New Wave of Eco-Blockchains – why it matters and how you can act

Maciej Zieliński

07 Feb 2022
New Wave of Eco-Blockchains – why it matters and how you can act

The Blockchain community starts to notice the environmental impact of cryptocurrencies and distributed ledger technologies (DLT). Now, there is a new class of projects which combine sustainability and environment with decentralization, which augments their business utility. In this article, we explore the new wave of eco-blockchains, and why you should get on board quickly.

Table of contents:

  • The carbon footprint of blockchain protocols
  • Why validating nodes is so energy-intensive
  • Proof of Work alternatives
  • Eco-friendly blockchains
  • How to lower the energy consumption of alternative finance
  • Blockchain and carbon neutrality

Though undoubtedly successful and enormously powerful, early Blockchain protocols such as the one of Bitcoin, have suffered from limitations to their scalability and sustainability. Because of their consensus mechanism in encrypting new blocks and adding them to the transaction ledger.

So far, the main race in blockchain technology has revolved around combating high transaction fees, boosting algorithm efficiency, and improving the speed of crypto transactions. Those factors have had a clear impact on crypto prices. 

Electricity consumption and carbon footprint

With the growth in the number of users and transactions, Blockchain systems based on the Proof-of-Work (PoW) mechanism require an increased computing power for miners. That causes increasingly-advanced computations to consume more energy as the network size grows. In turn, PoW-based Blockchains – such as the one of Bitcoin – have over time become environmentally unsustainable, because of their high energy consumption. Proof-of-Stake consensus model – e.g. in Ethereum – requires slightly less energy but does not eliminate the problem of limited scalability. 

Energy consumption

BTC alone represents 43% of the overall crypto traffic, which makes it the most popular cryptocurrency. The Bitcoin network has the greatest carbon footprint due to its energy consumption. According to the Bitcoin Energy Consumption Index, it’s estimated that Bitcoin mining requires 178 TWh of electrical power – roughly the same as the annual consumption of energy in Poland.  

Because of the environmental impact of mining, cryptocurrencies are criticized and compared to centralized financial tools. For example, one BTC creating a new block requires 1779 kWh of power, while 100,000 transactions operated by the payment card provider VISA, consume 189 kWh only. In one transaction, Bitcoin uses as much electricity as an average American household in 67 days. 

Eco blockchains - more sustainable future

Taking into account all the environmental considerations, the new generation of sustainable Blockchains has emerged in response to skyrocketing consumption of miners in conventional cryptocurrencies. Apart from ethical arguments, the reason for their rising popularity is scalability. With the rising prices of cryptocurrencies, miners need to process a greater volume of transactions; especially in 2021, the problem of rising electricity prices and power consumption became a pressing issue, making eco-friendly Blockchains not only an environmentally-sound proposition but also a very convincing use case in business. 

1. Chia - energy-efficient alternative

The Chia coin, powered by the Blockchain called Chia Network, skyrocketed in mid-2021 after its public mainnet launch. The Chia founder, Brian Cohen, is the author of popular software and protocol, BitTorrent. The platform was valuated at $500 million in a recent investment round. The Chia Network is currently the fastest-growing green Blockchain. It is also a smart transaction platform that allows users to take advantage of available hard drive space. Because Chia is also a smart contract platform, there is a new wave of further innovative projects released on the Chia Network that take advantage of carbon-neutral, scalable solutions of the space-based consensus mechanism. 

The Chia solution uses much less electricity compared to cryptocurrencies powered by PoW or the PoS consensus mechanism and allows more people to start mining at a lower cost. To become a Chia miner, one has to simply devote their disc space or use cloud computing platforms such as Amazon Web Services. Since Chia's launch in March 2021, Chia's computer memory usage has grown exponentially. While in mid-May 2021 it was about half a million terabytes of memory, in October this figure multiplied ten times. 

