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The Chia Project launched its main-net to a decent amount of excitement in 2021. Now firmly in to 2023, how is this once anticipated project faring?
While its placement among top projects may appear tenuous at first glace, the team behind the Chia Network continue to share various initiatives that may change this in time, allowing for it to capitalize on its unique approach.
A ‘Greener' Gameplan
One of the most obvious defining factors that separates one project from another, is choice of consensus. Typically this means choosing between Proof-of-Work (PoW), or Proof-of-Stake (PoS). While there are subtle variations of each, it is these two that dominate the digital asset market. Look closely though, and you will find a few projects which are outliers, taking a novel approach towards attaining consensus. One such project is the Chia Network (XCH) and its use of Proof-of-Space-and-Time (PoST).
As stated, PoST is a departure from the more commonly used PoW and PoS consensus mechanisms. Rather than gobbling up energy to perform complex computations in hopes of earning a block reward like in PoW blockchains, PoST allows for its network miners/farmers to leverage unused storage capacity in an effort to earn block rewards; the more storage space allocated to the network, the greater the chances of earning XCH. To keep its network neat and tidy, time is introduced into the equation through use of verifiable deal functions (VDFs), which act as “…proof that a sequential function was executed a certain number of times.”
Simplified, the take home point is that the Chia Network utilizes unused hard drive space – which is something the majority of people have in excess – rather than computational power, to achieve consensus. Part of this appeal, per the Chia Network, is that “No funds, special hardware, registration, or permission is required to join, only a hard drive and an internet connection. The system is completely transparent and deterministic — anyone can efficiently and objectively verify which chain is the canonical one, without relying on any trusted parties.”
The Chia Network boasts that its approach to consensus is “…less energy intensive and more inclusive while being at least as secure” when compared to PoW, and is “much less vulnerable to attack or manipulation and does not suffer from the problem of ‘the rich get richer' and the centralizing effects of staking” common with PoS.
Interestingly, Chia Network has begun offering what is calls ‘plot compression‘. This is a process that compresses data through use of computational power provided by a CPU or GPU. It is quick to clarify that while this process does utilize more energy, it falls well short of being comparable to levels required by PoW, and that its mission is to remain a ‘green' blockchain.
The main issue where many detractors claim PoST falls flat, is the stress it places on storage mediums used to support the network. While any hard drive may be used, the initial process required to allocate unused space to the network is extremely taxing. This has resulted in scores of anecdotal stories of typical consumer drives dying in as little as weeks. There are workarounds to this issue however, such as utilizing expendable hard drives to create ‘plots' which represent allocated space before transferring to another drive for long term use, and through use of commercial grade products that have lifespans with significantly greater read/write cycles.
So now that the Chia Network has been live for multiple years, where does it intend to go from here? Thankfully for supporters of the project, the team behind the Chia Network have a few ideas in mind, beginning with an attempt to get listed on renowned, mainstream exchanges, like the NYSE and Nasdaq.
For a company to gain access to the aforementioned exchanges, it means going public. With this in mind, the Chia Network has recently submitted a proposal to the SEC that would see it host an initial-public-offering (IPO) of its own.
Notably, for the above to occur, Chia Network will need to successfully convince the SEC that its token ‘XCH' is not a security. It believes it has a good argument for this, as it never actually sold this token. Rather, it is/was distributed through block rewards and a pre-farm environment hosted prior to main-net launch, while the Chia Network itself has simply operated as a software company building open-source solutions for its blockchain. It is able to do so with the backing of various VCs that provided the Chia Network with $61M in funding in 2021.
If successful in its attempt to take its company equity public, the Chia Network will join a very select group of blockchain oriented companies that have had success in doing so. These include names like Coinbase, Riot Mining, and more. For now, the SEC serves as the major roadblock to any IPO, with a decision from the regulator expected to arrive in the coming months.
Chia Trading Card Game (ChiaTCG)
At this point, it is clear that NFTs are here to stay. Chia Network has recognized this, and recently announced that it was launching what is calls the Chia Trading Card Game (ChiaTCG) in an effort to showcase the capabilities of its blockchain, and lure developers to its ‘greener' alternative.
Chia Network notes that through use of its Chia Open Digital Economy (CODE) framework, ChiaTCG participants will benefit from the ability to trade peer-to-peer (P2P). It states,
“Most online TCGs don’t allow digital ownership or trading through restrictive Terms of Services and End User License Agreements. The few NFT-driven TCGs allow buying and selling of cards, but only on centralized marketplaces. We want to put trading back into online TCGs with true ownership and Peer to Peer (P2P) trading for online TCGs. This is the expected behavior and a bare minimum feature for people who play physical TCGs.”
Full launch of this TCG is expected to occur in early June, 2023. To learn more about some other TCGs that have integrated NFTs, make sure to check out our Top-5 Ranking.
When looking at any marketing and communications issued by the Chia Network, it is obvious that the project is pushing a ‘green' narrative. While some view this claim as hard to prove, it is clearly a goal worth working towards. To that end, Chia Network is attempting to bring new efficiencies to the Carbon Market and how Carbon Credits are distributed, traded, and accounted for.
It intends on achieving this through leveraging the inherent traits of blockchain technology, which it states allows for near-unmatched transparency, verifiable ownership, trusted controls, and more. Chia Network is quick to note that, “Not all blockchains are created equal, and not all can provide the functionality outlined above. Using its decentralized structure, coin-set model, blockchain technology ‘primitives,’ and Chialisp programming environment, the Chia blockchain offers a novel and inherently sustainable platform for enhanced transparency and increased security”
While time will tell if this initiative is successful, it does further highlight the company-driven narrative that Chia Network is working to develop and facilitate green solutions within the blockchain industry.
Interestingly, despite its potential and various promising initiatives, Chia Network and its token ‘XCH' have been somewhat overshadowed in 2023 by gambling on meme-coins and projects with minimal adoption – a point which only serves to highlight the pure amount of speculation rampant throughout the market.
This isn't to say that XCH has been underperforming on the year though. In fact, since we flipped our calendars to 2023, XCH is boasting gains of nearly 30% at time of writing.
With its existing levels of adoption, unique market approach, and various initiatives, Chia Network (XCH) will definitely be an interesting project to watch over the coming months. Sitting at the #117th largest digital asset by marketcap, there is plenty of room to grow. At time of writing, the price of XCH was down roughly 98% from its all-time-high of $2,613, sitting at $35.26.
XCH is traded on a variety of popular exchanges, detailed in our ‘how to buy XCH' guide.
Despite labelling itself as a better blockchain offering more value, possibilities, inclusivity, and security, the Chia Network has been unable to gain much ground within the digital asset market since launch. This however, does not take away from the potential of what it could be – and with its planned foray in to public markets alongside integration of NFTs, we may soon see XCH climbing the ranks.
To learn more about this project, make sure to visit our Investing in Chia guide.