Orbs Public Blockchain Analysis
■ The public blockchain that has potential to solve the shortcomings of Bitcoin, Ethereum, EOS blockchain(Costs, Speed, Efficiency)
■ Sound and well designed network incentive structure that promotes organic growth of the network ecosystem
■ One of the few authentic projects with start-up and venture spirit that is worth to watch for (top 1% of among over 3,000 ICOs between 2017 and 2018)
■ Actual pilot projects conducted with traditional corporations about enterprise use cases
A. Introduction
In order to understand the business model of Orbs and the positioning of the project, it is necessary to understand the development process of blockchain. Blockchain is one of the decentralized consensus algorithm technologies that first appeared in the world under the pseudonym of Satoshi Nakamoto during the financial crisis in 2009. Distributed consensus technologies using blockchain have been applied in technical ways such as Proof of Work (PoW), Proof of Stake (PoS), and Delegated Proof of Stake(DPoS) under the philosophical basis of Byzantine General Problem (BGP) and Byzantine Disability Allowance (BFT). Here, it can be said that BFT means that public networks (distributed blockchain) can preserve “trust” even though there are malicious subjects (nodes) that are “damaged trust.” Blockchain connects data recording information to blocks based on P2P-based decentralized arbitrary servers rather than specific central servers, making it difficult to change or manipulate data, and data itself is reliable. Therefore, the innovative meaning of “trust” presented by blockchain can be said to mean only when it is a blockchain (data connection) of a decentralized agreement (public).
Bitcoin
As a digital commodity that enables digital transactions between parties without the involvement of financial institutions in the P2P version, its characteristics and composition of interests appear to be similar to gold. Bitcoin’s blockchain is created and verified by the protocol of the agreed proof of work (PoW), and the miner who performs the act receives the corresponding compensation and dis-incentive, so the Bitcoin network remains in line with the agreed algorithm. Miners who need costs such as electricity, labor, and mining-buying will receive Bitcoin known to the public as mining compensation, and since only 21 million finite Bitcoin can exist, the value of Bitcoin in theory will have a gradual ascendance (but considering Bitcoin’s internal and external ecosystems). Because of this deflationary nature, it is sometimes likened to ‘digital gold’. Bitcoin has become a representative symbol of the blockchain’s “data reliability”, but the growing network of PoW’s consensus and defined algorithmic structure creates practical problems that limit cost, speed, and scalability (for reference, it accounted for about 1/5000 of global power usage as of January 2018).
Ethereum
Ethereum is a PoW-based blockchain mainly developed by Vitalik Buterin and other blockchain programmers(recently transition to PoS, which is a verification method by staking and delegation), and expands trustless natuere of Bitcoin by supporting Turing Completeness. This proved the concept of a Smart Contract. Smart Contracts can be seen as a new approach because they force programming code and make it difficult to manipulate the code. This is also the reason the public can have trust in the public ledger called transaction details (coding details) of the Ethereum network (Figure 1). Therefore, if the decentralization of the blockchain network is guaranteed, it can be seen that the reliability of certain coding actions (contracts) as the contract itself is guaranteed (Figure 2). This is because if the blockchain is properly designed, the blockchain acts as a notarization that cannot be manipulated by a third party.
Figure 1. Ethereum network’s transaction records
Figure 2. Concept of Smart Contract
Ethereum, which is evaluated as a second-generation blockchain technology, is faster than Bitcoin, and because of the functions of smart contracts, anyone could easily issue tokens. At the time of 2017 and 2018, more than 3,000 ICOs (blockchain project fundraising) were conducted, but in fact, it is judged that most of the projects are fraudulent or services that cannot be used for business purposes.
Ethereum proved the concept of ‘Smart Contract’, but it seems that it is difficult for the Ethereum network to be used for actual business purposes. This is believed to be due to the fact that many major blockchain developers had no business experience and focused only on the ideals and visions presented by blockchain technology. There is a fatal flaw in the design of Ethereum, and if one characteristics of blockchain network is prioritized, another characteristic must be compromised. This is known as the Blockchain Trilemma (Figure 3).
Figure 3. Blockchain Trilemma(Security, Scalabilitiy, Decentralization)
Decentralization
It refers to a structure that is not centralized, and the more decentralized (the more random nodes increase), the security of the corresponding blockchain network increases, but the network processing speed becomes slower due to the increased number of nodes. Representatively, there are Bitcoin and Ethereum. Since it is not centrally controlled, the block chain’s resistance to censorship increases. In the opposite case, there is Hyperledger, which specifies nodes and reduces the number of nodes, although the speed is fast.
