As always It’s my pleasure to welcome you to this week’s crypto review where we take an in-depth look at some of the latest and most talked about projects in the space. This week we’ll be stepping back into that hot Defi space to review a new project called Aleph.im.
Aleph.im (ALEPH) is a cross-blockchain layer-2 network built on the NULS ecosystem and focused on decentralized applications and their related infrastructure (storage, computing servers, security). Where the projects focus is to decentralize and revolutionize the web and cloud services. Many of the current blockchain-related technologies cannot scale to the levels needed for large applications (social networks, web apps, IoT providers, etc) used on a daily basis. Aleph intends to provide a solution to these issues by offering fast single cross-technologies and cross-chain solutions on a decentralized and reliable ecosystem.
Aleph launched their mainnet on June 4th, 2019 with their website currently operating off that network. Aleph is building this second layer solution by adding an extra layer of truth to the existing smart contract economy via “agents” running API servers. Agents will commit the messages on the blockchain for the users and be incentivized to do so by the network’s token. They will then spend the native chain asset and receive the token in exchange for their service. Then that agent’s work will be verified by the previous agent, validating the transaction and increasing the agents credit score. This will allow for free and instant interaction with dapps for efficient batched inserts on the blockchain. The hashes of the data are stored on-chain but the data itself is stored encrypted or not on IPFS. Posting is done either via API by the dapps to an API node, or by IPFS if available on the browser. Rewards are issued for each signed message, storage of application data and locking tokens into the underlying NULS chain. Of those rewards, a part will come from monetary creation, and apart from dApp owner incentive to focus on the use of their apps and their user fees. Meaning Aleph.im operates as a cloud storage service for existing blockchains. Current underlying chains able to operate on the network are NULS, Binance, Bitcoin, Ethereum, NEO, and EOS. In future upgrades, the Aleph protocol will look to add ID services for defi verification systems.
Earlier this year Aleph absorbed the existing codebase from the now-defunct project PikcioChain (PKC/PKX). The platform offered a private and customized search engine, a decentralized peer-to-peer chat, and a wallet that operated with smart contracts on ETH, later integrated to the NEO blockchain. After falling victim to attacks and many token changes as a result the registered company PikcioAG shut down in early February 2020 after being delisted that same month. The team at Pikcio then decided to dedicate their remaining time and effort to collaborate and transfer its technology into the hands of the Aleph.im network team. Concluding with Aleph conducting a token swap ratio of 1 ALEPH for every 5 PKX/PKC NEP-5 tokens on the NEO blockchain.
ALEPH was originally issued as an NRC-20 token on the NULS blockchain. Started in August 2019, Aleph and NULS jointly completed testing of a new staking service, staked coin output (SCO). This means there was no IEO or ICO for ALEPH tokens and the only way anyone was able to get them was by staking the required 2,000 NULS tokens at the time. The staker would then simply delegate their node to become a consensus node for ALEPH, and allow them to receive ALEPH tokens instead of NULS as their reward. This took a huge amount of faith by stakers as the Aleph.im whitepaper wouldn’t even be released until November 2019.
ALEPH has gone through a number of changes since it’s initial tokenomics were announced. Originally the token supply started at one billion ALEPH with 150M allocated for airdrop, marketing & bounties, 150M for proof of credit mining, 350M for contributors, and a 350M reserve. After some extra tokens (50M) outside of the 1B original cap found their way into the ecosystem, the tokenomics were updated a few more times. As of July 31st, 2020 the token supply changed to 500M ALEPH. In order to facilitate the supply reduction, changes were made to the current token amounts in 5 of the 6 token pools with the incentives pool being the only one left untouched. Instead, they will be reducing the remaining pools as evenly as possible to get a 5-year unlocking schedule. This makes the current token supply breakdown 50M for the innovation pool, 60M in the marketing pool, 150M for the company pool, 120M for business development pool, the 100M original tokens left in the incentive pool, and 20M remaining tokens for the NULS Foundation pool.
