Aeternity was developed by a team headed by Yanislav Malahov, who is considered the ‘Godfather of Ethereum’, as a public, open source digital asset platform that is built on decentralized peer-to-peer cryptography where transactions are processed using high bandwidth. It is built on a scalable blockchain technology where smart contracts are connected to real-world data through decentralized oracles.
Aeternity was built after problems surrounding other cryptocurrencies which were identified as the lack of scalability, complex nature of analyzing smart contracts, the high cost involved in integrating real-world data into smart contracts, and the limited capability of smart contracts platforms to update themselves.
These problems and more are what Aeternity aims to give a solution to, as it uses state channels to move smart contracts off-chain. Where the smart contracts are run on private state channels to exchange value between parties involved in the said contracts. This state channels enable Aeternity’s smart contracts to remain scalable and keep it private on the condition that there are no disagreements between its consisting counterparts.
Aeternity uses decentralized oracles as opposed to the Turing-complete model as smart contracts require that certain conditions be met before transactions are carried out. While these conditions are being met in smart contracts if a dispute arises then Oracles keep undeniable accounts as evidence and execute decisions accordingly. Oracles on Aeternity are decentralized and used in many cases including voting, weather conditions and pricing etc and this ensures that there is no central point of failure in the system.
A hybrid of Proof of Work (PoW) and Proof of Stake (PoS) is used on Aeternity, where Proof of Work is used for consensus while Proof of Stake is used for governance. This blend of PoW and PoS creates a unique form of governance which gives miners the ability to vote while value-holders are able to bet on developmental proposals, this, in turn, helps Aeternity become more versatile and better in the future.
Aeternity is embedded with its native value token called “AE tokens” or “æon” which is transferred between users and also used to pay participating nodes for various computation performed. These AE tokens are also used as a means to prevent spam in the system as storage and computation time are allocated proportionally to the amount of AE tokens offered by the request. Computation time and space on Aeternity platform are paid for using AE tokens too.
Features of Aeternity
The features of Aeternity which set it apart from other cryptocurrencies or smart contracts processing platforms include:
Decentralized Oracles Machine – With this machine integrated into Aeternity’s system, data from outside sources or real-world data are brought in for use in smart contracts. This means that information from our real world like weather conditions, sport reports or events, human deaths, current prices of shares etc which are hosted on other websites or platforms outside the Aeternity system like the price of gold, the weather condition in Japan or the score of a hockey game can all be checked or accessed on Aeternity platform. Since this data would be coming from sources outside the Aeternity secure platform, the veracity and accuracy of this data from outside sources would be voted upon by users using prediction markets.
Prediction Market – Aeternity uses prediction markets for its various verification and voting purposes within the platform. When various data from outside sources are brought into the system through various oracles, the prediction markets is the point where users bet on the accuracy and veracity of the data.
Hybrid Proof of Work and Proof of Stake – Like many cryptocurrencies, Aeternity uses proof of work for its consensus, where miners verify the creation of new blocks but with a twist to allow for scalability purposes as it blends proof of Stake to form a hybrid where a new graph-theoretic proof of work combines with the scalable memory requirements for instant verification. This new graph-theoretic proof of work design is called “Cuckoo Cycle”. With this Cuckoo Cycle in place, Aeternity can be mined on mobile devices. The governance of the Aeternity system is controlled by proof of stake where users can vote on developmental proposals based on the amount of AE tokens they own.
Open Source Aepps – Aeternity is focused on developing their decentralized open source applications that they call “aepps” as they hope to attract mobile and web applications developers into the platform with their mobile-first and user interfaces focused aepps. This means that with time other projects can be built on Aeternity.
State Channels – Aeternity uses state channels to move smart contracts off-chain to ensure greater privacy as only the two parties involved in the transaction can view the information and operations of the contract. This state channels increase the efficiency of the smart contract as they do not have to pay the network whenever a computation is done thereby resulting in low-cost of transactions.
Identity Network – This feature allows a user to create and own an identity on the Aeternity network. This created identity can be used on the web, on voting systems, in real life and outside Aeternity network.
Cuckoo Cycle Mining Algorithm – Aeternity uses Cuckoo Cycle algorithm in its mining which is an improvement in the ASIC method as it uses memory-hard mining. Which means mining can be done using low-powered devices like Smartphones thereby achieving a decentralized and distributed effect of the mining power.
Differences Between Aeternity and other Cryptocurrencies
- Unlike other cryptocurrencies who use either Proof of Work or Proof of Stake, Aeternity uses a hybrid of both Proof of Work and Proof of Stake. Where Proof of Work is used for consensus while Proof of Stake is used for governance.
- Aeternity uses Cuckoo Cycle design which enables AE tokens to be mined on mobile devices, unlike most cryptocurrencies where mining is done solely on personal computers.
- Unlike most cryptocurrencies, Aeternity uses state channels which ensure privacy as smart contracts are stored off-chain to enable speedy transactions and to save resources in the blockchain.
- Decentralized oracles are used in Aeternity to connect smart contracts with physical world data, unlike other cryptocurrencies which use Turing-complete models.
- Unlike most cryptocurrencies which charge hefty fees for transactions on their platform, Aeternity’s use of state channels has made low-cost of transactions possible.
- Applications requiring fast processing can be created and executed on Aeternity.
Aeternity Pros and Cons
- Ethereum has many scaling issues that they are currently trying to solve, AE looks to solve that problem.
- Erlang is a very secure and reliable language on the platform.
- Cuckoo Cycle is innovative and power efficient.
- Their team of engineers is very capable of developing a solid project.
- AE team has revealed that they are communicating with marketing agency and will take some steps, but at the right time.
- Currently, people fail to see innovation and true value because bad communication and marketing.
- Much competition surrounds this same space that AE is fighting for.