Unlike previous cryptocurrencies, the Chia coin is powered by a Blockchain using the Proof-of-Space-and-Time mechanism. As a result, Chia mining uses neither GPU nor CPU architecture to enable the exchange of data and value, but computer memory. Miners’ hard drive or SSD space powering the Chia Blockchain is connected to the decentralized network where storing a certain amount of data over a certain amount of time is rewarded in XCH, Chia’s token. 

Chia farming is accessible, with neither specialized equipment needed nor massive amounts of power. This makes it not The network’s blockchain transaction platform can be downloaded at chia.net. Users can decide to dedicate a portion of uncommitted hard drive space to the network and receive XCH in exchange, without significantly affecting computer performance or requiring vastly more energy.

2. SolarCoin 

Unlike Chia, which is a brand-new Blockchain and consensus mechanism, SolarCoin exploits the simple idea of smart contracts. It follows the logic of all other cryptocurrencies, but the key difference is that the platform design aims to incentivize real-world environmental activity: verifiably produced solar energy. The smart contract distributes 1 SolarCoin (SLR) for every MWh (megawatt hour) generated from solar panel technology. 

SolarCoin relies on two forms of Proof-of-Work (PoW) protocol. The first is the traditional cryptographic PoW associated with the most conventional cryptocurrencies (e.g. Bitcoin). The second-layer PoW is a verified mechanism that indicates whether the said 1 MWh of power was proved to be produced from solar energy. Then the smart contract distributes SolarCoins using these two PoWs as a means of rewarding green electricity generation.

3. IOTA

As a great add-on to IOTA’s tech proposition, its environmentally-oriented approach is achieved by eliminating miners, since they are the cause of environmental problems of cryptocurrencies.  IOTA uses an alternative to conventional Blockchain called the ‘Tangle’. Instead of mining, the network is maintained by smaller devices and uses calculations that require less power and thus consume less energy per transaction (0.00011 kWh per transaction), making it the most environmentally sustainable among the leading cryptocurrencies. 

The whole crypto community is getting green – so should you!

There are visible signs that the crypto developers are increasingly aware and active to find new ways of offering all the benefits of cryptocurrencies, with none of the unsustainable and environment-harming drawbacks. 

Leading Blockchain firms and corporations signed the Crypto Climate Accord. Its objective is to decarbonize the crypto industry and make it a net-zero greenhouse gas emitter by 2040. It was signed by such important names as Ripple, Consensys, Polygon – and among corporate giants: KPMG and NortonLifeLock.

Whether environmentally friendly by design or business choice, the crypto industry has very convincing arguments to ‘go green’. In the current form, the most popular cryptocurrencies like BTC have been heavily criticised for their unsustainability. Decentralization efforts cannot be sustained if the environmental costs of powering transactions keep rising. Hence, the rise of a new wave of green Blockchains and green cryptocurrencies a clear call to action for several stakeholders.

Given the early stage of development, environment-neutral cryptocurrencies and decentralized protocols are a great space for entrepreneurs to get involved. They can develop their own solutions based on sustainable Blockchains. Beyond optimizations in consensus mechanisms and DLT architectures, there are some of the most exciting business cases, such as green NFTs, exchanges and storage platforms. 

If you want to know how to build your projects based on eco-Blockchains, contact our experts who will be happy to give you a free consultation.

Most viewed


Never miss a story

Stay updated about Nextrope news as it happens.

You are subscribed

The Economy of Aleph Zero (AZERO)

Karolina

22 Feb 2024
The Economy of Aleph Zero (AZERO)

The evolution of blockchain technology has brought forward numerous platforms aiming to solve various challenges in the digital world. Among these innovations, Aleph Zero stands out with its unique approach to creating an economically viable ecosystem through thoughtful tokenomics and incentives. This article delves into the economy of Aleph Zero, focusing on its native token, AZERO, to understand how it sustains growth, incentivizes participation, and ensures long-term viability.

