I wanted to provide you all with an update on our newly revised tokenomic model. As you may know, our old model had the founders holding 20% of the tokens, with the Foundation having another 26.6%, resulting in a combined total of 46.6% of tokens being centrally held. We have always preached about being decentralized and putting our community first, and wanted our model to reflect that even further. This update establishes an improved model that is more community and validator rewards focused.
With this enhancement to our token model, we want to reaffirm community confidence in what we’re building and show, not just tell, that we believe strongly in the future of this business and our network.
So, what changes have we made? In relation to their previous percentages, both the founders and the Foundation are reducing their allocations and shifting to double the validator network. The founders are now holding 64% fewer tokens, and the Foundation is holding about 27% fewer tokens. See below tables. Most importantly, we are doubling the total validator reward pool to incentivize node validation.
We want developers who are excited about building on top of Constellation to have more access to rewards. This new model will not affect anyone who previously purchased tokens, nor will it increase the token supply. We’re not minting any new tokens, we’re merely opening up a larger piece of the network to those that build, adopt, and validate transactions on our network. We hope that this will foster developer growth and a stronger community sentiment for years to come.
Partners & Advisors
Partners & Advisors
If you have any questions on the new token model or the decisions behind it, please reach out to us on Orion or Discord.
Ben Jorgensen CEO
This paper is for informational purposes only and is not a statement of future intent. Constellation Labs makes no warranties or representations as to the success of the DAG tokens (the “Tokens”), Constellation Labs or related entities (“Constellation”), or the achievement of any activities noted herein, and disclaims any warranties implied by law or otherwise, to the extent permitted by law. No person is entitled to rely on the contents of this statement or any inferences drawn from it, including in relation to any interactions with Constellation, the Tokens or the technologies mentioned in this paper. Constellation disclaims all liability for any loss or damage of any kind (whether foreseeable or not) which may arise from any person acting on any information and opinions relating to Constellation, Constellation’s products and services, the Tokens contained in this statement, or any information which is made available in connection with any further enquiries, notwithstanding any negligence, default or lack of care. Whilst every effort is made to ensure that statements of facts made in this paper are accurate, all estimates, projections, forecasts, prospects, expressions of opinion and other subjective judgments contained herein are based on assumptions considered to be reasonable as of the date of the document in which they are contained and must not be construed as a representation that the matters referred to therein will occur. Any plans, projections or forecasts mentioned in this paper may not be achieved due to multiple risk factors including without limitation defects in technology developments, legal or regulatory exposure, market volatility, sector volatility, corporate actions, or the unavailability of complete and accurate information. All information contained in this document is intended to be indicative only and is not a statement of Constellation’s intentions or a promise of any kind. Constellation expressly reserves the right to to modify its plans at any time. In that event, any new documentation will supersede this document and be made available at https://constellationlabs.io.
These tokens are available for issuance to the employees, consultants, and advisors of the Constellation Foundation, in each case with a vesting schedule commensurate with the token allocation. For example, token grants to employees will be subject to a four-year vesting schedule with a 12-month cliff. Additionally, tokens held in treasury are available to further the mission of The Constellation Foundation.
These tokens are used to incentivize community participation in the Constellation ecosystem through airdrops, developer initiatives, and academic grants that will be available through our community portal.
These tokens are issued to validators on the Constellation mainnet when it is launched in 2019. They are intended to be released over a period of 10 years to validators on the Constellation mainnet.
First off, I would like to take the time to apologize for being silent and not having a consistent cadence of communication. Constellation has been growing and going through some organizational shifts which has caused us to go heads down. Even while we were restructuring the organization, we made headlines by being one of the first scalable protocols to be a part of the Linux Foundation’s HyperLedger (the genesis of modern computing) and joining the largest mobility consortium, MOBI.
Brendan is stepping down as the CEO of Constellation Labs and as a member of the Constellation Foundation board to focus his attention on his passion for the consumer adoption of blockchain technology in developing economies and nations. Constellation has been restructuring the organization where the founders empower cross-departmental alliances and decision-making. The company has named Ben Jorgensen CEO and Brendan’s tokens remain with the foundation.
As a result, Brendan sees an opportunity to leverage his strengths to other blockchain and community-based initiatives. Given his strengths that include product development, growth, and design, as well as engaging with a broad community, he sees the opportunity to support Constellation and the blockchain space as a whole while not being a part of the day to day operations. Stepping back from Constellation will allow the organization to focus on building and deploying the Constellation mainnet. Constellation wishes Brendan the best in his future endeavors.
