Review of the two-year development of DFINITY, how is the performance of technology and ecosystem?

Author: Baize Research Institute

Do you still remember the former king-level project DFINITY?

In May 2018, 50,000 registered participants received ICP tokens airdrop.

In August 2018, DFINITY raised $102 million from a16z, Polychain Capital, KR1, Amino Capital, and other crypto venture capitalists, forming a team of over 215 members, most of whom are world-class cryptography technology, academic, and leadership talents.

In May 2021, the highly anticipated Internet Computer (IC), developed and maintained by the DFINITY Foundation, officially launched its mainnet.

DFINITY attracted investors, application developers, and community participation in the early stages of development, thanks to founder Dominic Williams' visionary idea of a decentralized "world computer," a public chain that can build fully on-chain DApps without using centralized cloud services like AWS, a public chain that can support countless high-performance DApps, and a decentralized cloud computing platform that can scale infinitely.

Vitalik Buterin, co-founder of Ethereum, has mentioned DFINITY on several important occasions. During the recent EDCON 2023 conference, Vitalik referred to the IC network developed by DFINITY as a sister network to Ethereum, rather than a competitive relationship.

However, all of this has disappeared with the plummeting price of ICP tokens, community criticism of the network system, the development of multi-chain narratives, and the recent Ethereum L2 craze. In just a few months, from "king" to "fallen king," from the initial heat and fervent discussions, to the rare mention of DFINITY and ICP in the Chinese crypto community. Along with other star projects of the same period (Chia, Filcoin, etc.), it has become a representative project of "peaking at debut."

Now, two years after the mainnet launch, how has the performance of technology development and the ecosystem been? The author will introduce the development of the IC network over the past two years from three aspects: ICP 1.0, ICP 2.0, and the ecosystem airdrop season. (Note: 1.0, 2.0 are unofficial definitions)

ICP 1.0: Perfecting the underlying infrastructure, expanding the network through on-chain governance

NNS: The on-chain governance system built into IC

Since the launch of the IC network mainnet in May 2021, it has undergone over 140 upgrades, an incredible number.

All of this is thanks to the on-chain governance system designed for the ICP token—the Network Nervous System (NNS).

Every ICP holder can become a neuron by locking ICP and participate in NNS, and will receive system rewards for participating in governance. This is similar to the "staking mining" model, where participants lock their ICP to gain voting weight and corresponding rewards based on the amount and duration of staking. The longest staking period is 8 years, which is the origin of the largest community "8yeargang" (8-year party), composed of a group of loyal ICP fans who have accompanied the growth of the IC network.

NNS proposals cover almost every aspect of the IC network, including modifying system parameters and rules, system optimization and upgrades, freezing and unfreezing accounts, adding or reducing subnets, and node approvals, among others. When a proposal is approved, the IC network will automatically upgrade according to the parameters in the proposal.

In other words, NNS represents the voice of the ICP community, and the IC network upgrades according to the community's voice.

However, due to the fact that any neuron can initiate proposals, NNS does indeed have a large number of junk proposals, and neurons that support the passage of junk proposals can earn more token rewards through active participation in governance voting. Although the development team has proposed modifications multiple times, this issue has not been effectively resolved to date.

Currently, approximately $1.4 billion worth of ICP is staked on NNS, enough to place the IC network among the public chains with the highest TVL.

Infinite subnets: Supporting the "world computer" narrative of the IC network

At the time of writing this article, the TPS of the IC network is approximately 5200 transactions per second, which is an astonishing number. However, its upper limit is infinite.

While Ethereum is focusing on transitioning to sharding, the IC network had its own sharding solution since its launch, namely subnets. Subnets are a special type of blockchain within the IC network that can seamlessly integrate with other subnets, expanding the capacity of the entire IC network by adding subnets.

If the IC network needs more computing power and storage resources, the system will combine nodes to create new subnets through community regulation based on NNS proposals. Subnets interact with each other through ChainKey technology, allowing smart contracts within the same subnet or different subnets to communicate directly.

Currently, the IC network has 40 subnets, and this number will continue to increase in the future as the IC network is further adopted and developed to meet increasing capacity demands.

Despite its powerful technical architecture and the strong technical soil it has opened up for DApps, unfortunately, due to the manipulation of ICP prices by FTX founder SBF after the listing, many investors and developers have lost confidence in the IC network, dealing a double blow to the token price and the ecosystem. In 2022, bankruptcy, collapse, and bear market panic were all gathered. Fortunately, the early applications in the IC ecosystem quietly persevered, and the community struggled through this year amid bullish and bearish arguments.

