Aeternity (AE) Complete Review!

There are many Blockchain platforms out there. Ethereum, NEO, Cardano, EOS, Tron, etc… each of them has unique technological features that make them different from the others. Aeternity has 3 main unique features that make it special. If you understand these 3 features, you understand Aeternity.

In a classical Blockchain, the Dapp (decentralised application) is built on the Blockchain, and any transactions that happen on the Dapp is done on the Blockchain using it’s computational power. This is very burdensome and slows down the whole Blockchain over time. Examples of classic Blockchains that use this are Bitcoin and Ethereum, and both of these Blockchain are running into problems with scaling. Problems with scaling means that as more Dapps are built on the Blockchain, the Blockchain is unable to keep up with the demand and the performance begins to slow down.

A newer blockchain model we’ve seen a lot of recently is the use of side chains. Here the Dapp is built not on the blockchain, but on top of the Blockchain, and each side chain has it’s own technology and economy and the transactions are done on the side chain so it doesn’t burden the Blockchain. Only the results of the transactions are recorded on the Blockchain, so it’s not burdensome at all, and this is a great solution for scalability.

Examples of current projects that use side chains include EOS and Loom.

Aeternity uses another off-chain solution similar to side chains, but not exactly the same, and it is called State channels.

A state channel is like a side road. So the main Dapp is built on the Blockchain, like the classical model, however, the transaction is done not on the Blockchain, but off the Blockchain on the state channel.

Similar to side chains then, it is only the result of transaction that gets recorded in the Blockchain (if needed) and is hardly burdensome at all.

This processing of transactions on a channel not only allows scalability, it also allows privacy. So for businesses who want to keep the transactions private, it’s possible to hide the transactions on the channel and keep it private. The record of the transaction would still be available on the Blockchain if needed, e.g. if there was a disagreement, but the details of the transaction could still be kept private in that situation.

The main difference between side chains and state channels is side chains have a lot of flexibility in their design, e.g. they can have a different concensus mechanism etc… in State channels, because the Dapps are built on the Blockchain, they are bounded to the mechanics of the Blockchain, e.g having the same concensus algorithm etc.. but the good thing about being bounded is that whatever benefits the Blockchain has from it’s design, the Dapps will also have.

So any scalability solution like side chains or state channels are definitely better than the classical Blockchain, but when you compare the two, there isn’t a definite better model, it comes down to each individual project and which design works better for the needs of that project.

If you’ve been around the Blockchain scene for a while, you would have heard of lightning network, a proposed scalability solution for Bitcoin. Some might think “this sounds very similar to lightning”, and you would be right. Lightning uses channels to help do transfers. You have to remember Bitcoin was 1st generation Blockchain, way before Ethereum, and smart contracts only came into being with Ethereum 2nd generation Blockchain. Smart contracts are the core building blocks for Blockchains these days, but because Bitcoin doesn’t use smart contracts and Lightning was developed for Bitcoin, thus Lightning only facilitates faster transfers. State channels is the improved version of that technology that allows faster processing of smart contracts on the channel.

One thing I’ve not seen mentioned in any review of Aeternity yet, but it is mentioned in their whitepaper, is that Aeternity’s Blockchain architecture is actually set up to be sharding compatible. Sharding is basically partitioning of information, it can happen at many layers and in Aeternity, it is set up to happen at the nodal level.

In a classic Blockchain, all nodes in the system will have a full record of every transaction. This becomes chunky and slow.

In Aeternity, sharding of the nodes is possible, so that not all the nodes have a full copy of the transaction record, rather a single record is split into small shards that are then stored across many nodes. In such a way, the over burden of storage and processing of the storing is greatly reduced.

So state channels and the potential for sharding is the first key feature of Aeternity.

The second key feature of Aeternity is the decentralised oracle.

An oracle is basically a gateway between Blockchain and the outside world.

Blockchains run on smart contracts. An example of a simple smart contract would be you mowing my lawn I will pay you $50. But for the smart contract to automatically execute this transaction, it has to receive information of when you finish mowing the lawn. The information is dynamic, meaning it is already set in the Blockchain, it is information outside the Blockchain that the system has to actively collect to obtain. An oracle is that system that collects real world data for smart contracts input.

Typical oracles are a single point of information. E.g. you might tell the smart contract you have finished mowing the lawn and that would trigger the smart contract. But a single source of information may not be accurate, because you may lie and reported you’ve mowed my lawn when you really only mowed half the lawn. So in order to ensure accurate collection of information, Aeternity’s oracle takes a decentralised approach to ensure accuracy/ truth of data.

The way it works is any input offered to the Oracle has to be accompanied by a deposit of tokens. A set time is then set up for the information to be confirmed or challenge. A challenge can be launched but must be accompanied by the same deposit amount of tokens. At the end of the set time, if there is no challenge, the oracle accepts the input as true, if there is a challenge, it goes through a bigger concensus mechanism to achieve concensus. This is more expensive but safer.

