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ILCoin - Interview with a founder about the perspective of DeFi market

ILCoin - Interview with a founder about the perspective of DeFi market
  1. Lately, Everyone seems to be talking about the high fees on the Ethereum network. We all know that DeFi is the cause, but given your technical background, can you offer us a better explanation as to why these fees are increasing so much?

I believe this question includes way more guesses than actual facts. Secondly, as I have said it several times before, I myself am not a developer. With that being said, I think the most significant problem is that miners in Ethereum have the opportunity to determine the fee of authentication. This raises fundamental questions with regard to how much it fits into the decentralized approach.

The value of DeFi tokens is getting higher and higher, and everybody wants their own slice of the pie. Every single token imparts a kind of extra “pressure” to the system. The value, in this respect, is only secondary, as a worthless token takes up room on the Ethereum network just like the valuable ones.

Miners are a group with their own values. It is clear that it was a tremendous effort by the miners in terms of financial contribution and time to make the Ethereum we know today work. This will obviously create opposition between the future envisioned by Vitalik and the interests of the miners. In my opinion, Vitalik analyzes numerous issues on a very idealistic basis, and I think the approach he uses to envision the future of Ethereum is, in many ways, impractical.

 

  1. One of ILCoin’s core principles is to keep the fees as low as possible. How are you planning to achieve this in the long term?

As we have solved the scalability problem and are now capable of transferring large amounts of data through the network, our transaction cost per unit is also substantially lower. Thanks to RIFT, we are able to handle way more TXs in one single block.

So, my answer would not be about how we are planning to achieve this in the long term but much rather about the fact that we have already solved this issue. Obviously, there aren’t enough transactions yet to truly make its effect perceptible for all, but I can assure everyone that ILCoin is the one that’s capable of achieving the lowest transaction fee among all the current blockchain solutions. The proof of this is the 5GB block that we managed to implement in November 2019.

However, our goals do not end with solving this problem. TX cost is just one thing. It is much more important for us to create something permanent when it comes to blockchain-based data storage. It is no secret that there are several elements to this problem that bring along immense challenges for companies dealing with blockchain development. The reason why implementing efficient, transparent, and safe data storage is tricky is that the individual areas are opposed to each other. In short, if you want a safe and secure blockchain, it might be at the expense of efficiency and transparency.

We are working on these problems, step by step, which results in a synergy that forges the pieces together, leading to maximum efficiency. I would not say that the ILCoin we know today is complete; however, I should also mention that thanks to the RIFT protocol and C2P, we are way ahead of most projects. No one else has been able to come up with a solution like RIFT, let alone anything that would come close to it. Hydra and Casper may be close, but we cannot really comment on them as they are not quite ready yet.

 

  1. The problem maround high fees is not new. Actually, I can recall a time when Vitalik Buterin was introducing Ethereum as a solution to Bitcoin’s high network fees. What do you think most of today’s protocols are doing wrong?

There are a number of ideas at the moment to reduce the transaction cost. All of the off-chain solutions promise to lower TX costs. Of course, we’ll need to look at the price we need to pay to have this, as most of the solutions that aim to create a faster system lose a lot of their safety when it comes to their operation. Double-spending is only one of the problems that characterize most solutions. In my opinion, fast synchronization is the biggest challenge.

To answer the question; the cause of the problem is much simpler. At the moment, everyone must face the limitations of the network, which implies that many people are giving it their best to find a solution that alleviates these limitations. Ethereum, Cardano, Tron, and EOS are all working on how they could reduce transaction costs with the help of a blockchain with faster and higher transfer capabilities. Increasing the block size or decreasing the block time is, in fact, meant to serve the same purpose. In practice, however, there are significant differences between the two.

We believe there are no big secrets. If we have a look at Casper, we can see that it is a solution quite similar to the RIFT Protocol; every two-layer solution is a kind of copy of the RIFT. The reason is, of course, that the integration of these protocols has not yet been possible because they have gotten stuck.

Synchronization carries the biggest challenge. It is not enough to transfer the data, as it also has to get synchronized, and this is the problem that many cannot overcome. So, my short answer is that they are unable to cope with this problem and, therefore, cannot make the system more efficient, which would significantly reduce the TX costs for large amounts of transactions.

  1. ILCoin’s network is just beginning to see user growth and it’s rapidly increasing with the Age of ILCoin game, the Telegram bot, and many other dApps joining the network. How are you planning to maintain your network scalability?

Thanks to the RIFT Protocol, ILCoin possesses the best scalability capabilities of any of the current systems. We created a 5GB block last November, which, of course, is only the beginning. With DCB, the ILCoin network will have the potential that will allow us to use the blockchain technology with a completely different approach than what we have been used to so far.

DCB is going to be a pioneer not only in terms of data storage but also in the use of smart contracts. Our objective is to create a system that can serve as a basis for everything that Ethereum has promised. It is not a coincidence that we are developing our modular smart contract system for the Solidity programming language. If Ethereum is the largest network in the world, then ILCoin will be the one who will contribute the most to its success.

  1. While Bitcoin is processing blocks every 10 minutes, Ethereum is doing it every 10 seconds. However, the Bitcoin block can fit 1MB of data, while Ethereum’s can only fit 20 to 30kb. Can you explain how the block size influences the fees and transaction times?