I’m very excited to accept the position of CEO and thankful for the team’s input and validation. A lot of my prior experience to Constellation has been growing and advising early to mid-market organizations. All of the partnerships and engineering developments have been made by empowering the organization with a streamlined vision and implementing OKR’s (a method of measuring milestones and successes in the organization).
Going forward, I will be doing the following in order to facilitate ongoing communication with our amazing investors:
Monthly Token Holder Update: which you will receive on the last Monday of every month
Quarterly Token Holders Calls: to review strategy and state of the organization
Weekly Company Highlights/Newsletter
Below is a breakdown of our new strategic direction. In the meantime, if you have any questions please feel free to reach out directly in email or suggest a call time.
Focus on Technology
Ultimately, our promise to you and the wider community is to build groundbreaking Distributed Ledger technology for consumers and businesses alike. We’re re-allocating considerable funds to the core engineering team, and away from marketing and community initiatives. The industry is moving at an incredible speed, and in order to maintain the interest of enterprise groups, we need to accelerate the roadmap towards adoption. We’ve established direct relationships with a number of clients (direct and through consortiums), and they need to see open APIs and a functioning network to test potential integrations. In order to deploy and retain our current conversations, the engineering team will continue to expand as we invest in new tools, infrastructure, and personnel.
Building on Recent Partnerships
We are now members of some of the most influential blockchain consortiums, which include the likes of IBM, Cisco, and FedEx among their partners. We’re at the table with these companies, and we need to pull additional resources to maintain our active presence in groups like HyperLedger and MOBI. These partnerships are not passive and require continued management from a marketing and business perspective. We’ve seen a huge return in value from investing in these groups, and we need to continue to do so.
Why is this so exciting?
Essentially, these organizations are how enterprise organizations vet out the opportunities in the blockchain industry. Additionally, Linux is a foundation that basically invented modern-day computing. Our participation enables us to create a loud voice in the industry. We are already seeing PoC (proof of concept) requests come in from large organizations. This is a one-to-many approach and gives us more access, more feedback, and more clout across partnerships.
Delay International Community Building
Over the past few months, we’ve seen a direct correlation of code updates, whitepaper releases and engineering updates having positive effects on $DAG and the overall community sentiment. On the flip side, we’ve seen poor returns from paid global community building. This is mainly due to the current bear market cycle we are experiencing and a general shift in the ecosystem. Developers and investors alike favor actual tech buildout and use cases over a purely speculative basis. Therefore, we will continue to grow organically by leading with technology versus paid outreach. We have an incredible team of community managers who we will continue to work closely with and engage the wider crypto community — these initiatives are not going away, and we will restart our efforts in line with our tech rollout and an expected market turn.
We’re excited to announce a new partnership with Sutherland Gold, Silicon Valley’s premier PR agency who counts Bill.com, Cloudflare and SurveyMonkey amongst other clients. They have successfully helped launch a number of blockchain businesses, such as Circle. Our partnership marks a renewed approach to press relations, with an emphasis on enterprise. They are helping us shape our messaging and build momentum around our new and existing industry partnerships.
MOBI and the Trusted IoT Alliance (TIoTA) have recently launched a three-year series called the MOBI Grand Challenge (MGC). The MOBI Grand Challenge is a four-month long competition which will demonstrate the potential use-cases of Blockchain in coordinating vehicle movement and improving transportation in urban environments. The ultimate goal is the creation of a viable, decentralized, network of blockchain/DLT connected vehicles which will be able to reliably share data, coordinate behavior and ultimately, improve urban mobility.
Constellation Labs is proud to announce its sponsorship of the MOBI Grand Challenge. Constellation has contributed $DAG to the overall prize pool, which will include over one million dollars of token prizes to be awarded over the three-year Challenge series. Constellation’s Engineering Team is also offering a mentorship, which gives participating teams the ability to message them for specific questions regarding their expertise.
“With Constellation’s focus on the Mobility and Autonomous Vehicles markets, we see the MOBI Grand Challenge as a bold and meaningful showcase of the promise of Distributed Ledger Technology,” said Constellation’s VP of Business Development, Benjamin Diggles. “We view our sponsorship and promotion of this event as a way to accelerate developer and enterprise participation to yield the best results possible for a foundation we believe in.”
