Table of Contents
1. The pace of the Stellar network
2. Stellar Consensus Model vs Mining Model
3. The Stellar Payment Accumulation System
4. Why fork the network?
Following a number of experiments and proof of concept builds, the Kinesis team concluded that using the forked Stellar network to form a bespoke blockchain network was the most successful and fit-for-purpose option for the kinesis currency series.
There was one guiding aim to be achieved with this decision, and that is the ability of Kinesis currencies to act as the high-speed, globally-used currencies that form the basis of the revolutionary monetary system. Stellar addressed these primary needs in a variety of ways, both technological and algorithmic, but 3 key factors lay at the heart of the decision.
1. The pace of the Stellar network
The pace of the blockchain network is a critical factor for a currency platform to support the fast turnover of coins required for it to operate efficiently, and at the level expected for Kinesis currency suite. The speed of networks is usually defined in the number of transactions which can be processed per second by the blockchain network.
The one clear influence on that is hardware, of course. Of course, the equipment on which a network is running would have an impact on the processing capacities, but there is no precise calculation of this effect on network speeds until the scale suggested by Kinesis is used in a network. Kinesis has tackled the need for extreme versatility here through sophisticated designs in Cloud Technology (see here how the Kinesis leverages Cloud Technology).
The other and more important factor in network speed is, of course, its specific data propagation model and cryptographic algorithm. A number of tightly controlled experiments on a variety of blockchain networks have been conducted in this regard. The results of these provide a clear idea of the network’s approximate comparative average speeds under load. The results of these tests put Stellar at the forefront of network efficiency, outstripping competitive networks by orders of magnitude and not only slightly.
Stellar founder Jed McCaleb indicated in an interview with the blockchain-focused podcast epicentre that ~4000 transactions per second come within the capabilities of the Stellar network.
After a variety of tests on different scaled equipment with stellar networks, the outcome of the average speeds was between 3000 and 4000 transactions per second. This remains an estimation at this point but predicted with higher velocities.
Compare those figures with those collected from competitor network experiments:
- 3.3 to 7 transactions per second through Bitcoin.
- The average for Ethereum is 15 transactions per second.
- VISA’s current volume average of 1,736 transactions per second and its total capacity of 24,000 transactions per second.
These statistics would explain why Stellar was the top choice for Kinesis blockchain technology and the potential of this network’s fork to account for the high speed of a fully-fledged currency.
2. Stellar Consensus Model vs Mining Model
A crucial aspect of the Kinesis and Stellar designs is that it does not incorporate the blockchain ‘mining’ paradigm as do Bitcoin and Ethereum. Instead, the Stellar network uses a strictly Consensus model. The consensus model allows a certain number of nodes to achieve agreement in order to continue a transaction to the network, so transactions can only be propagated on the network if many nodes agree that they are valid and comply with their calculations. This is very different from the fact that the Bitcoin or Ethereum models need comprehensive mining operations to spread the transactions. This makes the influx of new data into the network highly expensive to computing resources and introduces the risk of run-away fees. The Kinesis network also guarantees external parties can not add false nodes to the network by ensuring consensus can only be achieved through trustworthy nodes. Inauthentic nodes would be explicitly removed from the process, ensuring consensus can be trusted at all times.
3. The Stellar Payment Accumulation System
The monetary system in Kinesis provides special features of yield-bearing. To accomplish this the cryptocurrency transaction fees must be obtained transparently and centrally controlled throughout the network.
The fees are distributed and received in a mining model by the miners who perform the overhead processing of mining the data transmission, meaning fees can not be provided across a wider spectrum of network participants. In addition, currency demand facilitates mining by explicitly allocating fees only to miners, resulting in unpredictably changing fees and rapidly escalating in this unregulated model.
Where a mining model allocates transaction fees only to the miners, a consolidated fee accumulation method was used by the stellar model across the entire network operation, thus collecting fees for large distribution to Kinesis participants.
In addition, the fees in Stellar and hence Kinesis are related linearly with the actual transactions and are measured accordingly in a static manner, not manipulated artificially by mining. In this way, the Stellar model helps Kinesis to avoid the run-away impact that mining has on fees by adding fees to the transaction operation itself, so that those who transact with the kinesis currency will have consistent, straightforward and incredibly affordable fees attached to their activities.
The accumulation of fees in Stellar’s Kinesis fork is safely kept in an off-chain account so that they remain safe until they are distributed to the revenue earners’ accounts. The fees collected as part of the open blockchain processes are clear to ensure that there is no way for them to be abused and offer additional trust in their revenue share and network participants.
4. Why fork the network?
The last topic to explore is why the decision was made to build a tailor-designed blockchain network instead of using Stellar as it is. Kinesis itself is to form the underlying base currency within the blockchain network in the currency designs of the Kinesis. To achieve this blockchain Kinesis needed to account for a particular collection of characteristics in cryptocurrency.
As far as the base currency is concerned, one transacts on the Stellar blockchain using Lumins as the base currency and charges in Lumins will be accrued. One transacts in the Kinesis blockchain using Kinesis itself as the base currency. Fees are deposited in the Kinesis blockchain accounts of income earners for distribution as Kinesis coins.
The second significant reason was to include a charge as a percentage of the transaction amount for the adjustment of the charging process. This is a Kinesis custom feature and is one of the first blockchain networks in the core network code to offer this type of transaction fee calculation. Again it supports the principles inherent in the Kinesis method where the yield in the Kinesis currencies increases with time.
While there are a number of other factors that were assessed through a variety of proof of concept experiments that lead to the choice in Stellar and the decision to fork the network to form a bespoke Kinesis Blockchain, these above hold the highest importance in achieving the true currency characteristics of a globally inclusive, transparent, reliable and high-velocity Monetary System on offer by Kinesis.