Aeternity actually uses two concensus algorithms, POW and POS.

The POW they use is actually a unique POW known as Cuckoo Cycle POW. Traditional POW used by Bitcoin relies on computational power and uses lots of electricity and so strong ASIC mining chips that boost computational power give a better return. But Cuckoo Cycle POW relies not on computational power but latency. This means a few things:

i. Less electricity use and wasted

ii. Since it is not computational power determined but latency, even mobile phones can be used to mine

iii. It is ASIC resistant. This is important because ASIC chips are the world’s strongest mining chips for traditional POW and as a result, Bitcoin’s mining instead of being decentralised, is becoming monopolised and centralised by a single mining chip. But this problem will not happen with Aeternity.

iv. By promoting individual minings, this will do away with the need for mining pools which again are a source of centralisation.

POW will be used to produce new blocks, in other words, new tokens will be minted or created into the system through the POW process.

The POS is used not in the block creation but rather in the Governance. Aeternity uses an on-chain governance through delegated voting.

In the past, when a big system upgrade needs to be done, there is no clearly defined manual on how to do it and this results in big differences in opinions over the projects that eventually lead to hard forks. That’s how Ethereum split into Ethereum Classic over the DAO incident.

Now any Aeternity token holders can participate in the governance e.g. voting on a decision, weighted by the amount of tokens the account holds. This governance is used to make decisions e.g. size of the blocks etc… If I was to summarise, this is essentially a democratisation of blockchain governance.

This form of governance avoids controversial hard forks and can even help to prevent forks from happening as changes to not need to be done in big “batches” like Ethereum, but can be done in smaller portions of individual change through the voting system. So a series of small upgrades rather than a big fork.

One point of consideration is whilst I really like the idea of a decentralised governance and promoting ownership of the project in the community. I’m not sure how I feel about the fate of big technological decisions being in the hands of lay token investors. Would you know how to make the best decision about block size or forking options? Cos I don’t. Personally, I rather leave it to the experts actually. Haha, well we’ll have to wait and see how this plays out in the future.

One last thing to cover about the tech is that Aeternity will support 3 virtual machines. Most platforms only have one.

i. They will have a version of the Ethereum virtual machine that will make it easy for Ethereum Dapps to swap over to them and also for programmers familiar with Solidity (the Ethereum programming language to use),

ii. They will also have a Functional Typed Warded Virtual Machine which prefers Varna, a functional langage similar to Bitcoin’s script language

iii. The High Level Machine. Which supports more advanced langauges like Chalang.
Some of the other main programming languages supported include Erlang, Elixir, C++, Python, JS and more. So it’s an easy to use platform for most developers.

Aeternity will also be targeting mobile apps, so developers will find it easy to build mobile apps which is a big advantage in this day and age. Not to mention they will have actual mobile mining in the future which will be huge. Electroneum only has mock mobile mining, and even that attracted over 100,000 users in a couple of months, so imagine what real mobile mining would do for Aeternity.

Currently the only partnership I know for Aeternity is with Erlang Solutions, and they have many Erlang developers on their team so effectively, this is the go to platform for Erlang developers who are keen to build a blockchain Dapp.

And that’s a overview of Aeternity’s technology.

One thing I do like about this project is that at the end of their whitepaper, they write these words that “Aeternity is not a catch-all solution for decentralised applications. It should rather be viewed as a synergistic complement to existing technologies.”

In other words, Aeternity’s technology will appeal to certain users out there e.g. prediction markets, event contracts, insurances, tolls, crowdfunding etc… but there will also be some use cases, e.g. Dapps that require a high degree of customisation in creating a subcurrencies not tied to an asset etc.. that Aeternity may not be the best for.

And this can be said of any blockchain protocol out there. There is no one size fits all. I feel much safer investing in a project that knows it’s limits, rather than a project that promises to be all things to all Dapps. The future of protocols is specialisation. Because if you were a company wanting to build a Dapp, all other factors even, would you want to choose a generalised platform or a specialised platform that has specific features tailored for your needs? Every one would choose the specialised platforms, furthermore specialised platforms offer a unique ecosystem of other projects that are more likely to be related to the Dapp, so more interaction and business. So I definitely think moving forward, we will be seeing more and more specialised platforms like Aeternity and less generalised platforms like Ethereum.

As token investors we all want to know that there will be token use for the AE token, because that’s where the demand and value come from.

In this case, because the Dapps are built on the blockchain, it is easy to have sufficient token use. The AE token will be used as gas for all smart contracts and that alone would be enough. Because if AE has 3 Dapps, the potential use case of the tokens would have gone up 3 times, 10 Dapps, 10x and so forth. This is not the same for side chain projects like EOS. Gas fees are the main source of value and demand for Ethereum and it will be the same for Aeternity. Just the gas for smart contacts would be enough.