MUST READ: "What is Aleph Zero"

Understanding AZERO Tokenomics

Key Metrics and Distribution

  • Ticker: AZERO
  • Type: Utility
  • Circulating Supply: 257,990,631
  • Total Supply: 354,678,137
  • % Staked: 71%
  • # of Wallets: 207,370
  • Inflation: 30,000,000 AZERO per year
  • Market Cap: $410,598,781

Allocation and Use Cases

  • Aleph Zero Foundation. 23% of the tokens are allocated for research, development, marketing, operations, ecosystem incentives, and other expenses.
  • Team Allocation. 10% of the tokens, with 80% locked for one year and vested over four years.
  • Funding Rounds. Details on the pre-seed, seed, Early Community round, public presale, and public sale distributions.
  • AZERO Utility. The AZERO coin powers the Aleph Zero ecosystem by being used for validator node staking, DEX swap fees, collateral for wrapped assets in Liminal, fees for asset-wrapping and bridging on Liminal, network fees, and governance voting processes.

The Role of Inflation in Aleph Zero's Ecosystem

Inflation is often viewed negatively in traditional economic contexts, associated with diminishing purchasing power and economic instability. However, in the realm of blockchain ecosystems like Aleph Zero, inflation serves as a pivotal mechanism for fostering sustainable growth, incentivizing network participation, and ensuring the long-term viability of the platform. This article explores the nuanced role of inflation within Aleph Zero's ecosystem, detailing its introduction, benefits, and governance.

Introduction of Inflation

Aleph Zero has introduced a systematic annual increase of 30 million AZERO tokens to its circulating supply, a decision rooted in the desire to sustain and nurture ecosystem growth. This inflationary mechanism is not merely a tool for increasing token supply but a strategic approach to enhancing the network's security, scalability, and development. By carefully calibrating the rate of inflation, Aleph Zero aims to balance the need for rewarding network participants with the imperative of maintaining the token's value over time.

Benefits of Inflation

The introduction of inflation within Aleph Zero's ecosystem serves multiple critical functions, each contributing to the platform's overarching goals:

  • Incentivizing Validators and Nominators. Validators and nominators play a crucial role in securing the Aleph Zero network through the proof-of-stake consensus mechanism. Inflation provides these participants with financial rewards for their efforts, encouraging continued engagement and investment in the network's health and security.
  • Funding Ecosystem Treasury. A portion of the newly minted AZERO tokens is allocated to the ecosystem treasury each year. These funds are instrumental in supporting ongoing development projects, marketing initiatives, operational expenses, and other activities that contribute to the ecosystem's growth and sustainability.
  • Supporting Long-Term Holding. By distributing inflation rewards primarily to those who stake their tokens, Aleph Zero encourages long-term holding over speculative trading. This strategy aims to reduce market volatility and foster a stable economic environment conducive to gradual growth.
https://youtu.be/y-FypMbm0BM

Inflation Mechanism and Governance

Validators and Nominators

At the heart of Aleph Zero's security and efficiency are its validators and nominators, who ensure the integrity of transactions and the network at large. Inflation directly supports these roles by compensating participants for their staked tokens and the risks associated with securing the network. This compensation not only rewards current participants but also attracts new validators and nominators, enhancing the network's decentralization and resilience.

Ecosystem Treasury

The ecosystem treasury represents a vital component of Aleph Zero's inflation strategy, receiving a dedicated portion of the annual inflation to fund various initiatives. These initiatives range from research and development to community engagement programs, all aimed at bolstering the ecosystem's health and competitiveness. The treasury's role is pivotal in allocating resources efficiently to areas that promise the most significant impact on Aleph Zero's growth and user adoption.

Decentralized Governance

A key aspect of Aleph Zero's inflationary policy is its commitment to decentralized governance. The platform envisions a future where token holders can vote on critical decisions, including adjustments to the inflation rate. This participatory approach ensures that the inflation mechanism remains responsive to the ecosystem's evolving needs, balancing the interests of various stakeholders to support the platform's long-term success.

MUST READ: "Aleph Zero vs Solana"

Regulatory Compliance and Market Presence

  • FINMA No-Action Letter: Aleph Zero’s compliance with Swiss law and the implications for its operation and token issuance.
  • Market and Wallets: Insights into Aleph Zero’s market presence, including exchanges and wallet statistics.