The launch of MGC took place on October 12 in New Mexico and will end with a public demonstration of selected technologies at an event hosted by the BMW Group, MOBI community member, in Munich, Germany on February 15, 2019.
The MGC is loosely modeled on the 2004 DARPA Grand Challenge, where robotic vehicles competed to autonomously navigate through the Mojave Desert. While the most successful vehicle traveled only 5% of the course, the 2004 event ignited worldwide interest in autonomous cars and launched billions of dollars capital investment. Just eighteen months later, when the event was repeated, five vehicles completed the full course and 22 of the 23 teams surpassed the best result of the previous year.
The challenge includes, but is not limited to exchanging data and payments with other vehicles and infrastructure; operating in a tokenized environment by registering assets and payments on a public or permissioned ledger; negotiating rights of way, access, and use of infrastructure in a cooperative and distributed ecosystem; adjusting behavior to maximize efficiency from providing services, buying fuel, managing pollution, congestion and carbon footprint, etc. Winning teams will be expected to demonstrate how blockchains and related technologies – distributed ledgers, cryptography, tokens, and consensus mechanisms can leverage the high-speed connections and computing power of future vehicles to make mobility safer, cleaner, faster, more efficient and accessible.
MOBI has selected The Blockchain Society (TBS) to assist with organizing the Grand Challenge. TBS works behind the scenes with innovative startups and projects to advance blockchain technology integration in the mainstream. For more information on TBS, visit theblockchainsociety.ca/.
Follow the links below for additional resources and how to get involved:
Coming off of a busy couple of weeks of events, we’ve got lots to share with you all — including recaps of Wyatt’s panel at SFBW, our LA MeetUp with Element Group, as well as a video from the recent FinTech panel in Portland. We also have Engineering and Airdrop 4 Updates along with a new exchange listing, upcoming events, and recent articles.
Read on for all that and more, but first, a quick announcement about the frequency of our Weekly Updates. We’ll be switching over to a bi-monthly cadence of these emails, so you’ll receive the next one in two week’s time. Developer and Airdrop updates will be sent separately.
We’d like to get to know our community better in order to tailor our weekly content output. Please take a few moments to fill out a quick questionnaire:
Other panel members included Shahaf Bar-Geffen (CEO, COTI), Lindsey Maule (Founding Director, Luna Capital), and Kyle Armour (Director of Technical Partnerships, Hashgraph).
Last week we partnered with Element Group to host a Peer-to-Peer Blockchain Mixer in Santa Monica, CA. The evening started off with brief 20-minute presentations from Ben Jorgensen (COO, Constellation Labs) and Stan Miroshnik (CEO, Element Group). Ben and Stan outlined the key technologies their firms are currently building and how they fit into the future of the blockchain sector.
Thanks to everyone who came out, and to our friends at Element group for hosting us. This marks the first of regular LA MeetUps.
FinTech and Product Innovation Panel
Our VP of Business Development, Benjamin Diggles, recently spoke on a panel in Portland, Oregon titled “FinTech Product Innovation and the Intersection with Blockchain”. Check out what he, Shamir Karkal (Founder and CEO Sila; Co-Founder, Simple Bank) and Christian Maynard-Philipp (COO, Third Party) had to say about the topic in the video below:
We’re happy to announce our new Constellation Space on AirSwap! Users can now make any size OTC trades of DAG to KYC/AML-verified users with no counter-party risk.
Airdrop 4 Update
Emails kickstart ing AirDrop 4 KYC process went out last week. If your application is still pending, please don’t worry. Our legal team is reviewing through to early next week. Expect a response soon!If you have any AirDrop related questions, visit our AirDrop FAQ post.
2018 has been an exciting year for blockchain and DLT. Give our latest blog post, Trends From The Trenches, a read for a deeper look at the major trends in the space, and how Constellation fits into some of them.
5 Reasons Why Blockchain Technology is Failing at Mass Consumer Adoption
COO Ben weighs in on the five obstacles we need to solve before blockchain technology can achieve true widespread adoption, as originally outlined by Deloitte. Give it a read on Medium.
Constellation is looking for a Distributed Systems Engineer to join the Core engineering team building a third generation DAG protocol that uses reputation based consensus.
The perfect candidate has an in-depth understanding of distributed systems, distributed consensus, and hands-on experience building and testing data intensive applications at scale.
You will work directly with the Core engineering team and will be a key part of the protocol development.
