ICON

  • Cryptoasset Report
  • June 5, 2019

ICON is a blockchain interoperability project aiming to support communications between various chains (both permissioned and public) via a low-fee, permissioned blockchain.

Overview

The ICON project aims to build a decentralised network that allows independent blockchains, with distinct codebases, to exchange value without intermediaries. The ICON network is supported by loopchain (originally developed by ‘theloop’, which has since been rebranded to ICONLoop); a proprietary high-performance blockchain that aims to facilitate enterprise adoption by providing faster confirmation times and lower transaction fees. ICONs native token, ICX, aims to facilitate real-time payments across separate blockchains. A Decentralised Exchange (DEX) utilizes ICX to enable transactions between digital assets connected to the ICON network, after determining an exchange rate through a process inspired by the Bancor Protocol. ICON uses smart contracts which run locally, via the Smart Contract on Reliable Environment (SCORE) repositories, in the interest of reducing computational load on the chain.

Theloop collaborated with a consortium of financial institutions in Korea (KOFIA) to produce an identification certificate called Chain ID allowing customers to utilize one ID verification while interacting with any of the 25 KOFIA institutions. This is in addition to government sponsored trials and partnerships with major hospitals. ICON raised 150,000 ETH in their token sale, half generated in a private sale and half generated in the first 6 hours of a public sale. The Token Sale event involved ERC20 tokens, with an airdrop of ICX mainnet tokens following. The ICON mainnet launched in January 2018.

The ICON foundation counts as advisors Don Tapscott, author of ‘The Blockchain Revolution’ and co-founder of The Blockchain Research Institute, and Simon Seojoon Kim (CEO of hashed). Byeongkil Sohn is a blockchain developer for the ICON Foundation having previously held the position of ‘Core Engine Team Lead’ at theloop. Other principal software engineers have experience in the medical field, machine vision and embedded software.

Project Details

The ICON Nexus blockchain uses a Blockchain Transfer Protocol (BTP), analogous to TCP/IP for computers in the internet except ICON is proprietary, to connect disparate blockchain networks via their representative Nodes (Portals) into the ICON network. Typically, transferring value across different blockchains requires trusted exchanges. DEXs generally face challenges around liquidity and offering acceptable exchange rates. ICON differs from Ethereum’s notion of a DApp by not opting for a Virtual Machine to execute code. Instead, ICON operates a DApp store from which nodes download software. Downloading and running software locally helps speed up DApp processes whilst allowing for DApps to run independently from the underlying blockchain processes.

ICON segment node participation in the network into multiple channels;

  • The Public Channel in which DApps are formed and interacted with; anyone can participate
  • The Notary Channel through which independent blockchains transact
  • The Representation Channel allowing governance of the conglomeration of blockchains to function independently of the governance of constituent blockchains

Loopchain’s consensus mechanism, Loop Fault Tolerance (LFT), is Byzantine Fault Tolerant (BFT) and designed to prevent forks, in which consensus is reached faster by creating a group of trusted nodes that are allowed to propose new blocks. All nodes participating in generating consensus are required to stake ICX. Leader nodes gather transactions across the network and generate blocks which are broadcasted to each of the validator nodes for confirmation. If the votes achieve quorum then a new block is created. LFT utilises a technique called spinning to select differing primary nodes for each block creation, mitigating the risk posed by a faulty primary, which propose blocks of transactions to other nodes for verification.

Some of the key features and technologies of the ICON project:

  • Smart contracts which run locally rather than on a Virtual Machine, called Smart Contracts on Reliable Environment (SCORE), facilitate real-time transactions (with the exception of Communities whose blockchains cannot achieve consensus in near real-time; in this case ICON consensus is pending that of the community) and run independently from underlying blockchain processes, meaning a problem with the Smart Contract will not perturb basic blockchain functionality.
  • Multi-channel features allow independent channels where transaction data is only held by those transacting. This might present an assurance to prospective enterprise users concerned about preserving the privacy of transaction information.
  • A Tiered System with PKI based authentication for each transaction allows different access privileges. enabling function specific nodes to be created, such as those required for audit or supervision.

Although ownership of ICX in and of itself is not sufficient to gain voting privileges in the Nexus blockchain, it is a necessary condition. Only nodes contributing significantly, as measured by The Icon Incentive Scoring System (IISS), to the ICON network qualify as Community Representatives (C-Reps), and are incentivised to maintain the ICON Republic. C-Reps have the right to vote on verification of transactions and their governance in the ICON Republic.

Asset Details

ICON’s token, ICX, acts as an intermediary currency in the ICON DEX, in addition to being used to pay transaction fees on the network, ICX is also the medium of reward for nodes supporting the ICON network. ICX is required to influence governance of the system through the ICON Republic. Any newly issued ICX is first held in the public treasury. Transaction fees will be distributed on an approximately monthly basis. ICX will be distributed to Full Nodes and Light Clients according to their I_Score. A participant’s I_Score will be the weighted sum of the following inputs:

  • ICX transaction amount (as a proportion of all ICX transactions)
  • DEX transaction amount
  • Participation in voting
  • DEX freezing volume
  • DApp generation and usage

ICX design aims to provide an intermediary currency for transferring one cryptocurrency to another, leveraging the Bancor protocol to ensure liquidity between ICX and any token listed on the ICON DEX. Using ETH to buy ICX via the ICON DEX will increase the reserve balance of Ethereum and decrease the reserve of ICX, which in turn causes an increase in the price of ICX as offered at the DEX. ICON will make arbitrage transactions to mitigate divergent values between the ICX on the ICON DEX and ICX as available on third party exchanges.

ICX Tokens are issued by the ICON Foundation, a Swiss not for profit organisation. Newly issued ICX will first be held in the Public Treasury, from which all incentives are allocated. Additional ICX will be issued after the TGE. Token allocation: 50% to fundraising; 16% reserve; 14% to the foundation; 10% to the community group and strategy partners; 10% team, advisors and early contributors. Use of proceeds: 20% Tech company; 20% Reserve1; 15% Reserve2; 15% Business development; 12% operation expenses including legal; 10% strategy partner; 8% marketing expenses. The ‘Tech Company’ will be covering the development of the blockchain engine, DApps, A.I. etc. Reserve1 is for Ethereum based networks interacting with the DEX and Reserve2 is for other blockchain based networks.