Security
The more decentralized (the more nodes there are), the higher the security (difficulty in data and network manipulation/attack), but the slower the speed. Since the more nodes there are, the slower the network response speed, the inconvenience is from the user’s point of view of the service that will use the blockchain.
Scalability(Scalability/Speed/Performance)
Blockchain networks must be able to handle speed, cost, and network traffic even if they are used by real service users (end-users) in order to be widely used. Increasing speed and throughput traffic requires reducing the number of nodes (centralized network), which compromises the security of that network (because the number of nodes is small). The EOS network increased its speed and processing capacity by limiting the number of nodes to 21, but was criticized for its centralized network.
Case of CryptoKitty
Blockchain has the above mentioned Trilemma, and a well known example of scalability problem is the overload of the Ethereum network due to CryptoKitty (Ethereum based Dapp).
CryptoKitty (cat breeding and exchange game) is Ethereum’s representative dapp, and as the blockchain received explosive attention in 2017, CryptoKitty’s traffic was concentrated on the Ethereum network. As a result, there was a delay in the CryptoKitty service itself, and users could not use the service properly. In addition, the overload of the Ethereum network caused by CryptoKitty has resulted in an increase in the fee for Ethereum’s transaction. Ironically, the more users use the service, the more costly the public chain is affected Showed contradictions.
Figure 4. Ethereum network overload due to CryptoKitty (2017)
EOS
EOS is maintained by a network of 21 block producers, elected by all token holders. Since network consensus is reached based on the delegated stake, the technology of Delegated Proof of Stake (DPoS) is applied. Therefore, it is inevitably faster than PoW-based Bitcoin or PoW/PoS Ethereum. However, the number of nodes is so small that it is criticized for being centralized. In addition, since nodes are specified rather than arbitrary, unlike the characteristics of the blockchain, they are vulnerable to external attacks. Due to the attractiveness of speed, many Dapps use the EOS network, but the EOS network is considered to have a structural incentive flaw to be widely used.
EOS’s incentive structure defect and collusion of nodes
There was a suspicion that there is a possibility of collusion of nodes in this somewhat centralized network, and this is a state that has proven to be true. In addition, EOS is also rewarded with EOS tokens for the node’s block verification behavior, such as Bitcoin and Ethereum, but this compensation system has a fatal flaw. This is because nodes can deliberately overload the network (of course, if it makes money), which leads to a slowdown in the network and an increase in the EOS price/network cost. The cost of this increased cost is all the users who use the EOS network (Dapp and Dapp users). In fact, due to the overload and cost increase of the EOS network, many DApps using the EOS network have left the EOS blockchain, criticizing the intentional collusion of the EOS nodes.
‘Public’ vs ‘Private’ vs ‘Startup’ vs ‘Conglomerate’ type blockchain
The public (anyone can set the node) and private (only the selected node) mentioned earlier depends on how the node is configured. When you look at the news, you come across articles that a large company is launching a blockchain, which can be seen as fading when considering the meaning of blockchain. Because distributed ledgers were already used thousands of years ago (if you have to trust distributed ledgers, in fact, there is no big difference from centralized systems and may be rather inefficient), and the innovation provided by blockchain technology lies in a distributed public ledger that cannot be manipulated by third parties. This is because (distributed) permissionless/public notarized/consensual technology is meaningful. However, rather than saying that any one of the public (anybody can) or private (permitted) blockchains is good or bad, it is judged that it is appropriate to use the appropriate technology according to the purpose for using the blockchain and its purpose background.
B. ORBS Public Blockchain network:
The public blockchain to compensate for design flaws in existing blockchains(Ethereum, EOS)
Figure 5. Orbs public blockchain universe structure
As an incentive structure, delegators (incentivized to be rewarded for staking participation in Orbs network) and guardian (incentivized to be rewarded for proper node management) receive a certain amount of rewards only for the entrusted staking amounts, and validator(node operation reward) receives network usage fees. The basic structure is similar to EOS’s DPoS, but Orbs has a differentiation in network infrastructure design to solve the problems encountered by Bitcoin, Ethereum, and EOS(Orbs is not a hard forked form of Ethereum like most other blockchain projects, but it was custom developed).
1) A hybrid type of public chain that uses Ethereum as a base layer rather than Orbs’ own main-net for the network’s governance participation.
Orbs’ hybrid model is defined in two forms.
First, a composite chain as the second layer of Ethereum. Second, the separation of block producers (the user/enterprise) and block validators (validators of ORBS network).