Aleph.im’s SCO testing generated more than 4 million in staked NULS across four nodes within 24 hours. Over the next several months, Aleph.im generated 110,000 NULS rewards. So far, Aleph.Im has minted almost 2% of its 50M token supply. NULS has airdropped 2.7% of the circulating Aleph tokens to participants in the POCM program. With tokens currently available as NRC-20s on NULS, NEP-5s on NEO, and ERC-20s on Ethereum. It’s worth noting that the old supply of 1B is still reflected in all these contracts and the team is working to update them.
The team consists of Founder Jonathan Schemoul who came directly from the NULS blockchain as a community developer with over a decade of experience with python based frameworks. Senior UX/UI Designer Claudio Pascariello previously served as a UI/UX designer for NULS as part of the Code Craft Council community. While it’s unclear his full role, it appears that Darryl Heller serves in a security position having previously worked at the US Dept of State and others as a security specialist. Both Andrew Stock and Roger Sutton work with the team to manage and operate nodes via their master node hosting platform Node Forge.
Last week the team announced an official partnership with the Serum Foundation to produce Project Serum, a decentralized derivatives exchange with trustless cross-chain trading powered by FTX and Alameda Research. Serum is being designed as the first DEX to meet the strict performance and reliability expectations of traditional cryptocurrency exchange users. With Aleph.im having architected their network to decentralize the cloud to allow dApps and DeFI to deliver a user experience comparable to traditional web applications. With FTX and Alameda Research contributing significant resources to Aleph.im in order to ensure the continuing success of the network and Project Serum.
Lightning network and other programming solutions that operate “on top” of existing blockchains promise big strides in scalability, interoperability, and functionality. Something we’ve been hearing for years but hasn’t seen many real-world applications of. It’s hard to say when these second layer solutions will be operable but safe to say that Aleph is in the back of the pack. With well-known projects like Trinity Network, Raiden Network, Celer Network, and Matic Network incorporating plasma, sharding, and other new technologies. We’re sitting on the verge of second layer solution hype and for good reason. These technologies will undoubtedly take us to the next level and enable near-instant transactions without sacrificing the security features currently like block times and size.
My first concern has to do with the team or lack of currently. I understand the project started as a grassroots venture by Jonathan last year. However, during my research, it’s become obvious that he’s still doing the majority of work and community management by himself. I hope that with this new partnership he gets some of the much-needed support to build out the platform to its full potential.
Tokens are a bit of an issue at the moment having contracts operating across three separate networks. This creates a lot of confusion when it comes to retaining data on the actual supply and how much of it is currently circulating. Like with all contracts still reflecting a 1B total supply and waiting to be updated, the market cap of the project doesn’t reflect the actual ecosystem or it’s current value. Given the 500M tokens locked into a wallet on the ETH contract, we still have a major distribution issue. As it stands the six pools mentioned earlier in tokenomics hold 98% of all tokens in circulation.
Lastly I’m concerned with using PikcioChain in any part of the project. With attack vectors already exploited by hackers previously what’s to say anything has changed? In my experiences, the only time a well-funded project throws in the towel is when they find issues in the codebase that can not be fixed properly without creating other issues. Most of which have to do with token supply and issuance. The fact that Aleph has already had unexpected tokens show up in the supply and had to rework their tokenomics three times now leads me to believe just that. Having previously worked as a community support engineer for a project that suffered this exact fate, this carries many of the same warning signs. Token holders in a failed project decide to become developers so they don’t lose their investment. With good intentions to make it the working and useful platform, it was intended to be. But, due to unforeseen issues with the code they spend years of work only to find out that the code is bad and not viable. In the real world, intentions matter less than actual outcomes.
Aleph in its current state is more hype than working product. That changed slightly with the support of their new partnership and having a more specific direction to build towards. But, these things take time and I don’t expect anything significant anytime soon from the project. Making this a purely speculative position in any portfolio. That’s not to say you should take Aleph off your radar yet. Given a little more time and additions to the team I can see more potential in terms of what they’re looking to accomplish and if you happen to be already participating in the NULS network, then there’s little downside to delegating a staking node to the project in anticipation of Serum’s future release.
Until next time, remember that the only guarantee is BTC. So keep stacking that Satoshi.