As the ICO Alert team has joined the IOST ecosystem, we’ve been constantly asked, “Why IOST?”. It’s a good question, and a valuable one, whether you’re an investor, developer or enthusiast. There are a variety of blockchain projects out there now that allow developers to build applications and other valuable technologies. While price decline has been the leading headline in 2018, if you ask anyone in the cryptocurrency space, they’ll tell you its what is going on behind the scenes that is so exciting. Every year it seems that the talent and resources behind cryptocurrency and blockchain technologies grows, and 2018 is no exception (evidenced by the Top 40 Blockchain Influencers of 2018 that we shared on icoalert.com). So, when looking at IOST I break down my conviction for this project in two main categories: User-focus and Inclusion.
Talk to any startup trying to solve the “chicken-and-the-egg” problem for the creation of a network of some kind and they’ll tell you that the biggest challenge is building a sizable, loyal user-base. Whether you’re selling clothes or building a new social media platform, your user base is generally what brings you exponential value in today’s world. Next, talk to any cryptocurrency industry veteran or project founder and they’ll tell you that they’re trying to bring this new technology to a mainstream audience in some way. The problem of growing a network exists for both parties in this example, especially when their actions and decisions don’t align with their goals. If you manufacture your shirts in a way that allows your distributors to pack and ship them easily it doesn’t necessarily do anything for the end-user, and may even harm the end-user’s experience. If you develop your protocol quickly for your private or public investor base, with faulty governance models or you don’t account for scalability, there’s a good chance the end user is going to end up paying for it down the road.
You see a lack of user-focus and actions that don’t follow stated goals in other protocols who don’t build their technologies in a way that benefit the end-user. While other protocols run into issues with scalability, usability and governance, IOST solves these problems by focusing on you, the user. For example: by eliminating a dynamic resource allocation; lowering the threshold needed to run a node; allowing virtually any node to validate transactions; and by offering fair staking rewards to users who stake their tokens to vote for nodes, IOST is incentivizing the end-user to interact with its technologies. As a user, you can earn roughly 20% every year on the tokens you stake to the IOST network! The mantra of “If you build it, they will come” is no longer viable in this industry. There is too much competition from big corporates and teams and technologies need to have a user-focus underlying every decision if they expect to compete for engagement.
If you look at IOST thus far, pre-mainnet, they have already solidified themself as the leading platform for application layer projects with the success of two applications: Berminal and Bermi. In a tweet at the beginning of the new year, the Berm team talked about the growth of these two applications during what has been one of the worst six month periods for adoption since the Mt. Gox hack. With two million monthly visitors in December, over one million Bitcoin price predictions, 50,000 daily active users and over 600,000 Berm ERC-20 token accounts created, Berminal leads the pack for application layer adoption in the cryptocurrency industry. Berminal was even ranked as the number two ‘News App’ in all of Turkey at one point. (The second largest dApp has 8500 daily active users according to DappRadar, as of 1/30/19). As for Bermi, in a short two months after releasing this new short-form video platform, the number of downloads for Bermi exploded to over 500,000 in just 60 days. Perhaps more impressive, are the users themselves on Bermi, with a 50/50 breakdown of male vs. female users, most of whom are new to crypto. Post-mainnet the Berm team will have the ability to utilize the incentive models that IOST has developed and further leverage the entire IOST ecosystem for growth. Berm has been so successful because it focuses on solving key problems the user has when digesting news and content in the cryptocurrency industry. Users are not staking tokens to generate dividends on the Berminal app, they’re simply using the application because its valuable and useful. There is a user-focus from the team behind Berm and they’re being rewarded for it during the toughest of times for adoption in cryptocurrency. The entire IOST team has this focus on users and I expect we’ll continue to see the most promising application layer projects building on IOST.
I’ve made the argument before that the largest potential value creation for cryptocurrency and blockchain technology is in the crypto-networks that can be created. Chris Burniske breaks down crypto-networks vs. crypto-businesses quickly and expertly in this piece if you want to freshen up on the concept. At one point Chris states: “…instead of each country having its own redundant verticals of industry, a protocol (re: crypto-network) forms a horizontal-coordination-mechanism that participants from every country can tap into.” My translation: A crypto-network allows for decentralization among global participants to flourish, without having to worry about centralized governance models or middlemen stealing value, slowing efficiency, or hampering communication.
Decentralization is generally sought after, but doesn’t often come to fruition because the underlying technology and decisions made by the community / development teams are not aligned with the goals and needs of decentralization. There is a lack of inclusion in almost all of the top protocols today, and you see flawed incentive layers being exposed through a lack of real use or adoption of the technology. Proof-of-stake and delegated-proof-of-stake models determine or cap the amount of incentivized participants on the protocol layer by installing a “rich-only” hierarchy or arbitrary node limits that harm the end-user’s incentive to interact with the crypto-network. This leads to governance issues in the crypto-network when changes want to be made, often leading to various forks of the technology by the community or unhappy development team members. IOST on the other hand utilizes a new protocol titled “Proof-of-Believability” which doesn’t cap the number of nodes on the network and allows for all participants to be rewarded for their positive actions towards IOST. To start, 2.1 million IOST will allow you to be a node on the network (roughly $12,000 in today’s token price). For some context, you would need to collect over 86 million EOS votes (nearly $200 million) to run a top-21 EOS node, or nearly 29 million Lisk votes (over $30 million) to be considered a top-101 delegate. The IOST team has stated this number will only continue to decrease in order to incentivize community members, industry leaders and other crypto-focused businesses and participants to join the community. What IOST is doing is bringing together the power of the entire cryptocurrency community vs. building a closed-off community that rewards the largest token holders and “crypto-rich” who aren’t required to work towards the growth of the protocol to earn block producer rewards. IOST is utilizing its technology to connect and include the top minds, enthusiasts, projects and third party businesses from across the globe to participate in their crypto-network.
Will IOST be the only protocol in 2019 and beyond? No way – many others will grow and flourish with the help of active communities. If you look at IOST versus the incumbents though, its my opinion and ours at Sutler Ventures, that IOST is one of the first to have a chance to solve the real mainstream adoption of decentralized technologies. Myself and the whole SV team are going to do everything we can to help get it there!
Founding Partner, Sutler Ventures