ICP 2.0: Technological expansion, ecosystem setting sail

Looking at the entire Web3 ecosystem, it is rare to see a public chain like DFINITY that "enjoys itself in its own world and goes with the flow in others."

In the Web3 industry, there are countless projects that run away with money, not to mention in a bear market with a lack of funds, shrinking profits, and community criticism. To determine whether a team is inclined to run away, one must see if they are seriously working in the face of community ridicule and attacks, continuously developing products, or gradually disappearing and lying low. Some projects, in order to survive, are willing to abandon their original vision and chase after hot trends.

On Twitter, community members often suggest to founder Dom to take a different path, such as whether to vigorously promote IC NFTs following the NFT craze? Only by continuously introducing new users to the IC ecosystem can the token price and struggling ecosystem be revitalized.

Clearly, DFINITY still needs to stick to its own path, a path that must be walked for twenty years. In the article "Announcing the 'Mainnet' of the Internet Computer and the 20-year Roadmap," Dom revealed DFINITY's long-term development path. This path is not about "Killing ETH," not about becoming No. 1 in the crypto and blockchain industry, but…

5 years later (2026): More and more traditional Web2 entrepreneurs and development teams are developing products on the IC network, and fundraising becomes easier for DAO governance.

10 years later (2031): Becoming the "open internet" of the tech industry, a true Web3.

20 years later (2041): Becoming a larger "open internet" than Web2, expanding into everyone's life.

Two years after the mainnet launch, DFINITY is still exploring in multiple key technological areas to make efforts to achieve this roadmap.

ckTokens: Advancing into the multi-chain ecosystem

In August 2022, the DFINITY Foundation announced that it had successfully integrated the IC network with the Bitcoin network. In simple terms, each subnet and smart contract in the IC network can use threshold ECDSA signatures to receive, store, and send real bitcoins on the Bitcoin blockchain. (Not a cross-chain bridge, all transactions using this method will be broadcast on the Bitcoin blockchain)

To facilitate the circulation and application of Bitcoin in the IC network, based on this technology, the development team introduced ckBTC, a Bitcoin-anchored token similar to WBTC, managed by the ckBTC smart contract (issuance, destruction). Users can mint ckBTC by sending real BTC to the smart contract; conversely, when sending ckBTC to the smart contract, the smart contract will pay BTC to the user's Bitcoin wallet.

In other words, transactions will only settle on the Bitcoin network when users transfer BTC into and ckBTC out of the IC network. Therefore, users using ckBTC in the IC network will not be affected by the slow transaction speed and high fees of the Bitcoin network.

In fact, there are already quite a few Bitcoin-anchored tokens in the entire Web3 ecosystem, but ckBTC's advantages have the ability to stand out among them:

• ckBTC has sufficient collateral, and users can even check the amount of collateral at any time during transactions.
• ckBTC is fully decentralized, directly managed by the governance system NNS.
• Enabled with KYT (Know Your Transaction), blocking black bitcoins, making it more secure and compliant.

Currently, the total amount of ckBTC in the IC network has reached 47, worth approximately $1.2 million.

Inspired by ckBTC, DFINITY plans to build a "ckTokens" ecosystem in the future, integrating with more public chains in a non-cross-chain bridge manner. It is expected that the IC network will become the "hub" of the future multi-chain ecosystem. The direct integration of the IC network with Ethereum and the development of ckETH have been put on the agenda.

SNS: DAO LaunchPad for Ecosystem Projects

SNS, which was referred to as the "flagship product" of the IC network alongside NNS at the launch of the mainnet, has finally been officially launched this year.

Both NNS and SNS are core governance infrastructure of the IC network. The former is responsible for the governance system of the entire IC network, while the latter is a "one-click" governance system specifically designed for ecosystem DApps to promote their development in open governance, tokenization, transparency, and other aspects.

Every DApp in the IC network can use SNS to quickly issue tokens and open governance. This generally requires 5 steps:

• Set SNS parameters
• Transfer control of the DApp
• Submit a proposal to NNS (whether to activate SNS, how much ICP needs to be raised)
• If approved by NNS, initiate decentralized token sales
• If the sales target is met, the DAO is successfully launched, and future upgrade proposals for the DApp will be released in the DAO of the SNS project; if the sales target is not met, control is returned to the project team

Users can participate in the decentralized token sales of DApps through the "LaunchPad" function of NNS, using ICP for payment.

Currently, 5 projects have successfully become DAOs through SNS, including the decentralized chat app OpenChat, the decentralized short video platform Hot or Not, the decentralized search engine Kinic, the first meme coin on the IC network ICGhost, and the Web3 game Dragginz. Three platforms are currently in the proposal stage, including the decentralized community management platform Catalyze, the decentralized gaming platform Boom DAO, and the AI computing power trading platform EMC.

