Kaspa: the blockDAG and ghostDAG revolution

Bitcoin of tomorrow or just passing hype? Among the top-performing tokens in recent months, Kaspa is a sensational project that deserves our attention. Designed primarily as a peer-to-peer digital payment system, it stands out from the rest of the market in many ways. But what exactly is Kaspa? How does it work ? What are its strengths and challenges? Let’s take a look at the essential aspects of the project together to understand what sets it apart from the competition and imagine what its future might look like.

Estimated reading time: 10 minutes

General presentation of Kaspa

Kaspa’s goal

Designed several years ago, Kaspa is inspired by Bitcoin as to its objective: to be a comparative peer-to-peer electronic payment system. However, it has a goal do better as the first of the blockchains by improving its technology to maintain its strengths and overcome its weaknesses.

Unlike many current projects that focus on interoperability (we talked to you a few days ago about Zetachain, for example), Kaspa is currently not dealing with this aspect and is focusing its efforts on other projects. Kaspa does things differentlyand is not trying to conquer the users of DeFi or other ecosystems, but is simply trying to develop an optimal system for payments for now.

How Kaspa works

Kaspa partially takes how Bitcoin works and solves its main problem of lack of scalability, all without compromising on security and decentralization. To do it, he combines the advantages of linear blockchains and directed acyclic graphs (DAGs)using an innovative structure called BlockDAG.

With this architecture, blocks are not connected to each other like links in a chain. They can be produced in parallel and added to the BlockDAG at any time. This reduces choking problems and greatly improves scalability.

To give you some numbers, the block time is 1 second on the mainnet with 200-400 transactions per block, making Kaspa already 600 times faster than Bitcoin. Its testnet has a block time of 100 ms, and the developers aim to reach 32 blocks per second (or even 100 blocks per second), which suggests that current performance should continue to improve.

To better understand what a blockDAG corresponds to, you can visit the Kaspa Graph Inspector, which offers a real-time visual of blocks being added to a DAG.

THE consensus protocol which allows to order and secure blockDAG is called PHANTOM GUESTDAG. The latter is a development of the Nakamoto consensus (the consensus used by Bitcoin). Its design is true to Satoshi’s vision: proof of work operation, deflationary monetary policy, absence of pre-mined blocks when running blockDAG and no central administration.

We won’t go into too much technical detail about how this protocol works here. We simply note that it offers several advantages in addition to scalability, includingincluding orphaned blocks to blockDAG (which represents the loss of energy and time in bitcoins) and limiting the possibilities of manipulation of transactions by minors (resistant to MEV).

Like Bitcoin, Kaspa miners solve complex mathematical problems to verify transactions and add them to the network. The algorithm used is kHeavy Hasha variation of SHA-256 used by Bitcoin that offers similar security guarantees while emphasizing energy efficiency.

Recently, it has become possible to mine using ASICs.

History, team and investors

The Kaspa mainnet was launched on November 7, 2021 and is the result several years of research from a highly qualified team.

The initiator of this research is none other thaninventor of the GHOST protocol (Greedy heaviest observed subtree), Yonatan Sompolinsky, which was cited in the Ethereum white paper. A former computer science PhD student at the University of Jerusalem, he is now researching MEV at Harvard University. He was the co-founder in 2017 DAGLabsthe company behind the development and launch of Kaspa.

The company brings together several of his acquaintances, most of whom went through the University of Jerusalem:

  • Michael Sutton : Distributed systems researcher and developer
  • Shai Wyborski AND Aviv Zohar : Researchers who participated writing the GhostDAG protocol white paper.
  • Elichai Turkel : Developer and cryptographer
  • Ori Newman AND Mike Zak: Developers of cryptocurrencies and distributed systems

DagLabs picked up 8 million US dollars from PolyChain Capital in 2018. This allowed her to do her job and rent Kaspa mining computer equipment during the first 5 months after the mainnet launch. This activity enabled the company to obtain KAS 840 million, or less than 3% of the total supply.

When the mainnet was launched, DAGlabs withdrew from Kaspa to leave full power over the project to the community. Of course, DAGLabs members are still a part of this community, so they haven’t abandoned their child.

Kaspa stands out from most current crypto projects because blockDAG was started fairly. It wasn’t no token pre-sale and no pre-mining.

Roadmap, Tokenomics and Ecosystem

Kaspa is a community project which will go where its members want. There is a road map on the official website that includes some technical improvements, but they are more ideas than steps that are sure to be successful. The plan changes based on what community members want and what they are willing to give to get there.

Like Bitcoin and Ethereum, improvements are done through proposals submitted to the community“Kaspa Improvement Proposal” or KIP. Here is a list of improvements that are currently in development:

The bulk of the work at the moment is enabling migration to a coding in the RUST language. This will allow the GHOST protocol to evolve towards the DAGKNIGHT protocol, which will offer better resistance to MEV and higher speed for blockDAG.

The discourse of community members suggests that the implementation of smart contracts is far from a priority. They certainly appear in the roadmap to show everyone that it is not impossible to think about them on Kaspa (and not to discourage the public who would like to go in the direction of the current trend).

In addition to technical improvements, some members (including Christophe Leloup aka Wolfie, Kaspa Currency’s Business Director) they are seeking the adoption of KAS. They are looking for the token to be listed on as many centralized platforms as possible. Currently, there really is no interoperability with other blockchains, and there is no bridge to transfer tokens from one blockchain to another, and adoption necessarily involves CEX.

Regarding Tokenomics is very simple to understand due to the opening of the fair. The maximum number of tokens in circulation is capped at 28.7 billion KAS and is expected to be reached in April 2038. There are currently 22.7 billion tokens in circulation, or 79.3% of the supply.

Block mined rewards decrease over time. The division in half (division 2) takes place every yearand the decline is smoothed monthly with a factor of 1/21/12.

The last word

The BlockDAG model proposed by Kaspa has many advantages. This very interesting technology could later be adopted by other projects, but it still needs to pass the test of time to prove it is bug free.

In a podcast published on our Youtube channel a few days ago, Dashthe developer acting as a spokesperson for the Kaspa community humbly declares that it is the only crypto project that has solved the blockchain trilemma while being secure, decentralized and scalable.

If you are used to reading our articles, you already know that this is the value proposition of many protocols, which everyone is trying to solve (Celestia…) or bypass (Anoma…) in their own way.

At a time when Bitcoin represents “digital gold”, Kaspa still has a long way to go to become “digital money” and be the reference electronic payment system.

Although it is more scalable than the first blockchain, it could face the same problems. It is clear that today BTC serves as a store of value rather than a currency of exchange, although there are solutions for using it as such (Lightning Network, etc.). Tokenomics, simple to understand and beneficial to the early supporters of Kaspa, however, means a high price of the token in the future so that miners continue to find an advantage in doing their work. SO how to convince users pay in KAS while its price is about to increase, rather than using fiat currencies (or stablecoins) that still have to be spent or invested to keep from losing value?

AND how to convince merchants to accept payments in KAS if its price may collapse and it is impractical to replace it (obligatory pass through CEX) due to lack of interoperability?

If the price of KAS increased by about 2,300% in one year, which proves the interest of certain investors, the number of nodes (361) and active wallets (around 20,000 per day for the last 30 days) shows that Kaspa is currently more of a speculative tech gem than a decentralized digital currency.

The future will tell us if the project succeeds in fulfilling the mission it has set for itself and is already paving the way for future innovations in the world of blockchains and Proof of Work.

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