Think you’d be a good fit? View the full job listing and apply here!
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us…
That famous intro from the Tale of Two Cities feels like quite a fitting metaphor for the up and down nature of the blockchain space. While I’ve only been riding this roller coaster and working in the industry for just over a year (which automatically certifies me as a blockchain expert), I’ve witnessed many fluctuations and trends both rise and fall in the space. For this piece, I thought it’d be interesting to sum up the major trends I’ve seen develop throughout 2018 while observing how Constellation fits into some of them. I’ll be drawing from both personal experiences and citing online resources along the way. Without further ado, let’s dive in.
The Emergence of Blockchain Consortiums
Over the past year, there has been a dramatic rise in the number of blockchain consortiums in existence. I think the space as a whole has realized that the only way we’re going to solve the lingering issues of scalability and widespread adoption is by working together (as cheesy as that may sound), and stepping outside of our individual blockchain boxes or silos. Per a recent article on this trend by Deloitte, “A recent study counted some 61 blockchain consortia across a dozen industries globally—significant growth versus the prior year.” Blockchain consortia are groups of companies that come together with the joint purpose of advancing shared objectives, which might include “defining use cases, setting standards, developing infrastructure and applications, and operating a blockchain network.”
To take a moment to toot our own horn, Constellation has been extremely active on this front as of late, as we’ve become members of both the HyperLedger and MOBI consortiums. To further cite the relevance of consortiums, HyperLedger, and the Enterprise Ethereum Alliance, just announced their collaboration last week, with the goal of “accelerating the adoption of blockchain technologies for businesses.” With the rise of blockchain focused consortiums has also come an increased level of accountability and professionalism. Here’s what our CMO Zac Russell had to say on the subject:
Over the past few months, the rise of consortiums and collaborative groups signals the realization that protocols and projects can’t work in isolation. It’s early days, and weneed to share knowledge, resources and ultimately create integrations across platforms. This is the only way the industry will be able to scale and deliver on the promises and hype of 2017.
VC Investment Up, ICO Funding Down
2018 has seen a drastic rise in VC funding, while traditional ICO funding has plummeted 90% since the start of the year. Per a report from the blockchain research group Diar, VC investment in blockchain and crypto through the first three quarters of the year totals at $3.9 billion — up a staggering 280% from 2017. On the flip side, traditional ICO fundraising has been on a steady decline since raising $2.4 billion in the month of January, with only $300 million raised in all of September.
What’s the reason for this sudden flip-flop in funding models?
Diar points to the overall market correction that plummeted token values, and left companies seeking an alternative model of fundraising, one that is also much more regulatorily compliant.
“Non-equity ICOs are not only scrutinized by the regulators but the founders also have very misaligned incentives as there is no contractual obligation to deliver a product – a reality that to date seems to be the case with few launches, and even less adoption. The amount that was raised through ICOs, as well as the number of projects successfully completing an ICO, is now approaching a one year low.”
Our COO Ben Jorgensen penned a recent article that echoed a similar sentiment, calling for a more mature and balanced fundraising approach that embraces both the VC and traditional cryptocurrency investor worlds:
“A new era in cryptocurrency is upon us, and it will include participation and insight by both institutional and cryptocurrency investors, while ultimately requiring blockchain technology companies and the applications built on existing technologies to behave like mini-IPO’s being accountable to a myriad of personas from tech enthusiasts, crypto communities, users and enterprise organizations, and investors.”
Regulation has been another hot topic item throughout the past year. In comparison with more progressive countries such as Malta and Gibraltar, I think it’s fair to say that the U.S regulatory efforts have been quite lackluster up until this point. While we’ve seen a handful of states take some slightly progressive stances (hooray, you can pay your taxes in Bitcoin in a few years!), on the whole, it’s been a muddled and confusing effort from Uncle Sam. All the alphabet agencies seem to have differing opinions on how to classify cryptocurrencies, as the SEC, the CFTC, the FEDs, and the IRS can’t come to a consensus on crypto. Here’s what the billionaire venture capitalist Tim Draper had to say on the matter:
“I did not anticipate that the regulators would put a dark cloud over all this innovation. I had hoped that there would be some clear simple rules and we could then get on with it. But I guess there are a lot of old-school banking lobbyists trying to cling to the status quo. Years from now, governments will be judged by how well they manage this transition from fiat to crypto.”