Orbs will use Ethereum network to perform delegation(staking) despite it having its own mainnet. By notarizing Orbs’ delegated participation through Ethereum network, it can be seen that the reliability of Orbs network is strengthened because Orbs nodes do not have a room for node collusion. If delegation participation is made using only the Orbs mainnet without Ethereum, it can be seen as if an elector counting votes by oneself, and the reliability of the Orbs network is compromised.
Second, Orbs is divided into a block producer(company/user) and a block validator (Orbs validator). Therefore, companies that will use Orbs blockchain can create blocks (data inscription), but cannot verify blocks (hashing and blockchainization). Therefore, it is compared to a private blockchain that has control over the blockchain network. Therefore, private companies can enjoy advantages of blockchain (data transparency and permission-less ledger) through Orbs network without disclosing their sensitive data to outside audiences. This is expected to have an advantage over the business structural problems that private chains such as Hyperledger (IBM) have. In addition, in the case of private companies, if necessary, the block can be updated and corrected, but since the revision is recorded and disclosed through the blockchain, reliability and data transparency can be audited.
2) BAAS (Blockchain As a Service) as a ‘cloud server’ concept where efficient use of network’s resources are made possible through ‘virtualization’ and ‘subscription’
Orbs is a blockchain network that is designed with technologies of ‘separate use’ of the virtual chain and resources of the network, so that each chain (user’s virtual chain) does not affect one another’s network, yet at the same time providing the network with promised costs and speed. The agreed-upon services are guaranteed and provided by Orbs validator pool. Thus Orbs network design is fundamentally different than Bitcoin, Ethereum, or EOS (Figure 6).
Because nodes (validator) provide services agreed with users and use as much resources as the promised services, one can predict cost and quality of service. Through this, network overloads caused from use of a shared network and collusion of motivated network overloads (for the purpose of increasing cost, thus creating more revenue) of nodes can be prevented fundamentally.
Figure 7. Orbs resource use concepts
3) Helix Algorithm and Randomized Proof of Stake (RPoS)
Orbs is based on consensus of 21 nodes, but in the DPoS method, random node selection is added from a pool of 21 or more nodes. Therefore, it is possible to have node security at the level of PoW theoretically with the speed and low cost of 21 nodes.
Figure 8. Random-Stake Proof-of-Stake (RPoS) Concept Diagram Using Helix Algorithm
Orbs’ Value Proposition: Public Blockchain for actual businesses
Orbs is ‘Public Blockchain’ for businesses that aims for ‘profit’, not for the vision of decentralization or Dapp (Decentralized Application). There are three assumptions underneath the Orbs project.
a) Why Blockchain?
- Notarization of trust as a fair third party
b) Why is it permission-less?
- Proof of trust without bias and guaranteed with incentive model that aim for ‘maintaining the blockchain network’
c) Why is it public?
- Guaranteed transparency of data and algorithms that anyone can check
Orbs believes that by utilizing the ‘transparency’ of the data provided by properly working blockchain, profit-seeking companies can increase sales, reduce costs, or give additional competitiveness to existing business models or products based on trust. This is believed to be in line with the trust and transparency demanded by current century and the spirit of WEB3 (ownership of own data is managed by each individual, not by a company, and online privacy is protected).
Figure 9. Orb’s Value Proposition
C. Blockchain is ‘trust-notarization technology’
If you expand the concept of public key (public value), private key (private value), smart contract, and Ethereum’s transaction ledger, you can increase efficiency in many areas of business and society using blockchain. Blockchain is a protocol technology that not only solves problems only with technology but solves problems through new approach based on the technology. So in order to leverage blockchain and solve a problem, it is necessary for one to study and define the protocols for the interested stakeholders.
A few examples of the utility area of blockchain
1) Product transaction and asset movement
2) Distribution history tracking
3) Completeness of contracts and transactions
4) Digital ID and identity
5) Government digital license and permit
6) Issuance of local financial currency and digital gift certificates
7) Multilateral transaction settlement and business automation
8) digital voting
9) Product authentication
10) IoT security
11) Acting as a financial institution in a financially marginalized area
12) Transparency in use of funds based on public ledgers
13) Analysis of post-effects on the use of funds
14) Internet use without sharing sensitive information (WEB 3)
15) Other
Examples of applicable blockchain applications
- Example of notarization using Orbs’ sample application
The ownership of photos, documents, and objects can be notarized using the blockchain. For example, as soon as a photo is taken with a mobile phone, the key of the original photo can be extracted and uploaded to the blockchain, and the hash value can be uploaded to the blockchain along with the owner’s information. Since the photo itself is not uploaded here, it is possible to claim ownership of the photo while preserving data privacy using a blockchain. Through this, it seems possible to expand application to coping with photo theft, insurance accident certification, and classification of fake news (source verification).
