Blockchain is not accessible to all people in terms of its cost and difficulty in implementation. The POA Network has solved this issue, enabling users to build new DApps and issue tokens without any specific knowledge or skills. This is a real catch for small companies who are willing to implement blockchain in their businesses. Let’s consider all the benefits and disadvantages of this network in detail.
The Oracles Network and Its Main Features
The POA network is a really strong solution to the Ethereum blockchain scalability problem, which is based on the Proof of authority protocol provided by validators. Founders launched it in April 2017. There is a list of DApps that users have run on the POA network, including Ceremony, Governance, Validators, Ballots Stats, Governance Notifications, Bridge UI, and others. The most popular products built on the POA network are Token Wizard and Token Bridge.
Experts emphasize high speed, efficiency, flexibility to code, and protection against hacks and vulnerabilities among the most important advantages of the POA network compared to the Ethereum network. It allows the building of smart contracts while offering low fees to its users, and provides a high level of scalability and interoperability in blockchain networks. What made the founders of the network build a layer on top of the Ethereum network?
The Main Purpose
The founders realized that in order to build smart contracts on the Ethereum network, you need to have deep knowledge of blockchain and money to pay for this. What remains is to help small companies that don’t have the opportunity to devote significant funds to blockchain implementation. This is a real problem for small businesses who can’t keep up with the times and stay successful. For this purpose, developers created the POA network.
The POA Network serves as a hub for developing different types of blockchain projects. Experts in the blockchain sphere have developed this network. Every user can advise and vote.
Among the features provided by the POA Network, Applicature would like to mention the Parity bridge, which connects all Ethereum-compatible networks.
The main use case for this type of the crowdsale is to offload tokens after the event to another network. It can be a cheaper version of an Ethereum-compatible network. On the left side of the bridge, there is an Ethereum-compatible network, and on the right side of there is the main network. For instance, on the left side of the bridge, we have the Oracles ICO wizard, and on the right side, we have Ethereum Wallet. If we invest 1 token in the left side of the bridge, 1 token will be created on the right side of the bridge. And the multisig wallet will get an equal amount of ETH on the left side.
ICO Wizard is a tool for creating tokens compatible with the ERC20 standard and running crowdsales with ease. It’s a free, decentralized, easy-to-use DApp that allows you to launch a crowdsale campaign in five easy steps. For this, you need to create a name and ticket for your token. Then insert the percentage of sold tokens reserved for your team. You should think of different tiers of the crowdsale, such as ICO, pre-ICO, bounty campaign, airdrops campaign, and others. You can specify a wallet to which funds will be sent after each transaction. In addition, you can indicate when the crowdsale will start and when it will end, how many tokens users will get for 1 ETH, and supply.
You can also create a whitelist for your crowdsale. If you have a whitelist, only participants from the whitelist can purchase the token. You can also specify the number of tokens sold for participants from the whitelist. After these operations, the user will see a message that he/she needs to sign a certain number of transactions, and will see an individual Metamask window for each of them. ICO Wizard will create a crowdsale consisting of the number of tiers you have pointed out.
How the ICO Wizard Launches ICO
When you sign transactions, the ICO Wizard DApp builds a crowdsale contract ABI, and a constructor argues source programming code. This is all the information necessary to verify a smart contract, and also to audit it with third-party auditing companies or professionals. Usually, it takes around five to seven seconds to process one transaction on the Oracles testnet, and about 30 seconds on the mainnet. If you want to have 16 transactions processed on the mainnet, you need to wait for 8 minutes. It’s much faster than building smart contracts alone or adopting someone’s code.
The main advantage of the ICO Wizard DApp is that you don’t need to manually create a code using the Solidity language. After the processing of all payments, you will receive the information necessary for verifying your smart contracts. As a result, you have a crowdsale page, and anyone can invest in your ICO. After the finish of the crowdsale, users can move their tokens to the exchange and sell them.
How do “Authorities” Manage the Work in the Network?
The POA network gives to its participants all of the opportunities offered by Ethereum, but cheaper and faster. It allows you to create DApps with ease, and with much lower fees compared to Ethereum.
As mentioned earlier, the POA network is based on PoA consensus, which is an alternative option to the PoW and PoS protocol in which “authorities” play a very important role in the network. These are the individuals who form the core of the network, creating new blocks and making decisions via DApps. The main purpose is to provide users with a high level of security and to reach a greater efficiency.
Governance manages validators via smart contracts. They need to be residents of the U.S. To be a validator, you need to be a known individual whose information is in the public domain. The POA network differs significantly from other blockchain networks in its application of PoS consensus, which distributes rewards among users with a higher stake. The new consensus model allows rewards distribution among validators to occur honestly and evenly.