To avoid picking on just the U.S here, they aren’t the only ones who can’t make up their minds. China, Korea, Russia, and the EU all have varying and dizzying takes on crypto regulation. I would love to see the U.S be a bit more proactive and become regulatory trailblazers, but time will tell.
In regards to governments who are managing this transition in a more pro-crypto way, let’s take a look at the tiny nations making big moves, Gibraltar and Malta. On July 5th, the Maltese Parliment passed 3 bills into law and became the first country in the world to provide clear and official regulations for those working in the blockchain and DLT space. Shortly before these laws were passed, Binance announced that they were moving their entire headquarters to Malta, prompting the birth of the nickname “The Blockchain Island” for Malta.
Why are these relatively tiny island nations paving the way for progressive crypto regulation? One Maltese official for Digital Economy Innovation, Silvio Schembri, made a great point to this regard. While the major nations are busy worrying about how to regulate the financial gains from cryptocurrencies, he outlined how Malta is more focused on the long-term development of the underlying technologies:
“We are not looking at short-term gains here, but rather at the long-term evolution of blockchain and DLT technology. For example, if we think about an issuance of an ICO, operators typically present a white paper with the ICO details. While other jurisdictions are looking at the white paper to see if it’s certified, it’s the technology behind that white paper that implements what is written. Currently, no one is looking at the technology. That is something that we are doing differently,” said Schembri.
This isn’t to say that there is no hope for the U.S to make haste and come to some sort of consensus on how to regulate the industry. Just as recently as September 25th, over 50 industry leaders convened in Congress for a roundtable discussion to address many of the unsolved regulatory issues. One of the chief complaints echoed by various participants was the notion that the 72-year-old Howey Test should not be the measuring stick to determine whether or not a cryptocurrency is a security. The SEC has already declared that they don’t intend on changing security laws to cater to crypto, so it remains to be seen what actually shakes out from all of this. To sum this all up, here’s what Coinbase’s Chief Policy Officer Mike Lempres had to say on the subject: “We all want a fair and orderly market, we want all the same things regulators do. It doesn’t have to be done in the same way it was done in the past, and we need to be open to that.” Amen, brother.
Hungry Bears and the Year of (f)Utility
Let’s start off by killing two birds with one token (see what I did there?) and get the crypto markets price decline out of the way first, along with the hyped up notion of 2018 being the “Year of Utility”. As Coindesk and others optimistically declared towards the end of 2017, 2018 was to be the year when we’d “see tokens that provide true utility float to the top.” The general hope was that all the upward momentum and hype that the industry generated would roll over into the following year, and businesses and consumers alike would actually be utilizing dApps and integrating these blockchain projects into reality, while we’d simultaneously shift out of the speculative money-hungry nature of the crypto craze. This hasn’t exactly played out.
As illustrated by the handy Doge-laden graph I’ve made above, we’ve been ensnared in a nearly 10-month long bear market ever since the bulls went running wild last through last Fall and Winter. Ethereum and other big name tokens are all currently sitting around their lowest valuations of the year, and it’s anyone’s guess as to where things go from here. While this sharp drop-off probably lost a lot of new investors some hard-earned dinero and shook out a lot of shitcoins, I don’t think this decline in the total market cap is all that worrisome.
This year hasn’t exactly seen the predicted rise of utility-driven companies and tokens either. It’s been more of a year of futility rather than utility. A year of failing ICO’s and floundering shitcoins, and confusing regulatory guidelines. Personally, I see the bear market as a sign of maturity, not just in the sense of shaking out those who dreamed of riding ICO’s and random token investments to the moon and beyond — but in the sense that it’s forced those within the industry to focus more on the things that actually matter — which is driving adoption, building usable and scalable tech, while letting the market figure itself out. Despite the bear market, companies and enterprises alike have started to band together in order to hasten the development and adoption of DLT tech (namely in the form of the aforementioned rise of consortiums).
This past week has been one for the books! We’ve been out on the ground attending and speaking at events in Santa Monica and San Francisco, California, Portland, Oregon, and even New Mexico! Meanwhile, our Engineering team has been hard at work building. Read on for an overview of what’s gone on, and what’s coming up!