Figure 10. Orbs photo notarization example
2) Wal-Mart’s Food Supply Chain Test Application Case
Wal-Mart took several days to find the source of the product in question every year when an accident such as food poisoning occurred due to food. However, by using distributed ledger technology to upload authenticity certificates for mango sold in the US and pork sold in China, a test project was conducted to pursue the trust of the food supply chain. In this way, in the case of mango, it was possible to reduce the effect of reducing the general product tracking of 7 days to 2.2 seconds, and in the case of pork in China, various elements of distrust could be resolved. As of 2019, distributed ledger technology was expanded to more than 25 products and 5 other suppliers, and it is expected to be applied to all products in the near future.
Figure 11. Examples of Orbs’ Trusted Supply Chain (Track and Trace) Solution
3) Post evaluation of digital ID cards and grants for refugees in international conflict zones
According to The UN Refugee Agency (UNHCR), millions of refugees occur every year in conflict areas such as the Middle East, South America and Africa. In these regions, it is difficult to verify the identity of refugees, and due to various irregularities in the region, it is difficult to evaluate whether international subsidies are being used properly. In these areas, it is possible to create a digital ID card and digital wallet by setting a unique key value using the refugee’s biometrics (biometrics such as fingerprints), and through this, support money can be distributed. It is expected to be able to effectively manage donations.
4) CBAN (Communications Business Automation Network) automatic settlement and automation of multi-party communication tasks
CBAN is an international telecommunications network consortium established by former major telecommunications companies in the belief that the distributed ledger technology of blockchain can increase the efficiency of the international telecommunications network supply chain. Telecommunications companies currently rely on passive methods when dealing with multilateral international communication tasks (such as global roaming), and can automate and automatically settle those parts using blockchain. This allows global telecommunications network companies to increase sales while reducing costs, and reduces the time spent on cost settlement and accounting with fast, instantaneous processing (Figure 12).
When establishing api-linked multilateral automation business systems using blockchain in various industries,Orbs seems to be an attractive public network provider compared to Hyperledger(private chain), Ethereum (price instability), and EOS (collusion, price instability). Orbs is the only public network among CBAN’s many technology partners.
Figure 12. Conceptual diagram of inter-operable communication settlement using blockchain technology
Figure 13. CBAN Partners
D. ORBS Team
As described above, the blockchain does not establish a business model or solve any problems with technology alone. Not only the technology of the blockchain, but also the material/psychological incentive structure to determine the behavior of the network stakeholders, business considerations for the economic sustainability of the blockchain network, corporates using blockchain technology, consortium between companies is essential to consider becuase it is a new method of protocol based technology that requires right definition of the code of conducts among stake holders. Blockchain is a new technology that is still in its infancy, and considering the characteristics of startup that will experience various trials and errors and new problems, it is reasonable that the composition of human resources is particularly important for the success of the business.
Orbs has four co-founders (Daniel Peled, Tal Col, Netta Korin and Uriel Peled) and Nadav Shemesh currently serves as CEO.
Daniel Peled
Since 2013, he has been in touch with Crypto and has a deep understanding and experience in the Crypto ecosystem, and is the first to conduct an ICO in Israel. Prior to Orbs, he founded and operated a fin-tech company related to simple payment called PayKey.
Tal Col
The founder of a mobile app called Appixia and the company was acquired by Wix.com. After the acquisition, he served as the general manager of mobile development at Wix.com, and later served as the general manager of blockchain-related technology development at Kin by Kik. Tal Col is an active contributor of open source in the React ecosystem and intends to lead the open source of blockchain.
Netta Korin
Prior to joining Orbs, served as Senior Advisor for Gen. Mordechai and Dr. Michael Oren on foreign affairs at Prime Minister’s Office
Uriel Peled
Prior to Orbs, the company founded Visualead, which was acquired by Alibaba.
Prior to joining Orbs, he was a senior advisor to Israeli Treasury Secretary Moshe Kahlon in the high-tech sector. He also began as an employee at Babylon Software and served as vice president.
Orbs’ Team
Most employees are composed of developers and most have experience in starting a business.
In order for a ‘blockchain’ project, a protocol-based new technology, to succeed, it requires funding (assuming it is protocol technology, at least 50 billion won for 6–7 years), technology, open source developer network, business power, and venture-based business spirit.