The higher the network capacity, the lower the specific unit cost of a TX will be. Currently, the cost of transferring 10,000,000 ILCoins through the ILCoin network is 0.0124 ILCoin. You may then be asking yourself, “Why is it so low?” Well, the answer is pretty simple. Namely, because of the RIFT protocol. I would rather not get into a lengthy explanation of all this, as all the necessary material regarding the matter is available on the website. Overall, we can conclude that using the ILCoin network costs almost nothing. However, it also has its own challenges, but I want to reassure everyone that we are working on them.

 

  1. ILCoin’s network has already proven itself by successfully mining a 5GB block. How did you manage to reach such an achievement?

First and foremost, everyone should have a look at the downloadable documents on the website that are related to the topic. We have fundamentally reconsidered how blockchain works and have created a two-layer solution where neither network limitations nor synchronization problems can prevent us from transferring a large amount of data through the network.

We essentially solved this problem back in 2018, which means that the idea of the RIFT was not born in 2019. However, the 5GB block was implemented in November 2019 due to the fact that we were also working on another solution in the year before, which resulted in the creation of the Command Chain Protocol (C2P).

 

  1. Given that the network fees are directly proportional to the size of the transaction, what can we do about on-chain storage? Can we successfully store data on-chain?

This is a complex question that cannot be answered with a single yes or no. I have touched on this subject previously, and in my opinion, these questions cannot be examined fully at the present. On-chain data storage is the future and should be treated accordingly, just like we treated SpaceX, Tesla, Netflix, or any other pioneering businesses.

As for the second question, though, the answer would be: Yes, but not just yet. To make that happen, we have to solve a number of problems. In theory, we know how to, and we even possess some elements of the practical part, but we also need to be able to code it. We also know that synchronization carries one of the most significant challenges. In addition, one of the other big challenges is data size, which no one can really do anything about at the moment.

However, it should also be mentioned that not all data calls for on-chain storage. There are certain items that can be handled on an off-chain basis, as the degree of transparency regarding the data is not so important that the data itself must be stored on a blockchain. It is enough for the records of a lot of data to be stored on the blockchain, but I wouldn’t go into details because this question is highly subjective, and we have not yet reached the point where we could discuss this question on its merits.

 

  1. ILCoin offers unique on-chain data storage features essential to building many types of dApps. How will this affect the fees of the transactions containing large files?

In this form, it is not entirely true. As I have mentioned in the previous question, we are not saying that all dApps would need an on-chain system. This must be treated in a diversified manner. Needless to say, on-chain data storage comes with serious costs.

The whole question must be turned upside down in order to examine the possibilities on their merits. I think we first need to decide how much the data is worth. When it comes to high-value transactions, the value of the data is high, too. Everyone wants this data to be in safe hands, which obviously means that the on-chain based approach would be relevant in this case. It is actually that simple, in theory. In practice, however, everything is different. There are calculations, but I believe that when we get ready with the beta version of DCB, we’ll be able to have a worthwhile conversation on the matter.

 

  1. Everyone’s looking toward the release of Ethereum 2.0 as a solution to all of our fee problems. Some say that ETH 2.0 and its sharding implementation won’t truly solve the problems of the Ethereum network. Do you agree with them?

I’m not exactly sure how I’m supposed to interpret other people’s thoughts in this regard, but I would opt to say that sharding is not a stable solution. I also believe that the hybrid system, which Ethereum 2.0 represents, has many possible flaws and weaknesses.

Everyone can see that the development is not going the way many would have anticipated. I would refrain from being sarcastic, but we hear every month that ETH 2.0 is almost ready, and only the final touches are left to be done. How long have we been hearing this? Well, yes, it’s been a very long time…

 

  1. ILCoin is using the RIFT protocol, which is implementing a solution similar to sharding. Can you explain how this is different from other sharing solutions and what its biggest advantage is?

I think you cannot compare the RIFT protocol to sharding simply because sharding does not run on the chain, while RIFT does. I believe that this is a significant difference between the two. In the case of sharding, the nodes communicate with each other; the RIFT protocol works differently and is more secure. However, I would like to add that the current changes made in sharding follow RIFT’s solution. Consequently, I would turn the question around and say that RIFT is what others are trying to copy simply because RIFT works.

Besides, we do not have to overcome any double-spending difficulties like sharding does. The communication that the RIFT protocol uses is completely different and way more efficient. It’s much simpler! You just have to read the Blue Paper and, I think, it will show very clearly why our two-layer solution works. And for those who don’t believe it, I suggest they download a QT wallet and have a look at how our 310028 block does the synchronization.

 

  1. Thank you for taking the time to answer our questions! I’d like to ask you one more: what’s your advice for all those who are spending up to $100 in fees for one single transaction on Ethereum?

Many of Ethereum’s followers look at Ethereum as religious people look at their religion. They have strong faith, and facts don’t really matter much to them. Undoubtedly, Ethereum is a project of great value that did a tremendous job to help us acquire the knowledge we possess today regarding blockchain technology. However, Ethereum’s real technological value, in my opinion, is much less than its potential for marketing and business utilization.

I don’t think that I would be the right person to give advice about a matter that, when looked at rationally, shows self-contradiction. Ethereum “conquered the world” by being much more efficient than Bitcoin. Granted, Bitcoin does not have any smart contracts, but in what other areas is it more efficient? Well, I will leave everyone at the liberty of answering this question on their own…

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