Given the large number of blockchain projects that exist today, it can be difficult for young projects to stand out from their competitors. Ethereum wants to challenge a variety of projects and create a faster, safer, and more user-friendly platform on which to develop smart contracts and distributed applications (dApps). One of these competitors is Aeternity.
Aeternity is a blockchain platform with the vision of proposing an alternative to existing governance, economic and financial intermediaries. Simply put, one could also say that Aeternity, with its technology, wants to be a platform for new software solutions without intermediaries in (almost) all areas of everyday life. From a technological point of view, Aeternity presents itself on its medium blog post as follows:
Aeternity is a public, open-source, blockchain-based distributed computing and digital-asset platform that builds upon decentralized cryptographic P2P technology. The platform is open to anyone, anywhere in the world to use.
However, this description could also apply to a large number of other crypto currencies and smart contract platforms. However, Aeternity has big ambitions and does a lot to stand out with its features from the other competitors.
However, before we go into more detail, it is important to remember that Aeternity has no great ambitions to become a currency for daily use. The focus of Aeternity is rather on processing data via the blockchain platform. When Smart Contracts and dApps are executed, Aeternity (AE) serves more as a parallel means of payment.
The founder of Aeternity is Yanislaw Malahov, who calls himself the “Godfather of Ethereum” despite the competition with Ethereum. In a May 2015 medium post, Malahov also describes why he calls himself so and has published a chat course on how he inspired Vitalik Buterin to found Ethereum in its current form.
What problems does Aeternity solve?
Aeternity aims to solve the problems of scalability, data protection and transaction speed, especially with regard to Smart Contracts.
The central element which should solve these problems are the so-called “State Channels”. These are a technology for shifting transactions “off-chain”, i.e. processing them away from the rootchain.
At present, there are two solutions for shifting the transaction volume from the rootchain and thus relieving the latter. These are sidechains and state channels. State channels are not inventions of Aeternity, but are based on the Lightning Whitepaper by Joseph Poon and Thaddeus Dryja, published on 14 January 2016. But not only Bitcoin developed State Channels (with the Lightning Network), but also Ethereum can show a development with the Raiden Network.
The network of State Channels enables trustworthy exchange with everyone in the world, whereby the State Channels can be imagined as direct communication channels between two (or more) parties, which also make it possible to execute Smart Contracts apart from the Rootchain.
Since not every single piece of information transmitted over the communication channel has to be included in the block chain, on-chain transactions are minimized and ultimately the scalability of the entire platform is increased. The execution of off-chain transactions also has the additional advantage that the information remains private, since it is not written to the public block chain. Thus the State Channels provide more efficiency as well as privacy.
Another feature with which Aeternity wants to set itself apart from the competition are the so-called “oracles”. These should ensure that Aeternity can integrate real information, either from human or non-human sources, e.g. sensors, into the block chain. The data generated beyond the blockchain should be able to be used in Smart Contracts. It is conceivable that a Smart Contract is dependent on a condition whose fulfilment is measured by sensors (e.g. weather data) and written into the blockchain. If the condition is fulfilled, the Smart Contract is executed.
The third problem that Aeternity wants to address is the centralization of the network through the consensus algorithm. In the case of proof-of-work blockchains, there are concerns about the centralisation of mining by large mining companies. In the case of proof-of-stake blockchains, there are always critics who claim that the accumulation of wealth also leads to centralization. To avoid this problem, Aeternity has implemented a mixture of proof-of-work and delegated proof-of-stake.
The hybrid consensus mechanism works by using the Proof-of-Work (PoW) to review transactions and the Delegated Proof-of-Stake for Governance to secure the decision-making process in the network. The transactions in the Aeternity network function by means of the so-called “Cuckoo Cycle” algorithm, which is more energy-efficient than Bitcoin’s. The Cuckoo Cycle algorithm is used for the transactions in the Aeternity network. In addition, the Aeternity team has decided to rely on ASIC resistance to keep mining at GPU level for as long as possible. The “Cuckoo Cycle” was chosen because it is considered the most promising algorithm by the team to ensure that ASICs will not be developed in the near future.
However, the team also admits in a medium post that this will probably not always remain so. That is why Aeternity wants to take an offensive approach:
We believe a good way forward could be the development of open source ASIC designs so anyone can build ASICs.
An open source ASIC design is intended to enable users to design ASICs with commercially available components. This should significantly lower the entry barrier for new ASIC manufacturers, so that new players enter the market and centralisation by a few Miner manufacturers is prevented.
The Delegated Proof-of-Stake (PoS) is used for governance by delegated voting, weighted by the number of tokens each account has.
In most blockchain systems, entities or their addresses are addressed or identified by their hashes. This notation is far from user friendly. Aeternity has therefore developed a naming system that allows users to assign user-friendly identities and addresses.
Aeternity Virtual Machines
From a technical perspective, it is interesting to note that Aeternity supports multiple virtual machines: a High Level VM that enables fast and cost-effective Smart Contracts with fixed execution costs; a Functional Typed Warded VM that is used to efficiently and securely execute contracts in the Sophia functional language; and the Aeternity-Ethereum VM that executes Solidity Smart Contracts to provide an easy way to migrate Ethereum and more.
What are Aeternity Tokens (AE)?
Aeon is the native coin of the Aeternity Blockchain. Aeon is currently (as of November 2018) still an Ethereum-based ERC20 token. With the launch of the Mainnet, however, a migration to the Aeon-Coin will take place.
The basic functionality of the token is the voting right of the Delegated Proof-of-Stakes in order to participate in the further development of the project. In addition, it is also used for all system fees and Smart Contract processing.
Aeternity Mainnet Launch
The migration to the Aeternity Mainnet is to take place in four phases, each phase being followed by a hard fork. Phase 0 is the migration phase before the start of Mainnet. However, the start date has not yet been set (as of November 2018). The current schedule looks like the following:
- End of phase 1: February 2019
- End of Phase 2: May 2019
- End of Phase 3: After 2 September 2019 (Ethereum AE tokens will not become transferable)
After Phase 3, the migration process will change as the Smart Contract manages the expiring AE tokens and Ethereum AE tokens are no longer transferable. Users can continue to migrate their AE tokens unless they use a smart contract to manage them.
Bottom Line: Is Aeternity worth an investment?
Technically speaking, Aeternity could be one of Ethereum’s biggest challengers. However, Ethereum has an extremely strong developer community that is able to further develop Ethereum (using casper, sharding and plasma) in such a way that the current advantages of Aeternity are probably soon no longer advantages. Nevertheless, Aeternity is a project that will attract attention if successfully implemented, especially with the mainnet launch.
Last updated: 01/07/2019