Updated and tested facilitator selections in new streaming flow
V2 skeleton cluster migration finished
Fixed memory issues in checkpoint combiner
Updated download functionality to V2
Prototype for conflict resolution functions
Improvements / refactoring for data resolver
Implemented simple snapshots for tip merge validation
Prototype for tip consistency validator
Refactored database methods to use typed actors
Added new tests for nodes joining cluster
Between SF Blockchain Week going on in San Francisco and Block-Con happening in Santa Monica, as well as a panel in Portland, OR, this past week has been an exciting one on the West Coast for the Constellation Team.
To start things off, COO Ben spoke at a Blockchain Brunch Panel in San Francisco last weekend featuring a spirited, audience-led panel chat.
On Tuesday, the Constellation team in LA attended the Block-Con Beach Crawl which kicked off a series of Block-Con events throughout the week.
Meanwhile in Portland, OR, Constellation VP of Business Development, Benjamin Diggles spoke on a panel titled “FinTech Product Innovation and the Intersection with Blockchain” hosted by Sila. Other panelists also included Shamir Karkal, founder and CEO of Sila, Christian Maynard-Phillip, COO of Third Party Technologies, and Isaiah Steinfeld, Entrepreneur in Residence at Nike.
On Friday, Zac (Head of Marketing) was back at Block-Con speaking on the future of Distributed Ledger Technologies. It was a great turn-out, and we’ll share a video of the presentation in the coming weeks.
Also on Friday, Benjamin Diggles was back at it in New Mexico where he attended MOBI’s Colloquium. The event aimed to promote and advance standards and accelerate adoption of blockchain, distributed ledger, and related technologies. If you’d like to watch the event, it’s available for viewing on MOBI’s Facebook page.
The team will be wrapping up the week at Blockchain Week SF Friday afternoon with a panel discussing DAG.
Constellation Labs and Element Group invite you for an evening of networking and drinks. We’ll start with brief 20-minute presentations from Ben Jorgensen (COO, Constellation Labs) and Stan Miroshnik (CEO, Element Group). In their respective presentations, Ben and Stan will outline key technologies their firms are currently building and how they fit into the future of the blockchain sector.
We have a busy upcoming week of presentations and panels ahead of us. Find us in LA at Block-Con and out and about during a hectic SF Blockchain week. Hit up the team on Telegram or Discord if you want to meet us. Read on for a general round-up of all that’s been going on…
VP of Business Development, Benjamin Diggles, will be discussing “FinTech Product Innovation and the Intersection with Blockchain” on a panel alongside Shamir Karkal (Co-Founder and CEO of Sila), Christian Maynard-Philipp (CCO and COO of Third Party Technologies), and Isaiah Steinfeld (Entrepreneur in Residence at Nike).
COO Ben will be giving a presentation on the future of Distributed Ledger Technology next week at Block-Con in Santa Monica. We’re excited to take part and will have a video of the presentation this month.
SF Blockchain Week Brunch, October 7, San Francisco, CA
SF Blockchain Week DAG panel, Oct 12, Info to come
Following CTO Wyatt Meldman-Floch and V.P of Engineering Ryle Goehausen’s rousing talk from TechCrunch, we recently published a blog post diving into the overarching vision fueling Constellation. Also addressed the current limitations in the distributed ledger space, and how our approach differs. Read the post in its entirety on the Constellation blog!
This week, we wanted to take a break from the more inward-facing technical content and have a little fun by honoring our community with some prestigious, totally made up awards (such as Meme Lord). Thanks to our community for all your continuous support, and have a look at our Champions of Community piece!
VP of Engineering, Ryle’s, commentary was featured in BitsOnline – Talking Universal Node Accessibility With Constellation Labs.
Last month we announced the launch of our Global Ambassador Network. We wanted to remind the community about the amazing work being done. In a few short months, it has already lead to partnerships with MOBI and Hyperledger. The program offers the tools and knowledge needed to integrate blockchain into networks eager to embrace blockchain technology around the world. While our early focus is on mobility, IoT, and renewable energy applications, we’re also extending into a multitude of industries, based on ambassador outreach and momentum.
“In 5 years, I believe blockchain will become the core technology for innovation, and I believe in Constellation Labs’s vision to bring decentralized technology to the next level. I saw an ambitious dream in Constellation. Constellation will take a big role of upgrading blockchain technology to a universal common language, and thus enhancing global connectivity, such as internet and mobile, that shaped the world to how it is today. I’m happy to be an Ambassador of Constellation Labs, helping to continue to propel innovation, together.” – Constellation Ambassador and former Hello Kitty Managing Director, Ray Rehito Hatoyama.
