Topics Altcoins
Bybit Learn
Bybit Learn
Aug 19, 2022

IOST: Tackling the Blockchain Trilemma with IOST's PoB

IOST is an ultra-fast and scalable blockchain that’s striving to meet all the basic requirements of a decentralized economy. Learn more about it in this article, and discover if IOST is something you want to invest in.

What Is IOST?

IOST is a blockchain system reputed to be much faster and more scalable than Ethereum, EOSIO and similar networks. It also lets developers use JavaScript to build DApps.

IOST was created because traditional blockchains are struggling to cope with the issue of scalability.

For instance, Ethereum, one of the oldest and most established blockchain technologies, regularly gets congested due to high traffic. Once the transactions on the blockchain reach a certain threshold, it often becomes difficult for individual nodes to compile and save the bulk of data. Eventually this frenzy leads to congestion, data limitations, security risks and high transaction costs.

To solve these problems, the IOST platform features a new mechanism — proof of believability (PoB). In simple words, the PoB mechanism ensures that the network uses the reputations of nodes to reach a consensus. As a result, the system can process up to 100,000 transactions per second (TPS). This is orders of magnitude faster than either Bitcoin or Ethereum, which can process very few transactions per second.

How Does IOST Work?

The IOST ecosystem is composed of multiple components. To know how it works, you’ll need to understand two important concepts: EDS and proof of believability. You can read more about proof of believability in the following sections, but let's first talk about EDS, or Efficient Distributed Sharding.

To deliver speed and scalability for high-end transactions, IOST uses a system of fragmentation that divides the entire network into several sub-areas. In technical terms, Efficient Distributed Sharding is a process that divides the blockchain into smaller sub-chains while keeping the main blockchain immutable.

Using this system, a part of the node is grouped into a named fragment that performs tasks only for that specific fragment. This setup allows a large number of transactions to be processed and validated in parallel across the IOST network.

It also means that each sub-chain has the same throughput capabilities as the main blockchain. They also have the same characteristics in terms of security and consensus. The overall result is a higher rate of transactions per second (TPS) and enhanced scalability.

EDS is just one of the main blockchain technologies that IOST is using to find a solution for the blockchain trilemma.

What Is the Blockchain Trilemma?

The blockchain trilemma is a concept which suggests that a perfect blockchain has three main characteristics — decentralization, security and scalability — and when building a blockchain, a developer has to sacrifice one of the three characteristics to accommodate the other two.

For in-depth information about the blockchain trilemma, you can read this article.

At the moment, most blockchain developers think that decentralization and security are the two most important traits. Therefore, they're willing to sacrifice scalability, which is evident in the slow transaction speeds of such popular networks as Bitcoin and Ethereum.

Scalability, however, is critical for the development of blockchain technology because it helps network participants process and store vast amounts of data. As we move toward adapting the Internet of Things and the metaverse, there has to be a way to process the data without sacrificing decentralization and security.

While the concept of the blockchain trilemma lingers, it's becoming increasingly common for developers to try new methods that will address this trilemma once and for all. These methods include sharding, a process that breaks blockchain transactions into smaller data sets that are easy to process. The IOST platform and the upcoming Ethereum 2.0 are based on this concept. Likewise, other blockchain projects are implementing secondary layers such as Lightning Network to solve the problem.

Polkadot is using interoperability to address the trilemma. Interestingly, IOST and Polka Chain have partnered with each other to build a cross-chain transfer bridge to the Polkadot ecosystem.

How Does the IOST Blockchain Network Tackle the Blockchain Trilemma?

The heart of the IOST platform is its proof of believability mechanism, which helps the network deal with issues of decentralization, scalability and security — in other words, the blockchain trilemma.

The main advantage of proof of believability over other consensus mechanisms is its capacity to offer high transaction speed without compromising security. To achieve this, PoB uses elements such as micro state blocks and a sharding protocol. They help reduce storage needs, enhance processing power and keep transactions secure.

As previously explained, sharding is a process that splits the main blockchain infrastructure into sub-blockchains. This enables the network to reach speeds up to 100,000 TPS, which is suitable for enterprise use.

Storage needs are reduced using micro state blocks technology, or MSB. This technology ensures that each shard of the ledger maintains only the header information from the blocks that preceded it. The node validates just the final segment, which decreases the strain on data centers.

To deal with decentralization, the PoB mechanism splits validators into two groups: Believable and normal. In the first phase of decentralization, the believable validators process the transaction. Then the normal validators confirm the transaction.

Every node is given a chance to become "believable" by assigning it a "believability score." The score depends on the following factors:

  • Number of IOST tokens stored in the node

  • Number of Service tokens earned

  • Number of positive reviews that a node is given

  • Reputation and transaction history of the node

Using this method of consensus, PoB can randomly select several validators per block. While nodes with higher believability scores would more likely be selected, the random process ensures that almost every node in the network has the opportunity to validate transactions and mine IOST tokens.

The barrier to entry for a PoB network is less than that of a traditional proof of work (PoW) network. Since more nodes can participate in PoB, the system apparently offers a more transparent environment.

