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Project Spotlight: Elastos

Project Spotlight: Elastos

With the thousands of projects now in existence it is easy to get jaded by what appears to be yet another copycat project. Ethereum initially caught my interest because it was described as a ‘new decentralised internet’. Golem was another that immediately popped owing to its vision of becoming a “global, open source, decentralised supercomputer”. Those are large scale visions, regardless of how realistic they might be.

In the last 12 months there have been a multitude of projects which are at best theoretically partial upgrades on already existing cryptoassets so that new ideas are often quickly written off because there is already a competitor or because it just feels so similar. It is very easy to get jaded to such an extent that projects from certain regions begin to be lumped together as a collective, an issue that Chinese projects are particularly prone to.

Elastos is one of those projects that I disregarded without a thorough reading because it seemed to be yet another knock off project that offered little new. However, a little additional research reveals there is more to Elastos than meets the eye, although the muddled marketing makes it harder than most to properly grasp.

The sentence that grabbed my attention was that Elastos was aiming to "build a decentralised operating system". I had no idea what it meant, but it's cool. 

Explain Like I'm 5

Note: I normally don't do this and I actually wrote this section after completing the rest of the article. I have moved it to the top as I feel many will benefit from it as I have found Elastos to be a particularly difficult project to explain.

Elastos is an operating system, a decentralised internet and a Virtual Machine (VM) tool all wrapped up into one. It has its own operating system to run on devices without one (e.g. IoT devices), it aims to improve security by using the blockchain as an internet protocol rather than TCP/IP and it allows DApps to run across any operating system - including phones - using what is essentially a VM (called Elastos Runtime).

It works to improve security by assigning everything running on Elastos (including devices, digital assets, servers, DApps) their own ID or 'Universal Unique Identifier'. This is checked on startup by the Elastos blockchain and only following validation is an internet connection established. This aids prevent DDoS attacks. Furthermore as all DApps run on Runtime they do not touch the device, Elastos OS or any other DApp - they essentially operate in a vacuum.  

There are other projects which aim to do some parts of Elastos but there are none (to my knowledge) that are trying to combine it all as is attempting to do.  

What is it?

Let’s break down the whitepaper bit by bit, beginning with the introduction and vision:

  • Elastos aims to create a new kind of Internet, powered by blockchain technology: This is similar to many of the claims made about Ethereum and others.
  • Elastos wants to make digital assets scarce, identifiable and tradable. Property rights pave the way for wealth creation, and Elastos intends to build a new World Wide Web that respects those rights: Whilst there are other projects sharing this goal, I’m not sure any of the other platforms have made this as high a priority as Elastos have, given this in the opening paragraph of the whitepaper.
  • The goal is to create an Internet that allows users to access articles, movies and games directly, without going through a media player or another platform intermediary: Again, there are other projects aiming to let people do this but it is more DApps aiming to do this, not platforms. It is interesting that they aim to bypass other media players entirely here.
  • Elastos will be a platform for decentralized applications (Dapps) that runs on a peer-to-peer network with no centralized control: Nothing particularly new here.
  • People can access these Dapps via their mobile phones, without changing their operating system: This is interesting and the first part of the project which really stands out. One of the main issues with a lot of DApps is the inability to run them on mobile phones at present.
  • Elastos wants to create a new World Wide Web that is safer and smarter, and that can one day be known as the Internet of Wealth: Continuing the confused marketing theme, burying the vision (actually located at the end of the whitepaper) is an odd move and it is unclear what a smarter WWW might actually resemble.

So do you understand what Elastos’ differentiator is or really what it is trying to do? No, me neither. It seems to be similar to many other projects at this point, although the ability to run on any mobile phone is attractive. Let us continue.

 Section 2 opens with the perceived limitations of Ethereum based DApps which include storage/speed (no argument there), bugs (I don’t believe this to be an inherent flaw of Ethereum, just the sloppy work of those who code DApps), cost (whilst simple transactions are cheap, executing smart contracts can be expensive), junk data (all data published is stored forever, making the blockchain increasingly big) and security (Ethereum does not negate conventional attacks via a virus, middlemen etc).