Key Takeaways

Conclusion

The economy of Aleph Zero showcases a thoughtful approach to creating a sustainable and growing blockchain ecosystem. Through strategic token allocation Aleph Zero is poised to contribute significantly to the blockchain landscape. As the platform evolves, its economic strategies will likely serve as a benchmark for future blockchain projects.

If you are interested in utilizing Aleph Zero, Solana or other blockchain-based solutions for your project, please reach out to contact@nextrope.com

FAQ

How is the AZERO token distribution structured?

  • The distribution is designed to support the ecosystem's growth, with allocations for stakeholders and strategic initiatives.

What role does inflation play in the Aleph Zero ecosystem?

  • Inflation is used strategically to incentivize network participation and ensure sustainability.

What is the utility of AZERO tokens within the Aleph Zero ecosystem?

  • AZERO tokens power the Aleph Zero ecosystem (validator node staking, DEX swap fees, collateral for wrapped assets in Liminal, fees for asset-wrapping and bridging on Liminal, network fees, and governance voting processes).

How does Aleph Zero handle inflation and its impact on the ecosystem?

  • Aleph Zero introduces a systematic annual increase of 30 million AZERO tokens to encourage ecosystem growth, incentivize participation, fund the ecosystem treasury, and support long-term holding by distributing inflation rewards mainly to stakers, aiming to balance growth with token value maintenance.

Aleph Zero vs Solana: A Comparative Analysis

Karolina

22 Feb 2024
Aleph Zero vs Solana: A Comparative Analysis

Blockchain ensures unparalleled security, transparency, and efficiency across various sectors. Within this innovative landscape, Aleph Zero and Solana have carved their niches, emerging as leading blockchain platforms. This article delves into a comparative analysis 'Aleph Zero vs Solana', aiming to illuminate their distinct features, technological advancements, and potential applications.

Understanding the Basics

Aleph Zero

ALEPH ZERO WHITEPAPER

  • Brief History and Development: Originating from a vision to enhance privacy and scalability in blockchain, Aleph Zero quickly ascended as a notable contender. Its development team focused on creating a platform that merges traditional blockchain benefits with advanced privacy features.
  • Core Technology and Consensus Mechanism: At its core, Aleph Zero utilizes a Directed Acyclic Graph (DAG) combined with a unique consensus algorithm. This innovative approach not only ensures transactions are processed swiftly but also maintains high security and privacy standards.

Solana

SOLANA WHITEPAPER

  • Brief History and Development: Solana was born from the ambition to solve the blockchain trilemma: achieving scalability, security, and decentralization without compromise. Its rapid growth is attributed to its ability to cater to high-demand applications, from decentralized finance (DeFi) to non-fungible tokens (NFTs).
  • Core Technology and Consensus Mechanism: Solana introduces the Proof of History (PoH) consensus mechanism, a groundbreaking innovation that allows for timestamping transactions in a sequential manner. This, combined with its underlying blockchain structure, enables Solana to process transactions at lightning speeds, setting new standards for efficiency in the blockchain domain.

The journeys of Aleph Zero and Solana, though distinct, converge on a shared goal: to redefine the capabilities of blockchain technology. Through their innovative approaches to consensus mechanisms and core technologies, both platforms offer unique solutions to the challenges facing traditional and digital markets today. Their contributions to the blockchain landscape not only highlight their individual strengths but also underscore the diverse potential of blockchain technology as a whole.

MUST READ: "What is Aleph Zero - Key Features"

Key Features Comparison - Aleph Zero vs Solana

Scalability

  • Aleph Zero: Tackles scalability through its DAG-based consensus, allowing parallel transactions that increase scalability.
  • Solana: Achieves high scalability with its PoH consensus, efficiently handling thousands of transactions per second (TPS).

Transaction Speed and Throughput

  • Aleph Zero: Boasts fast transaction speeds due to its lightweight consensus mechanism, aiming for efficiency without sacrificing security.
  • Solana: Known for its exceptional speed, Solana processes up to 65,000 TPS, setting a benchmark in blockchain throughput.