This approach is a critical step for blockchain adoption at the enterprise level, as all validators are known and legally bound to execute it. On the other side, it helps to prevent the creation of a real cryptocurrency due to the lack of confidentiality and decentralization.
The management of the network is absolutely transparent. The Identity at Stake model excludes anonymity. Validators must achieve a good reputation and prove their identity to have the right to run a node. Compared to the PoS consensus, in which every staker invests his/her stake to the distributed ledger to get a reward, here, every validator deposits privacy in order to gain the right to manage his/her node and verify transactions. Since everyone can track the activity of the “authorities” recorded to the blockchain, this stimulates them to manage their nodes securely. If one of the “authorities” is corrupted, the others become involved in the governance process to solve the problem.
Another important advantage of POA is the governance DApp, which provides validators with the right to add or exclude other validators. They can also increase or decrease the size of blocks and create soft/hard forks.
Validators can propose all of these improvements or decisions using ballots presented to other validators to vote. Before voting, validators discuss all the benefits and possible disadvantages of a proposal. This model provides a self-governing mechanism that allows the maintenance of justice within the POA network.
Initially, the “authorities” need to survive a test and meet all requirements on the Sokol testnet; only after verification will they have the right to validate blocks on the mainnet. They can vote using ballots and the voting DApp. Validators are successful if they receive a majority of votes. Governance can exclude validators if they don’t meet all requirements.
The governance process includes the authorities’ monitoring of each other. If a validator doesn’t take part in this process sufficiently, it can result in his/ her removal.
High Speed of Generating New Blocks
It takes around 5 seconds to create a new block, which is much faster than in the Ethereum network. Participants in the network don’t mine coins, as it is based on another consensus protocol.
In the POA network, around 1.5 million transactions are processed every day. As it’s faster than the Ethereum ecosystem, it provides developers with the opportunity to build new types of DApps that require a response rate from the distributed consensus.
The DApps that developers have built on the Ethereum network can be managed on the POA network, which provides a faster response time and greater capacity.
The POA network can be replicated according to its main strategy. Every clone of the network is called a “Clone Swarm”.
POA coins play a role of transaction fees and rewards appropriated for validators. Around 2.5 percent of tokens were issued as a reward for maintenance of the network in the first year of its life. A disinflation model lies at the heart of POA, and due to this model, the number of issued tokens will decrease every year. In terms of the main function of POA tokens, the more transactions are processed, the higher their value becomes.
Founders launched the POA ICO on November 17, 2017 and raised around U.S. $12,641,032 in one day. This is more than 100 percent of the amount they planned to raise. The hard cap is U.S. $12,600,000. During the ICO, the price of the POA token was U.S. $0,03, which was equal to 0.0002725938 ETH. In total, 252,460,800 tokens were issued, from which 70 percent were available for sale. The foundation got unsold tokens.
Advantages of the Oracles Network
- Multiple Oracles networks provide the opportunity to solve the blockchain scalability issue that has appeared in the Ethereum network. In the POA network, a new block is generated every 5 seconds, which is much faster than in the Ethereum network. This is very useful for building DApps.
- If the project reaches success, the value of the blockchains built on the POA network will be higher than the value of the network.
- As the building of various useful DApps provides users with a huge number of additional opportunities, it demonstrates that the team is very experienced in the blockchain sphere, and has gained credibility within their community.
Disadvantages of POA
- The main benefit of the POA network is the ability to generate new blocks quickly and provide a high level of scalability. These off-chain solutions enable the Ethereum network to scale, which can impact negatively on the popularity of POA.
- The POA token isn’t ERC-20 compatible, so it takes more time to list on cryptocurrency exchanges.
- The requirement for validators to be residents of the U.S. decreases the level of confidentiality.
- No consensus algorithm is ideal. PoA consensus is no exception. If the “authorities” decide to behave maliciously, they can do so, and no transparent system will be able to stop them.
The POA network is a serious step toward a horizontal scalability solution. It enables the building of new networks run by the same rules. PoA consensus provides users with a high level of transparency and safety as well as high-speed transactions at low cost. In the network, there are no miners or stakers, as in other networks. This enables the collective to distribute a reward among the “authorities” in an equal manner.
The POA network is a real catch for representatives of small businesses who want to create their own DApps and run ICOs on the blockchain, but don’t have sufficient knowledge or skills to build smart contracts. The POA network makes the process of blockchain implementation in business very easy and fast.
The project team members are great experts in the blockchain sphere and in the multifunctionality of the network.
It may be a good idea to hold the project’s tokens for a short time. On the other hand, the tokens will be neutral if you decide to hold them for a long time. Their value depends upon solving the scalability problems of the Ethereum network using POA network on-chain solutions. In this case, if the network doesn’t pay off, participants of the network can use tokens as a hedge.