Cryptocurrency and the decentralized monetary ecosystem have come a great distance since their emergence within the final decade, but when these applied sciences are to grow to be extra widespread and supplant fiat in our day by day lives, the prevailing infrastructure must be improved.
Based on Meter.io, of the principle issues holding again DeFi is the shortage of a secure, decentralized unit of account that represents a longtime worth for DeFi purposes and transactions.
DeFi is constructed on blockchains, decentralized ledgers that report the historical past of worth transfers. Blockchain aficionados say the expertise is superior to fiat cash programs as a result of it eliminates the necessity for a bodily unit of alternate. The ledger is universally accessible and gives a continuously up to date report of everybody’s accounts, so there’s no want for anything.
Nonetheless, present cryptocurrencies are far too risky to function this important secure unit of account, which makes them unsuitable for frequent, day-to-day transactions. Stablecoins present another, however there are fears round centralization, their restricted scalability, and their reliance on third-party information oracles.
Hybrid Consensus To The Rescue
Seeking to remedy this conundrum is Meter.io, a novel Layer-1 blockchain platform that’s the primary to function its personal metastable cryptocurrency. Moreover functioning as an L1 that’s laser-focused on DeFi, it will probably additionally function a high-performance EVM-compatible side-chain for Ethereum and different networks.
Meter’s largest innovation is its Proof of Value (PoV) consensus mechanism, which builds on an thought mooted by the Ethereum co-founder Vitalik Buterin:
The PoV consensus is actually a hybrid of a Proof of Work consensus that allows it to create a decentralized, low-volatility cryptocurrency often called MRT for funds and charges and a HotStuff 2 BFT-based Proof of Stake mechanism that allows the MTRG governance coin for transaction validation.
The infrastructure is claimed to be able to processing 1000’s of transactions per second with nearly on the spot finality and enhanced community safety. Superb for on a regular basis funds, it will also be used as an EVM side-chain to enhance the scalability of decentralized exchanges, yield farming algorithms, and different kinds of dApps.
Why Two Tokens?
By having two native cryptocurrencies, Meter is exclusive amongst blockchains in that it will probably separate financial consensus from the record-keeping consensus mechanism. On this approach, the financial consensus, represented by MTR, is used to find out the quantity of latest worth added to the Meter financial system primarily based on demand, whereas the record-keeping consensus, represented by MTRG, is about delivering safety and avoiding double-spending.
This division of energy is among the most elementary ideas of Meter’s design. It mirrors the truth of conventional finance, the place bodily miners work to extract gold and silver from the bottom, whereas bankers and others keep the monetary system by means of their record-keeping. The collaboration of miners and validators on this approach helps to make Meter’s ecosystem secure, safe, and extremely scalable.
The Position Of Proof Of Work
The Proof of Work consensus in Meter performs three essential features, together with the creation of latest tokens, producing true randomness and instrumenting the notion of time. It’s primarily based on a permissionless mining community that anybody can be a part of to start out minting new MTR tokens. Nonetheless, not like different PoW blockchains akin to Bitcoin, Meter has tailored the mechanism to make sure the price of MTR token manufacturing stays secure and constant and can’t be altered. So new MRT tokens are solely created when it is sensible from an financial perspective.
That is just like how miners work in the actual world. A gold mine operator will make investments extra in its operation when the worth of gold is excessive, and cut back its spending when the worth is low. Meter replicates this, sustaining a fragile steadiness that ensures the steadiness of the MRT asset.
The Position Of Proof Of Stake
As for PoS, that is the mechanism used to allow report retaining, just like the position performed by banks in conventional finance. Meter helps a large pool of validators that handle the underlying blockchain, whose job it’s to confirm and validate transactions and stop double-spending and censorship. A bunch of validators is chosen randomly initially of every new epoch, after which type a committee. For every epoch, solely the validators chosen to sit down on the committee can create and vote on new blocks, working by way of a BFT-style consensus mechanism. The benefit of this strategy is excessive efficiency and on the spot transaction finality, which is a key requirement for dApps in the event that they’re going to switch conventional banking apps.
As such, Meter primarily has two separate blockchains – one for PoW and one for PoS – which solely work together with each other on the finish of every epoch, once they’re cross-referenced to make sure community safety.
Delivering The Safety, Stability & Effectivity DeFi Wants
Most different blockchains are likely to merge the ideas of forex creation and report retaining, although they’re two basically various things. By separating them, Meter ensures that its PoW mining operations for MRT creation devour a lot much less vitality, whereas transactions may be authorized a lot quicker and with on the spot finality. The design additionally helps to keep away from conventional issues with decentralized networks akin to “long-range assaults” and the “rich-get-richer” drawback related to many PoS chains.
As we’ve seen in Bitcoin and different PoW networks, the community hash charge is commonly immediately correlated to the worth of BTC and its market cap. However with Meter, the hash charge solely correlates to the market cap, however not the worth, which is a particularly vital issue that allows it to keep up the worth of MTR and stop censorship and different kinds of assaults.
Meter says the separation of those two consensus mechanisms permits it to cut back the conflicts between miners, builders and community customers, making its financial system extra environment friendly and safe.
