Following a number of prototypes and proof of concept builds, the Kinesis team determined that the most effective and fit-for-purpose selection for a blockchain network for the kinesis currency suite was to use the Stellar network forked to form a bespoke blockchain network.
There was one defining objective that needed to be met with this choice, and this is the ability for Kinesis currencies to function as the high velocity, globally used currencies that form the basis for the Monetary System that Kinesis is pioneering. Stellar met these primary needs in a number of ways, both technical and algorithmic, but at the core of the decision lies 3 overarching reasons.
1. The speed of the Stellar network:
The one obvious influence on this is of course hardware. The hardware upon which a network is hosted of course will have a bearing on the processing capabilities, but there is no accurate measure of this influence on network speeds prior to it being used in a network the scale proposed by Kinesis. The need for extreme flexibility here has been addressed by Kinesis through sophisticated designs in Cloud Technology.
The other and more pertinent factor in network speed is, of course, its specific model of data propagation and cryptographic algorithm. In this regard, there have been a number of closely regulated tests performed on a number of blockchain networks. The outcomes of these give a good idea of the comparative average estimated speeds of the networks under load. The results of these tests place Stellar at the forefront of network speed, outstripping competitive networks not just marginally but by orders of magnitude.
In an interview with the blockchain-focused podcast Epicenter, Stellar founder Jed McCaleb suggested ~4000 transactions per second was within the capabilities of the Stellar network.
Following a number of experiments with stellar networks on various scaled hardware, the outcome of estimated speeds was between 3000 and 4000 transactions per second. At this stage, this remains an estimate but with higher speeds anticipated.
Compare these numbers to those obtained through experiments of competitor networks:
· Bitcoin’s 3.3 to 7 transactions per second, Bitcoin graphical statistics.
· Ethereum’s average of 15 transactions per second, Ethereum Transaction Chart, Etherscan, 2018
· VISA’s 1,736 average transactions per second at current volumes and 24,000 transactions per second actual capacity, VISA, Comparison to Visa,
These figures will make it clear why Stellar was the top choice for the Kinesis blockchain technology and the ability for the fork of this network to cater to the high velocity of a fully fledged currency.
2. Stellar Consensus Model versus Mining Model:
A key characteristic of the Kinesis and Stellar designs is that it does not implement the ‘mining’ model of blockchain like bitcoin and Ethereum do. The Stellar network utilises a purely Consensus model instead. The consensus model requires a specific number of nodes to reach consensus in order for a transaction to be persisted to the network, so transactions can only be propagated on the network if a number of nodes agree that they are authentic and comply with their calculations. This is quite different to the fact that extensive mining activities are required to propagate transactions in the Bitcoin or Ethereum models. This makes the propagation of new data to the network extremely costly to processing power and creates the possibility for run-away fees to do so. The Kinesis network also ensures that it is not possible for external parties to add false nodes to the network by ensuring that consensus is reached across trusted nodes only. Inauthentic nodes will simply be excluded from the process, ensuring that consensus can at all times be trusted.
3. Stellar Fee Accumulation Model:
The Kinesis monetary system offers unique yield-bearing characteristics. To achieve this the transaction fees in the cryptocurrency need to be collected transparently and managed centrally in the network.
In a mining model, the fees are allocated and earned by the miners who undertake the processing overhead of mining the data propagation, meaning that fees cannot be offered across a broader range of network participants.
Additionally, the currency demand incentivises mining by the fact that the fees are directly allocated to miners only, resulting in fees varying unpredictably and escalating rapidly in this uncontrolled model.
Where a mining model allocates transaction fees only to the miners, the stellar model utilised a consolidated fee accumulation approach across the entire network activity, and in this way, the fees can be accumulated for broad distribution to the participants of Kinesis.
Additionally, the fees in Stellar and hence Kinesis are linked linearly to the actual transactions and calculated accordingly in a static manner, not artificially manipulated by mining. In this way the Stellar model allows Kinesis to prevents the run-away effect that mining has on fees by attaching fees to transaction activity itself, so those who transact with the kinesis currency will have predictable, transparent, and exceedingly affordable fees attached to their activities.
The accumulation of fees in the Kinesis fork of Stellar is held securely in an off-chain account so that they remain secure until such time as they are distributed to the accounts of revenue earners. The fees accumulated, being part of the transparent blockchain processes, are visible ensuring that there is no way for them to be manipulated giving the network participants additional confidence in their revenue share.
Why Fork the network:
The final point to discuss is why the choice was made to create a bespoke blockchain network rather than use Stellar as it is. In the Kinesis currency designs, Kinesis itself is to form the underlying base currency in the blockchain system. To achieve this Kinesis blockchain needed to cater to a unique set of cryptocurrency characteristics.
Regarding the base currency, on the Stellar blockchain one transacts using Lumins as the base currency and fees would be accumulated in Lumins. In the Kinesis blockchain, one transacts using Kinesis itself as the base currency. Fees are accumulated in Kinesis, for distribution as Kinesis coins, into revenue earners’ Kinesis blockchain accounts.
The second important reason was to allow for the customisation of the fee mechanism to provide for a fee as a percentage of the transaction value. This is a custom feature of Kinesis and is one of the first blockchain networks to present this form of transaction fee calculation in the core network code. Again it supports the concepts inherent to the Kinesis system where velocity increases yield in the Kinesis currencies.
While there are a number of other factors that were assessed through a variety of proof of concept experiments that lead to the choice in Stellar and the decision to fork the network to form a bespoke Kinesis Blockchain, these above hold the highest importance in achieving the true currency characteristics of a globally inclusive, transparent, reliable and high-velocity Monetary System on offer by Kinesis.