IOST Blockchain Network Features

The IOST ecosystem incorporates a variety of features that help expand its on-chain applications, mainnet infrastructure and tools. If you're interested in the project, here’s a brief overview of some of its latest developments:

IOSTSwap Bridge

The IOSTSwap cross-chain protocol serves as a bridge between the IOST network and Ethereum ecosystem. The bridge will enable IOST users and other crypto enthusiasts to enjoy the benefits of DeFi and NFTs that would otherwise be impossible, due to the low scalability and high gas fees of Ethereum.

IOSTSwap is among the series of public chains and Layer 2 projects that have substantially lowered the barriers for entry into the DeFi, NFT and metaverse ecosystems. Now, IOST and Ethereum users can easily swap tokens between the two public chains.

IOST Token

The native currency of the IOST network, and the platform’s medium of exchange, this ERC-20 token also validates transactions, which powers the resources to run nodes. The IOST token also stands out from other cryptocurrencies because of its high transaction speed and security.

tomonity NFT Marketplace

The IOST platform has developed a unique e-wallet with a Japanese web development company. The in-built wallet is automatically granted upon registration. It ensures that artists and users can participate in the tomonity NFT marketplace without learning the technical aspects of online crypto wallets.

The intuitive consensus mechanism covers the gas fee, making the initial transaction free of cost. However, you're still charged a 2.5 percent closing fee at the time of sale. To prevent fake collections, the system also issues unique IDs for users, collections and items.

IOST Tokenomics

There are nearly 21 billion IOST tokens in circulation, of which 40 percent are set aside for private sale.

Here’s how they’re distributed:

  • 40% — Available for private sale from any of the popular trading platforms.

  • 35% — Reserved for ecosystem development. The IOS Foundation will distribute these tokens according to a predefined set of rules.

  • 12.5% — Reserved for community incentives.

  • 10% — Awarded to project founders at set intervals.

  • 2.5% — Granted to early investors and advisors of the IOST project.

IOST can be used for trading, earning revenue by staking tokens, paying for products provided by merchants on the IOST platform and running smart contracts. They can also be exchanged for third-party tokens.

IOST Blockchain Network Road Map

The IOS Foundation provides regular updates on the quarterly changes to its road map and existing blockchain technology. You can read about the upcoming changes on its official website. The report outlines the progress of the IOST ecosystem, as well as its plans and community initiatives.

Unlike a few other blockchain networks, each successive IOST road map outlines near-term goals and development. For example, the initial road map described the launch phase, followed by reports on the official release of the IOST network client, wallet and DApps.

In 2020, management focused on progressive changes to the nodes and how the rewards are distributed to these nodes. The following year, the focus diverted to introducing new products and upgrading the existing infrastructure. Recently, the updated road map outlined mainnet features, the launch of a cross-chain bridge and another upgrade to the existing infrastructure.

IOST Price Prediction

Recently, the price trajectory of IOST has followed a path consistent with the fortunes of other cryptocurrencies. During the height of the crypto frenzy in 2021, the price touched approximately $0.09 in two different phases.

From a technical perspective, any forward momentum in crypto markets is quickly transferred to IOST. In comparison to other cryptocurrencies, it usually reacts to such changes more favorably in price. The trend is particularly beneficial for short-term traders, who may gain substantial profit from a positive run.

IOST has strong fundamentals to back it all up. You can expect the price to double by the end of 2022. However, its true potential lies in the long term, where it could touch $0.50 within the next ten years — in other words, a 3,000 percent ROI for an investor who’s willing to stick with the ideology.

Where to Buy IOST

IOST is actively traded on more than 50 crypto exchanges. You can buy it from any of them, but only a handful offer perpetual contracts. Easy to trade, perpetual contracts offer maximum leverage and flexibility.

At this time, Bybit is one of the two leading exchanges in terms of the total volume of IOST perpetual contracts.

Follow these steps of buy IOST on Bybit:

Step 1: Register to open an account on Bybit.

Step 2: After registration, buy USDT. You can purchase USDT using the Express option found under the Buy Crypto tab on the main page.

Step 3: Depending on your country of residence, the system will offer relevant payment methods to buy USDT.

Step 4: Once you receive the required USDT amount in the Bybit wallet, click on USDT Perpetual under the Derivatives tab to access IOST/USDT exchange.

Step 5: To exchange IOST for USDT, click on the Buy button. The amount will be reflected in your wallet after the trade is completed.

Is IOST a Good Investment?

IOST isn’t the only project seeking to solve the blockchain trilemma. These days, it's a hot topic, and everyone has an eye on the outcome. For instance, Ethereum is just about to roll out its second iteration to cope with blockchain scalability issues.

Despite all the competition, IOST has an edge over similar blockchain technology initiatives. Practical to invest in because it's one of the earliest projects in this niche, IOST has the fundamental elements working in its favor: A good road map, an experienced team and a very active community. Since 2018, the concept has matured toward sustainability.

The Bottom Line

According to China’s Center for Information and Industry Development, the basic blockchain technology behind IOST supersedes 37 high-profile competitors, including EOSIO and Ethereum. This is certainly a bold statement, which should be enough for most investors to take this project seriously.