Airdrop Season Approaches: Will the IC Ecosystem Explode?

If you have been following the ecosystem since the launch of the IC mainnet, you may have noticed that due to the lack of unified token standards, the development of DeFi has been relatively slow. The most intuitive feeling is that most early ecosystem projects are SocialFi, with many of them targeting some Web2 platform giants.

In fact, the design of the IC network is naturally suitable for DApps that require high performance, such as SocialFi and gaming. On most mainstream public chains, all operations involving on-chain interactions (contract function calls) require a certain amount of gas fees, and the cost of interactions is influenced by the price of the native token in the secondary market. Additionally, in the case of network congestion, the cost of interactions will also increase accordingly.

The IC network has implemented a "reverse gas" model, which, as the name suggests, is the opposite of the traditional blockchain gas model. As users, we do not need to pay any gas fees when interacting with the chain; instead, developers prepay interaction gas in smart contracts, similar to the mechanism of the traditional internet, where developers bear the operational, maintenance, and hosting costs of the application platform.

This greatly improves usability. Compared to Ethereum, where users must buy ETH on an exchange and then withdraw it to a wallet in order to use DeFi and NFT applications, this barrier directly blocks most potential users. On the IC network, developers provide gas for running DApp smart contracts, and users simply enjoy the service. As a result, users can easily use DApps, even without knowing that the application is running on a blockchain.

Currently, most early applications in the IC ecosystem have officially launched, and some have begun preparing for SNS token sales, leading to many airdrop expectations. With the attraction of one-click DAO activation on SNS, more and more projects are starting to build on the IC network.

(Due to space constraints, the following section lists only some of the popular DApps on the IC network. For more DApps, please refer to the list I have compiled: http://reurl.cc/QXkNK9)

1. DeFi

Infinity Swap

A well-established IC DeFi platform.

Notable investors include PolyChain and a16z. It has clear interaction airdrop and SNS token issuance plans.

Bitfinity

An Ethereum L2 (IC EVM layer) launched by Infinity Swap, aiming to connect IC with Ethereum.

Currently in the testnet phase, the official products include a wallet, cross-chain bridge, and block explorer. It is attracting more projects to build on it. When the mainnet is officially launched, it may trigger a wave in the IC community, and the SNS token issuance is worth paying attention to.

ICDex

An early DEX on the IC network with relatively good liquidity and support for a wide range of tokens.

Active on Twitter with a significant following. The official products also include IC Swap. It is currently transitioning to multi-chain asset DeFi (token cross-chain). On ICDex, users can engage in trade mining to earn ICL token rewards, and ICL tokens can be traded on ICP Swap.

ICP Swap

A well-established DeFi platform on the IC network, with features including token exchange, liquidity mining, NFT marketplace, and governance, and is planning to introduce a chat function.

The token is confirmed to be ICS, with a total supply of 10 billion. It is expected to be issued on SNS in the second half of this year and become a DAO. There is an expected interaction airdrop.

Sonic

A new force in the IC ecosystem's DeFi, with features including token exchange, liquidity mining, and LBP (token issuance through liquidity bootstrapping pools).

According to the co-founder, the liquidity mining feature is about to be launched, and all liquidity pool creators will receive token airdrops.

Funded

The IC version of Gitcoin. Projects and communities can raise funds on the platform and provide NFTs with custom reward rights to donors, such as token airdrops and discounts during token sales. NFTs can be traded on the platform. Many popular projects on IC have conducted crowdfunding campaigns on this platform, including HOT or NOT and Catalyze.

Users can receive rewards by donating to promising new projects. For example, Catalyze, which is currently conducting a decentralized token sale on SNS, will airdrop tokens to NFT holders who donate on Funded.

2. SocialFi

Openchat

One of the earliest social apps on IC, the IC version of Telegram. It supports creating group chats, sending emojis, and sending red envelopes (ICP, ckBTC), and will soon introduce voice and video chat features. Every regular user is entitled to 0.1GB of message storage space for free, and unlimited storage as a diamond member.

The OC token has been issued through SNS. Currently, users can upgrade to become a diamond member of Openchat to receive an invitation link and invite friends to register and receive CHAT token rewards. Additionally, later this year, Openchat will launch a reputation system (through a DAO proposal), where chatting can earn money, but it will focus on reviewing spam messages from bots.

DSCVR

One of the earliest social apps on IC, the IC version of Reddit. It supports posting, upvoting, commenting, tipping, creating and joining topic portals, and has recently launched a web-based gaming platform where developers can submit and upload games. Polychain led a $9 million investment in DSCVR.