In addition to Hatoyama, early Constellation Ambassadors include Sebastian Spitzer, New Business Specialist at REHAU; Ratul Saha, Founder of GetonChain; Julian Jung, Co-founder, and Partner of Game Theory Crypto Group; and Jacob Mullins, Partner at Shasta Ventures.
You’ll notice a drip of changes to our site, Orion and marketing material over the next few weeks. We’re taking the time to fine-tune our messaging and narrative to more accurately reflect our technology and vision – Enterprise Grade Distributed Ledger Technology.
In this piece, we’re going to dive into the overarching vision fueling Constellation, while using our CTO Wyatt Meldman-Floch and our V.P of Engineering Ryle Goehausen’s rousing talk from TechCrunch as source material. We’ll address the current limitations existing in the distributed ledger space, and how our approach differs. If you haven’t had a chance to check out their presentation from the event, give it a watch below.
First off, what are the current limitations?
Let’s start at the beginning with a quick breakdown of DAG technology and a recap of the origins of blockchain technology. Blockchain technology, as it currently stands, allows you to secure digital transactions on a ledger (Bitcoin) and then moved into securing digital contracts (ETH). Now, we’re finally trying to solve the problem of applications, which not many of the existing technologies can do. One of the main issues with existing blockchain infrastructure is that they just don’t work at scale, and aren’t ready to handle the massive scaling demands at the enterprise level. The issue of scalability is another that we’re strongly focused on solving.
Alongside the likes of HyperLedger (who we recently partnered up with), InterLedger, Cosmos, and Parity, Constellation shares a similar complaint regarding how Ethereum is skewing more towards an excessive amount of centrality. “Plenty of people have talked about Ethereum moving towards too much centrality, and this is probably due in part with how much money and attention they have raised, they’re trying to push the bar past what Bitcoin can actually offer,” said Ryle.
Ethereum and other protocols lock you into their “centralized sandbox,” where different networks cannot connect, and you’re forced into using their coding language. Some other common blockchain limitations are resource waste, redundant work, and running application code over and over. Ryle went on to share how, as it currently stands, “you can’t really host a modern application on Ethereum. You can serve a website, but you couldn’t really serve a scalable database. It wouldn’t work. These networks can’t connect. You’re locked into that abstraction… there is no throughput to speak of.”
Enterprises already expect this level of functionality and fluidity in the computing infrastructure space, and it would make sense for them to expect to see a similar shift happen in the blockchain space before diving in head first. “Everybody is coming into [blockchain] expecting it to be like it developing on AWS, and it’s just not – it doesn’t work that way right now,” said Ryle.
“You can’t have competing VMs. You can’t have competing execution providers. You can’t deal with people who don’t want to run code from other people, as every node needs to run all of the applications,” said Ryle. In addition, what incentive do you really have to build an application on one of these protocols, when all you’re ultimately doing is enriching the creators of that protocol?
“This is unfair, and it avoids all of the issues of integrating properly and building a community if all of the value is driven into the protocol.”
Ryle went on to mention how with double spend attacks, “any miner who has enough power can instantly destroy” a smaller network. “Anyone with enough stake can manipulate their markets and the consensus models don’t reinforce one another.” These types of consensus models are also highly anti-entrepreneurial. “You can’t start your own network. You have to go to a large provider. If you have a new idea, you have to do what they say. You can’t just create a network and try and integrate it with something, because they don’t trade resources fairly. There is nothing that allows these networks to trade security with one another, and reinforce each other fairly,” per Ryle.
To reiterate, the issue with these larger protocols is that they have to run all of the applications inside of them. They lack application separations and boundaries between them, which also creates data management concerns. How do we solve this issue? It all comes down to the notion of consensus as a service. “The way to abstract over this is to focus on isolating out consensus in and of itself as a service, and focusing on the performance of that because that happens anyways in the regular ecosystem.”
While Constellation ’s solution is based around the use of DAGs (directed acyclic graphs), we would slightly rephrase this argument as it being nonlinear. “If you’re talking about consensus across networks, there are not necessarily linear relationships. It’s coarse, it’s granular. It’s graph-like in nature, and they’re globally distributed networks. Each application has its own unique access pattern for data dependencies and all these other issues. The huge thing here that doesn’t get talked about is if you create a small network, it’s not going to be secure.”
