seamlessly. They have a strong case for capturing a portion of the market.
Team & Leadership
In the rapid, challenging, and dynamic industry of DLT startups, the team is an imperative component to a project’s success. The frequent need for pivoting and the challenges of a new industry necessitate a team with a strong background in distributed ledger technology, technical and engineering educations, and proven reputations. Team bios, LinkedIn profiles, past work experience, and publishing work are all reviewed and analyzed.
Qi Zhou, Founder
- Software engineer & expert in high-performance systems
- Former Googler and 15+ years of development experience
- Ph.D from Georgia Institute of Technology
Zhaoguang Wang, Software Engineer
- Expert in large scale distributed systems
- Work experience at Facebook and Google
- Master in Computer Science from University of Michigan
Xiaoli Ma, Research Scientist
- Full-time Professor at Georgia Tech
- IEEE Fellow
Yaodong Yang, Research Scientist
- Professor at Xi’an Jiaotong University
- Partner of Demo++
- PhD from Virginia Tech
Wencen Wu, Research Scientist
- Assistant Professor at RPI
- Ph.D from Georgia Institute of Technology
Anthurine Xiang, Marketing and Community
- Graduate from SJTU & JHU
- Background in finance and technology
- 6 years experience both in Wall Street and Silicon Valley
Ting Du, Business Development and Ecosystem
- Product management founder of Demo++
Patrick Mei, Community Manager
- Founder of an investment firm
- 3 years of experience in financial investment
- Crypto media writer
Julianne Zhu, Social Media Broadcasting
- Expensive business development marketing
- Former branch manager for Roboterra Inc.
Advisors serve important roles in projects, bringing legitimacy, expert guidance, and unique outlooks. However, there is a market for paid advisory roles, and thus, these positions are looked at skeptically. Every effort is made to confirm any listed advisors through outside sources.
- Advisor to several blockchain technology companies including ICON Foundation and Orchid Labs
Arun G. Phadke
- Distinguished Professor at Virginia Tech
- Fellow of National Academy of Engineering
- Distinguished Engineer at Sun Microsystems
- Served as Chief Engineer for Storage at Sun Microsystems
- Ph.D Physicist with 100+ publications
- Founder of an IBM-acquired startup
- Cybersecurity expert
- Discovered serious vulnerabilities for Linux, Android and TCP/IP
- Assistant Professor at UC Riverside
The team and advisors seam capable and R&D-focused with the right business support, and members from credible companies including Google, Facebook, and Instagram; coupled with strong experience and background in software engineering, blockchain development, cybersecurity and finance, the team, on paper, seems well suited for their goal.
Nothing much to stay here, as QuarkChain gathers a collection of partnerships with some of the strongest players in the space. These partners provide support, networks, and development strategies to the QuarkChain team.
Marketing & Social
Social media and community engagement measures both how many in the community are aware of the project, as well as what the project’s level of engagement is within the community. It’s important to see active posting on Twitter and Medium, as well as a well-administrated Telegram or Slack.
- Twitter. Well managed, active account with 19.4K followers and 271 tweets since joining in March, 2018.
- Reddit. Active subreddit with plenty of user-generated content and 884 subscribed readers.
- Medium. The closest we’ve gotten to figuring their Medium out was this. Not too convinced.
- Facebook. Page isn’t available…
- Telegram. Huge Telegram community with over 80K members.
A website is the initial representation of a project’s professionalism; serves as the first-impression for potential investors; and acts as a key tool in conveying the team’s vision. Thus, the importance of reviewing the website for clarity, sophistication, quality, transparency, and professionalism.
QuarkChain’s website features a landing-style design with comprehensive information on all the key information, providing links to more detailed documents including the whitepaper. It incorporates videos, clean icons, professional photos, and nice graphics.
More positives than negatives here, but nevertheless some downs considering that they are not active (or even existing) on strong communication channels such as Facebook, and more importantly Medium. This, however, is counterbalanced with a healthy Twitter feed and one of the largest Telegram groups we’ve seen so far.
- Documentation regarding aspects of QuarkChain’s technology, such as how nodes are reshuffled within shards, has yet to be released.
- Cross shard transactions can get messy. QuarkChain looks to remedy this with a tailored “smart wallet.” The details and development of this wallet have yet to be announced.
- The currently circulating supply is small. While this isn’t necessarily a downside or red flag, it should be taken into consideration when evaluating QuarkChain.
- The roadmap is brief. It would be beneficial if QuarkChain further broke down their progress goals.
There aren’t significant red flags in regards to QuarkChain. However, it is important to recognize that there are still unknowns surrounding the project; many of these will be answered as more technical documentation is released, further testnet details are released, and their mainnet is rolled out later this year.
QuarkChain brings on interesting architectural designs and concepts to a packed market including strong players like Rchain, Zilliqa, Algorand, Dfinity, Ethereum, and more to come. While it’s unlikely one blockchain will rule over the rest, it’s also unlikely that all these projects will make it to mass adoption. But QuarkChain, because of their strong team, diverse advisers, reputable investors, and well designed technical architecture, is well situated to be one of the industry leaders. More to come this 2018 as they’ll potentially increase their test TPS scores, release more technical documentation, announce industry-effective partnerships (just announced as we were writing this review), and release their mainnet.
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Disclaimer: This is not investment advice, merely our opinion and analysis on the project. Do your own research.