Fees

  • Aleph Zero: Offers low transaction fees, making it attractive for both high-volume transactions and micro-transactions.
  • Solana: Despite its high throughput, Solana maintains competitively low fees, further enhancing its appeal for developers and users alike.

Smart Contracts and DApp Development

  • Aleph Zero: Supports smart contracts and DApp development, focusing on privacy and scalability within its ecosystem.
  • Solana: Provides robust support for DApps and smart contracts, powered by its high-speed blockchain, ideal for complex applications.
Aleph Zero vs Solana

Use Cases - Aleph Zero vs Solana

Aleph Zero

  • Best Suited For: Privacy-focused applications, financial services requiring high security, and scalable enterprise solutions.

Solana

  • Shines In: High-frequency trading platforms, decentralized finance (DeFi) applications, and NFT marketplaces demanding fast transactions.

Performance Analysis

Network Speed and Efficiency

  • Aleph Zero: Demonstrates efficiency with its innovative consensus, ensuring quick and secure transactions.
  • Solana: Outpaces many with its network speed, attributed to the PoH mechanism, ensuring both rapid and consistent transaction processing.

Scalability Solutions

  • Aleph Zero: Continuously explores advancements in DAG technology to enhance its scalability solutions.
  • Solana: Plans to further optimize its infrastructure, ensuring it remains scalable amidst growing demand.

Security Aspects

Consensus Mechanisms

  • Aleph Zero: Its unique consensus mechanism prioritizes security, aiming to prevent attacks while maintaining speed.
  • Solana: Solana's PoH consensus is designed with security in mind, preventing double-spending and ensuring transaction integrity.

Known Vulnerabilities and Responses

  • Aleph Zero: Responds to vulnerabilities with timely updates, emphasizing its commitment to security and privacy.
  • Solana: Has faced challenges, including network congestions and DDoS attacks, but has responded with enhancements to its network resilience.

Through this comparative analysis, it becomes evident that Aleph Zero and Solana each bring distinctive strengths to the blockchain arena. Their approaches to scalability, transaction speed, fees, and smart contract capabilities cater to different needs within the blockchain ecosystem. Moreover, their targeted use cases and ongoing efforts to enhance performance and security underscore the dynamic and evolving nature of blockchain technology.

Conclusion

In conclusion, the comparative analysis between Aleph Zero vs Solana reveals two highly innovative and efficient blockchain platforms, each with its unique strengths. Aleph Zero focuses on privacy and scalability, making it ideal for applications requiring robust security measures. Solana, on the other hand, excels in transaction speed and throughput, positioning it as a top choice for high-frequency trading and DeFi applications.

If you are interested in utilizing Aleph Zero, Solana or other blockchain-based solutions for your project, please reach out to contact@nextrope.com

FAQ

What are the main differences between Aleph Zero and Solana's consensus mechanisms?

  • Aleph Zero uses a Directed Acyclic Graph (DAG) combined with a unique consensus algorithm for high security and privacy, while Solana employs Proof of History (PoH) for high-speed transaction processing.

How do Aleph Zero and Solana compare in terms of transaction speed and scalability?

  • Aleph Zero focuses on scalability with its DAG-based consensus allowing parallel transactions, while Solana is known for its exceptional speed, processing up to 65,000 transactions per second.

What are the targeted use cases for Aleph Zero and Solana?

  • Aleph Zero is best suited for privacy-focused applications and scalable enterprise solutions, whereas Solana excels in high-frequency trading platforms, decentralized finance (DeFi) applications, and NFT marketplaces.

How does the developer community size and support compare between Aleph Zero and Solana?

  • Readers might be curious about the size of the developer community, availability of development tools, and the level of support provided to developers in both ecosystems.

What are the environmental impacts of Aleph Zero vs. Solana?

  • Given increasing concerns about sustainability, potential users may question the energy consumption and environmental footprint of both blockchain platforms.