“Consensus as a service” underpins Constellation’s approach. As Ryle puts it, “there should be a proper boundary created so that you could use varying VM’S or contract languages that might be suited to different platforms — like running on a cell phone, running in the cloud, running on a home computer — these are all different heterogeneous environments.”
Ryle went on to add some further context as to how Constellation is taking a unique “open-sandbox” approach, especially in comparison to Ethereum:
“In simplest terms possible, Ethereum does not support forks of itself. We want to have people re-use our code to build their application-specific networks and then integrate with ours, which is a different model. Under Ethereum, they set the rules for you to play in a sandbox. You don’t get to mess with Ethereum’s core code. With us, we allow you to extend your application as a ‘custom version of Ethereum’ and provide a mechanism for integrating it with our core network.”
While a number of other protocols have taken on so much ground and make such lofty claims that they can’t solve anything practical at all, we want to avoid that trap altogether. Rather than promising to “revolutionize and disrupt” all the worlds issues, we’d rather focus on solving consensus at scale.
As Ryle succinctly puts it, “if you can solve consensus at scale, there are any number of plug-and-play components that you can incorporate from other projects which is far more interesting from a decentralization perspective. We’re interested in networks reinforcing one another rather than dictating what you have to do.”
When you pare down what blockchain is, it’s a way of securing updates to a global database. When it comes to enterprise-grade adoption, the space as a whole isn’t ready for that leap, but in the meantime, we can look towards AWS as an ideal role model in terms of having an enterprise-grade security standard. Ryle went on to say how AWS’s security model doesn’t enforce security to the degree that it forces you into only using specific solutions, but rather, it’s designed to empower all sorts of different solutions. “AWS does not have a completely unified platform where you have to do everything a particular way – they offer plugins and customizations to developers”.
Ryle went on to share how he’s noticed a considerable problem in platformization, and by that he means how there is an underlying centralization trend among decentralized networks, saying “as they become larger, they become more centralized – this is crazy.” In our view, it’s more important to focus on disparate networks and to integrate different types of networks and microservices as an approach. Also, when more nodes and actors join our network, we become more decentralized as opposed to more centralized, simply by the inherent nature of our DAG infrastructure and our reputation based consensus model.
PoW vs. PoS vs. Constellation’s reputation model
Lastly, let’s examine some of the fundamental differences between the two main consensus models being utilized in blockchain right now – Proof of Work (PoW) and Proof of Stake (PoS). With PoW, the origins of this can be found in anti-spam for email. “It would be the death by a thousand cuts, where if you sent out a large amount of computation – it becomes cost prohibitive to spam a large number of people,” said Ryle. PoW was originally intended only to be used in a small, rate limiting capacity, and double-spend attacks regularly occur on smaller networks. “These double spends are in the news all the time on smaller networks. It doesn’t work. It’s a known vulnerability.”
Proof of Stake, while it addressed the wastefulness issue, it still has vulnerabilities. Smaller networks can still be easily attacked, and in terms of governance, it’s fundamentally anti-democratic. “We don’t run the world by trusting people just because they have money, right? That’s not Democratic. That’s not a governance solution. And this goes beyond just invalidating individual transactions and having penalties. It’s more about the governance of the entire protocol itself. You can’t rely solely on buying votes, that would be considered absurd in the real world,” said Ryle.
Regarding Constellation’s novel reputation based consensus approach, trust and reputation scoring is already conventional throughout society. “This is credit scores. This is auditing, this is accounting, finance – this is considered normal.” Although this notion is prevalent throughout society at large, there has yet to be a strong evolution in this and it hasn’t been codified properly into digital form. Our approach allows for an enormous amount of machine learning that can be done, that enables truly democratic governance. “Who are the people involved in these things? Where are their IPs coming from, all sorts of off- chain data that can be integrated very very quickly and easily – so far that really hasn’t happened,” per Ryle.
As it stands, there is still a massive level of ignorance about what happens in the code publishing process and who actually governs the project itself. “All of these steps require trust and they just they just ignore it completely. We need to go towards Democratic governance, not buying votes,” according to Ryle.
To sum it all up, the current blockchain solutions just aren’t ready to scale, and their underlying consensus models are vulnerable to attacks and are anti-democratic in nature. With Constellation, we’re aiming to create this notion of consensus as a service, while also solving the main issues of scaling for enterprise use and creating a truly democratic governance model. We’re excited to bring this vision to life, so be sure to continue to follow our journey at any of the links below!