The big issue they raise is that Ethereum (and by extension most competitors, Ethereum is merely the largest) runs smart contracts on the blockchain itself. Elastos claims to run DApps that are enabled by blockchain technology but do not run on the blockchain itself. They instead run on any OS – be it mobile or not. The paper goes on to explain that “Elastos runs applications on Elastos Runtime as opposed to on the already congested blockchain”.

Elastos on phone2.png

To aid this, everything is programmable in C++. Developers can code a DApp that can run across all devices - an attractive proposition. 

I still do not understand quite how this works at this stage, but at least it is still interesting.

What else should I know?                

Section 3 through 5 begins to get to the roots of Elastos. It is not just a blockchain internet, it is a blockchain powered operating system AND a blockchain powered internet. But what does this actually mean?

  1. Elastos Runtime, a component of the Elastos architecture, runs on the OS of customers’ mobile devices. Apps are free to run and their performance is comparable to existing mobile apps: This is an important point to note. Runtime would run on any device, would be immune to DDoS and virus attacks. This seems perfectly suited to enterprise usage where security is paramount. It is easiest to think of each Runtime instance as a Virtual Machine (VM). The point of Elastos is to check the integrity of each VM on the network. Much like if there is one malicious actor on the network the rest of the blockchain can remove said node from altering the chain, Elastos would be able to eliminate a malicious or infected VM
  2. Even when Elastos apps are running on operating systems such as iOS, Android and Windows, the local OS won’t be able to sabotage the property rights of digital assets: Security is provided by Elastos, not by the device OS
  3. Elastos OS prohibits direct process creation and does not allow direct interaction with TCP/IP, depending instead upon the system to automatically spawn and determine the location of local, proximate, and distant (or cloud-based) microservices: This is another important point. The point here is that Elastos aims to remove an internet connection as an attack vector
  4. Elastos supports traditional programming languages, making it relatively easy to write code. Elastos also supports popular programming frameworks: In contrast to other platforms, no new programming language to learn, an obvious benefit
  5. The Elastos public chain is clean and simple, and hidden from third-party applications and services: In contrast to Ethereum, where all DApps are on the main chain, Elastos will utilise sidechains for DApps to run on to keep the public chain quick (so won’t face the same scaling issues). There are downsides to this, however, which a future article will explore. The main chain is only used to check IDs of the devices on the network - a simple task and one that means the main chain won't need to scale

Elastos touts its advantages vs the competition as the following:

  • Bitcoin = Trustworthy Ledger
  • Ethereum = Trustworthy Ledger + Smart Contracts
  • Elastos = Trustworthy Ledger + Smart Contracts + Monetizable Dapps and Digital Assets

I’m not sure I agree with this, as Ethereum is capable of promoting monetizable DApps/non fungible digital assets (look at Publica or the numerous movie ICO’s for example), but the ID system built into Elastos is certainly different. 

However, I believe the potential differentiation of Elastos comes more from its architecture as Elastos provides an operating system, not a platform like competitors. Accordingly, DApps can run on all devices and OS’s, with security coming through Elastos Runtime (so less potential devices that can be exploited, something of particular importance with the rise of IoT). The blockchain aspect of Elastos is essentially being used to secure a network of virtual machines through the ID system. 

There are three further pertinent points worth noting about how the Elastos blockchain works.

First, it works in conjunction with Bitcoin using a process known as ‘merged mining’. What this essentially means is that two different cryptoassets can be mined simultaneously which enables less popular projects to benefits from the high hash power of projects such as Bitcoin. It is far harder for a malicious actor to take over the Bitcoin network than it would be a smaller project. The two blockchains remain independent at all time and neither chain gets bloated by the transactions from the other chain.