Furthermore, Aeternity is used in both the decentralised oracle and the voting governance, so there’s a lot of use and demand for the currency.

This is their team. Very big team as you can see. I think they currently have 44 employees and it’s a very tech heavy team. Over 75% of their team are developers, and that probably explains why they have very little marketing presence.
The founder of this project is Yannislav Malahov, he is the self-proclaimed “Godfather of Ethereum”. It is known he worked with Vitalik back in the days before Ethereum was even called Ethereum. There is no linkedin profile for him that I could find.

Marion Vogel is the director of the project—She has a linkedin Account and her career started as a management trainee in Porsche in 2011-2012, she was a junior marketing project manager for the Bavarian US offices for Economic Development from 2014-2015, she completed her MBA in marketing from HOF in 2016, before joining Aeternity the same year.

You can go through the rest of the team in your own time, I was quite disappointed that more than half of them did not have linkedin profiles and the brief spill of their them on the website was not very informative. For example, even their CEO, besides the title of self-proclaimed God father of Ethereum, there is no information about his previous employment or start-ups etc.. I am sure there is more to him and the whole team, I’m sure they have successful and experience, but it’s just not available.

One thing just to quickly mention with regards to their team, a while ago, there was a brief scandal where an ex-technical lead by the name of Zack Hess wrote a strong accusatory post against Aeternity about not being paid or treated fairly. He has since left and started his own blockchain project called Amoveo.

Aeternity did give a brief reply on Reddit which was very polite and civil. The matter has since not been heard. Some people think poorly of Aeternity because of this, but I actually no one knows the truth and it’s best not to judge.
After Zack Hess left, Aeternity then had a temporary CTO Joel Reymont, who also left the team because an agreement couldn’t be reached for him to stay full time and he then started his own blockchain project called Emotiq, but this time the parting was on good terms. So it wasn’t a bad reflection on the project, as I’ve read in some places whilst doing my research.

So I mentioned these two cases, because if you’re new to Aeternity and you read up on them, you will come across these two articles just as I have, and I just wanted to say from a neutral point of view, after reading every article and post I could find on these issues, I don’t think it pitches badly against the team, in fact their reply to Hess, I felt was very fair and thoughtful.

This is the roadmap for the project. It’s actually an recently updated roadmap, because until recently the timeline for mainnet launch was Q2 2018, which is this month, but they have changed it to August 2018. I was a bit disappointed that the updated roadmap didn’t go beyond August 2018, so it’s only another 3 months more. That’s quite short for an update. But hopefully we will see another update soon.

Other recent initiatives by the team that is not reflected in their road map includes the Starfleet incubator and Aeternity Ventures, both of which provide immense support for new developers on their platform. The support provided will include 6 months of technological, product, marketing, accounting, even legal support, up to $250k funding per start-up (that’s a quarter of million!), global workspace, mentoring, token sale preparation and a global alumni network.

So this is a platform which will be the go to for Erlang developers, has a wide range of other languages on board, easy for Ethereum Dapps to use or cross-over, great scalability, a niche market as well as a very generous and strong incubator program. As a package, I must say they are a very attractive competitor in the platform arena.

Aeternity is currently sitting at $2.51. That’s about 50% of it’s all time high. Is that a good entry point, yes it is. But in the recent bear market, every coin is at a good entry point. The question is which coin has the best fundamentals for a great bounce back when the market recovers. And I think Aeternity has that.

One thing that is not reflected in the graph is their current rankings in the market. About 3 months ago, Aeternity was sitting outside the 100 rankings. But over the past 3 months, in a very bad market, they have actually climbed their way to the 28th spot on the market. So they’ve actually done really well in a very bad market.

Furthermore, with Mainnet expected a couple of months away, and the recent launch of the Starfleet incubator less than a month ago, I think they have good traction and by August, we should see the price rise significantly. So short term price prediction is good.

In the longer term, this project has state channels with potential sharding and the decentralised oracle, that’s enough feature technology to stand out amongst the platform crowd. And further more they will have true mobile phone mining, which we know from Electroneum is a massive boost for mass adoption, and they are already the go to platforms for Golang developers. Last of all, their entire ecosystem has a very healthy token use that should be attractive to potential token investors. I think Aeternity is a very good project guys, definitely one to keep your eye on.

Alright guys, that’s my take on Aeternity, I hope you found this review helpful. If you liked it, give us that upvote and follow to help me produce more content.

Finally, as always, none of this is professional advice, so please always do your homework and make your own decisions.

Thank you so much for reading this. We’ll be taking a look at a series of utility coins for the next two weeks, so make sure you follow us for that. Have a great day guys and Il catch you guys again very soon!