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Infrastructure

Chia

Chia – blockchain with Proof-of-Space and Proof-of-Time consensus algorithm aiming to be as successful as Bitcoin

Rating: 3.8

Official contacts
Location: San Francisco
Web-resources:   Whitepaper Website
Social networks:
Details Description Risks Full analysis Team

Detailed review

Stage of product development
The development process has not started yet, but the team published the technical paper. Mainnet is likely to be launched in the second half of 2019


Token description
ICO date
TBA
Token price
N/A
Platform
Chia
Hard cap
150000000
Blockchain
Chia
Token distribution date
N/A
Consensus method
Proof-of-Space & Proof-of-Time
Escrow
N/A
ICO currencies
USD
Bounty camping
N/A
Markets
N/A
Token functions
Means of payments, reward for unused space. Also, tokens represent a share in the Chia capital
Risks
MARKET

Fierce competition from other blockchains with better characteristics

Burstcoin is vulnerable to attacks just in theory, but has never faced up to them in fact

It is not clear how Proof-of-Time will turn a competitive edge on Burstcoin

Proof-of-Space blockchains have their community but are not widely used

PRODUCT

No code is written now

Chia criticizes Bitcoin for being eco-harmful – this critics is questionable

BUSINESS MODEL

Legal uncertainty regarding some security features of the token

FINANCES

150M USD of Hardcap seems to be overestimated

Token pool capitalization is impossible to be evaluated

Financial metrics are unclear

Dividend policy and capital distribution are unclear

TEAM

The team is still hiring its core developers

Lack of marketing and legal specialists

Full analysis
Market

Chia aims to prevent wasting massive amounts of electricity of traditional Proof-of-Work blockchains maintaining the high level of decentralization and security. Chia is mined with storage space instead of mining with processing power. Proof-of-Space algorithm applied makes Chia attractive for those who leave much storage unused. It must be noted that buying hard drives is said to be unprofitable and Chia will be valuable only for those who have already spent much for hard drives and is looking for additional income. The main competitor is Burstcoin launched in 2014 that implements Proof-of-Space as well, but Chia introduces Proof-of-Time to prohibit a type of theoretical attack on the blockchain that Burstcoin is supposedly susceptible. It is not quite clear, will Proof-of-Time algorithm turn a competitive edge or not. In addition, the team aims to be as large as Bitcoin is, that is over optimistic taking onto account Bitcoin clear reputation and the fierce competition from other blockchains

Product

Chia is a blockchain that applies Proofs-of-Space and Proofs-of-Time instead of popular Proof-of-Work or Proof-of-Stake. It means that miners receive Chia coins having unused storage space. Proof-of-Time mitigates attacks on previous proof of space based blockchains, but it is not clear how it will practically work. Chia software snapshots unused storage available on hard drives. A farmer receives lottery type payouts for the amount of storage allocated. Chia aims to make hardforks impossible. The second algorithm is Proof-of-Time with limited number of nodes that are not rewarded. It prevents the blockchain to be attacked. Chia will support high transaction speed with its own Lightning Network applied enabling transaction to be conducted off-chain. Chia is going to support atomic swaps out of the gate. Entry barriers are projected to be low so Chia aims to become the most decentralized cryptocurrency on the market. The source code will be licensed under the Apache License after publishing mainnet code. For now, no code is written and Chia is hiring programmers, but the idea is described in the well-written technical paper. The mainnet is about to be launched in the 2-nd half of 2019, according to gossips

Business model

Technically coins are pre-mined and initially retain ownership of 100 percent of the coins, using the mini-IPO to foster a community of investors. The team is planning on issuing a dividend of Chia to shareholders in advance of the network launch. The team approved that it is given Regulation A+ status allowing officially to conduct mini-IPO not exceeding 50M USD. Chia will use an auction where investors choose how much they’ll bid for how many shares

Finances

Token supply increases at the fixed rate but the proportion of coins mined each year perpetually goes down like in Bitcoin. It will take 153 years for the tokens in circulation to double. Tokensale metrics are not clear now but the team projects to attract 50M USD. Chia has raised a $3.4 million seed round led by AngelList’s Naval Ravikant and joined by Andreessen Horowitz, Greylock, DHVC and more. Chia will do a pre-mine of its currency but initially retain ownership of 100 percent of the coins, using the mini-IPO to foster a community of investors. The team is planning on issuing a dividend of Chia to shareholders in advance of the network launch. Chia will use an auction where investors choose how much they’ll bid for how many shares. It’s similar to the process Google used to IPO. The more popular it is and higher people bid, the less equity Chia will have to sell to get the $50 million. Once a clearing price is locked in, everyone who bid below it will get no shares and their deposit back, while those who bid over get their shares plus a refund of the difference between their high bid and actual price. Shares equal to 100M USD are sold to institutional investors with 10% discount. The deal structure seems to be attractive, but we still know nothing about the token, how it will be priced and evaluated

Team

Generally speaking, Chia has not introduced its team, but LinkedIn indicates some of the members. CEO is well-known Bram Cohen invented the torrenting file transfer protocol in 2004 and co-founded a company around it called BitTorrent. It is one of the first ever P2P systems introduced, but the startup suffered through a decade of mismanagement by other CEOs. Bram has also introduced Chia Network concept and the technical paper available on the website. The second co-fonder is Ryan Singer who was Co-Founder and COO of the largest American Bitcoin exchange, Tradehill, Inc. Since Tradehill, Ryan co-founded CryptoCorp, a multi-signature security company, Blockchain Clearing, a securities clearing technology company, Blockchain Health, which does document control for clinical documents. COO is Ali Shandle who has 2 years in software development, 3 years in web development and 1 year in product management (IT). Software developer graduated from Stanford University (Computer Science), had an internship in Amazon (AWS). He has been working in Token company for 3 years developing payment solutions and being promoted to Engineering Lead. Chia is advised by Gene Hoffman, former NASDAQ CEO

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