Second, as the image below shows, part of the Elastos offering is a range of services such as ID generation, token distribution, digital asset trading and payment systems. It also includes the side chains previously discussed on which DApps will run. The main utility of ELA comes back to this ID system as all IDs have to be purchased with ELA. If the system takes off, that will be a lot of IDs, given it includes all assets and instances (e.g. each song published as an Elastos digital asset would have an individual ID). 

Elastos architecture.png

Finally, the P2P network aspect of the project titled Elastos Carrier enables nodes to rent out their equipment, including computation and storage. This is again similar to other DApps (and how miners/nodes operate in terms of being rewarded for computing power) but is extended within Elastos. ELA holders also receive dividends in the form of ICO tokens hosted on Elastos.

20 pages into the whitepaper and I’m still not sure if I’m truly understanding it or just kidding myself -  but I am enjoying thinking about it.

One further point to note - the mainnet is already live and there are demonstrations of it working on iOS. This is not just a theoretical whitepaper. 

Partnerships

Partnerships bring about increases in cryptoasset prices in general, not because of the true value they bring (which is often very little) but because of the legitimacy they confer. The average investor does not understand the technology of each platform. I spend more time researching the space in general but I do not know how to code, meaning I am fundamentally unable to review a projects development. This is why people put faith in partnerships; they trust that the usually large and high valued company are able to do so.

Elastos has a number of fairly high profile relationships. Foxconn, the Taiwanese manufacturing juggernaut, invested $31m (¥ 200m) in the Elastos operating system in 2015. They have a collaboration agreement with SAIC Motor, China’s largest automotive manufacturer and Tesla’s partner in the country which sees Elastos “oversee development of communication security, identity authentication and data security solution”.

Elastos also announced a joint collaboration with ZAPYA, which claims to have 500m users, in March which will see the company build a DApp called ViewChain on Elastos. Whether or not this is just another ICO or something deeper (i.e. ZAPYA moving all their users onto Elastos) is unclear at present.

They also have angel investments from Bitmain (manufacturer of Bitcoin and other cryptoassets mining equipment), NEO (the 9th highest ranked project by market cap) and the likes of Huobi (a large exchange), although it should be noted that a lot of the Chinese projects are partnered with each other.

What issues does the project face?

The biggest issue should be clear by now; the project is either so ambitious or alternatively too convoluted that it is very hard to understand exactly what it is, where its advantages lie and what it is trying to achieve (alternatively I am just being dense). The whitepaper talks in great detail about a consumer facing digital rights platform when to me it looks more suited to be an IoT platform. Consumer facing digital rights would lead to a very long and hard road to adoption; enterprise IoT could be easier.

Furthermore, as in previous articles, I believe blockchains will ultimately struggle to scale but Elastos is not alone in this issue and sidechains will reduce the burden so I will not dwell too much on this point.

Financials

Elastos currently has a market cap of c. $160m at a price of c. $31. The circulating supply has recently been updated on CoinMarketCap to just 4.96m, a number which comes in at under expectations (a move which sent the price higher upon listing).

Elastos is likely undervalued at present owing to a lack of market awareness, project understanding and a lack of exchanges as it is solely listed on Huobi. I suspect it will end up being listed on more exchanges in the near future at which point I expect prices to begin to rise.

Conclusion

Elastos is one of the more difficult projects Ive reviewed and I apologise for the stunning lack of clarity I have brought to the table. It is not an idea where I can say with any degree of confidence that it will succeed or transform the DLT space, although the Runtime aspect seems perfectly suited to Enterprise/IoT. It suffers from an inability to succinctly explain the potential benefits (although I accept that elements may have been lost in the translation to English).

Despite this, there is something about it that makes me suspect it will be a $1bn+ project sooner rather than later. In a competitive marketplace Elastos manages to stand out as being worthy of consideration despite the numerous issues highlighted. It is at least implementing blockchain differently to other projects and is more than just another clone promising faster speeds and little else. 

Disclaimer: I hold no ELA currently but will likely purchase in the coming days. 

The biggest competitive advantage?

The biggest competitive advantage?

Project Spotlight: Particl

Project Spotlight: Particl