As an early IC project, it has not issued tokens through SNS yet, but if the project issues tokens, it is highly likely to conduct an airdrop, as the platform has conducted large-scale airdrops of SNS-1 tokens. Therefore, interested users can interact without much cost. Additionally, DSCVR frequently collaborates with other projects to host events with prizes, so users can participate more.

Distrikt

One of the earliest social apps on IC, the IC version of Twitter. It supports posting, upvoting, commenting, and using hashtags.

According to the roadmap, the project will issue tokens on SNS in the fourth quarter of this year. There may be an airdrop, so users can interact more.

Hot or Not

The IC version of TikTok. It has brought the short video TikTok model to IC, using Web3's unique token economy to incentivize passive users.

Recently, the project completed its token issuance plan on SNS. It is currently conducting an airdrop campaign, and users who register for the project before July 15, 2023, can receive HOT+COYN airdrops. Additionally, as a Web3 project, Hot or Not is dedicated to earning money by watching videos, so interested users can interact more, as it may introduce token airdrops based on rankings or behavioral activities in the future.

Catalyze

Catalyze is a community governance platform where creators can join, create their own groups, and interact with fans. They can also create NFTs to unlock online or offline activities.

At the time of writing, Catalyze is conducting a decentralized token sale on SNS. Additionally, the official roadmap shows plans for an airdrop, so early participants/official NFT holders should pay attention to when the airdrop will occur.

Seers

More like the IC version of Twitter than Distrikt, but with fewer active users than Distrikt.

Seers currently only has a "post to earn" activity, where users are rewarded with ICP tokens based on the activity of their posts each week, but the rewards are minimal. Additionally, to prevent bots, users must stake 1 ICP at registration, which hinders user adoption. However, the good news is that Seers also plans to issue tokens on SNS and become a DAO.

Dmail

The first decentralized email service on Web3, offering communication, domain names, asset transfers, NFTs, subscriptions, notifications, and more. Notable investors include Hashkey, Kucoin, and BiXin. In addition to the IC network, Dmail has now integrated with other networks, including Starknet, Sei, ETH, Solana, and others.

Recently, Dmail first partnered with Worldcoin, then completed a pre-Series A financing round, and is actively collaborating with other wallet projects (to accelerate adoption). It currently has over 550,000 registered domain accounts and over 300,000 individual addresses, with a promising future. Dmail is currently implementing a point-based system and is expected to conduct airdrops in the future.

3. Gaming/NFT/Metaverse

Plethora

The IC version of "Tamagotchi Party." Completing daily tasks gives users a chance to win NFTs from the game's official partners.

IC1101

One of the early projects in the IC ecosystem, a metaverse platform built on the IC network.

Currently in the testnet phase, it has outstanding graphics quality and strong technical capabilities, and has been selected for support by the Hashkey-backed Future3 incubator program. However, the development team's marketing efforts have been somewhat unsatisfactory.

BoomDAO

BoomDAO's flagship product is a decentralized game launcher that integrates many game projects built on IC. Users can link their wallets with a single click and play different games. Game developers can quickly upload games, issue tokens, or NFTs. In addition, BoomDAO is committed to developing game-friendly tools such as a universal game engine.

It plans to issue tokens through SNS in August and has confirmed an airdrop. Users can quickly join the community on the official website and be ready for the upcoming airdrop.

Yumi

The most popular NFT trading marketplace on IC, at the forefront of IC's NFT field.

Conclusion

I fully agree with Herbert, the Asia-Pacific General Manager of DFINITY, in the "ICP Interview: Responding to Doubts, Entering Hong Kong, and the Launch of the ICP Ecosystem," where he stated, "The narrative of financial investment has become tired, and the market will ultimately return to its essence, focusing on the underlying infrastructure services of the internet.

DFINITY has chosen the most difficult and even lonely path because we believe it is the only path that can be sustained and is worth pursuing. Once this muddy path is taken, it will become wider and smoother."

DFINITY has indeed done many great things, such as the highly original token economics, reverse gas model, and on-chain democratic governance through NNS.

However, DFINITY has also made poor choices, such as establishing a long-term stable governance system by incentivizing neuron lockups for 8 years, resulting in permanent "oligarchy."

Nevertheless, it is commendable that from ICP 1.0 to 2.0, DFINITY has consistently adhered to its original vision: a public chain that can build fully on-chain DApps without the need for centralized cloud services like AWS, and a public chain that can support countless high-performance DApps. With the continuous development efforts of the development team, I believe DFINITY will get closer and closer to its 20-year roadmap.

Early ecosystem projects have also quietly grown into a series of strong "Web2 killers." With the arrival of the ecosystem airdrop season, can DFINITY, or rather the IC network, return to its peak? We wait and see.

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