ICON (ICX) Blockchain Review – The New Era of Decentralization
ICON is a blockchain that dreams of becoming the mother of all blockchains and “hyper connect the world” by bringing financial institutions, insurance companies, hospitals, universities, and other organizations into the same room.
For those who do not know yet, there are more than just one blockchain out there. Some support cryptocurrencies like Bitcoin. Others enable the development of dAPPs through smart contracts that can be useful in secure storage and share of medical records, payments, royalties, and many other forms of data.
The problem is that users from different blockchains cannot communicate with each other. Think of it as if two mobile users could not call each other because they have subscriptions to different service providers. Fortunately, that’s not true because we already have the technology that bridges this communication gap.
ICON aims to do the same in blockchain technology by providing a decentralized medium where all the existing blockchains and all of those yet to come will connect to enable seamless cross-chain operations. Here’s an ICON review that will tell you all about it!
What is ICON?
ICON is a decentralized autonomous organization (DAO) that aims to achieve and support optimal interoperability between all the blockchains in the world. It employs cross-chain technology to create a gargantuan network where Bitcoin, Ethereum, and other independent chains can communicate with each other regardless of their design or their consensus mechanisms.
ICON has the backing of the South Korean Government and its rapid development has earned it the moniker “the Ethereum of South Korea.”
ICON functions on a blockchain engine called LOOPCHAIN, which hosts NEXUS, a hub on which blockchains can connect freely and communicate or engage in cross-chain transactions. The participating chains will be able to mint both fungible and non-fungible tokens supported by ICON’s native ICX token.
To ensure perfect interoperability between the blockchains, ICON uses various technologies including the Blockchain Transmission Protocol (BTP) or the Incentive Scoring System (IISS).
Participants on the ICON network can use ICX to create and run smart contracts, employ the BFT-DPoS (Delegated Proof-of-Stake) consensus protocol, and abide by the ICON’s governance protocol called DPoC (Delegated Proof-of-Contribution).
ICON promises to perform hundreds of transactions per second and provide users with secure, transparent engagement on a decentralized platform where they can move assets freely regardless of the blockchain on which they operate.
Who is behind ICON?
Kim is also one of the co-founders of the Switzerland-based ICON Foundation that “oversees the ICON project’s core activities which include the promotion and development of the ICON protocol,” according to the ICON whitepaper.
DAYLI Financial Group sanctioned another South Korean blockchain company, ICONLOOP, with creating ICON and making it available for cross-chain operations.
ICONLOOP also works closely with the South Korean Government and the Seoul Metropolitan Government in developing blockchain tech solutions for both public and private use.
The LOOPCHAIN engine is still under development, and ICONLOOP is responsible for its maintenance and oversight. For now, the platform is not open source, but that should change in the coming months according to the latest ICON roadmap update.
What is the ICON (ICX) token?
ICON released its native token ICX through an Initial Coin Offering (ICO) in September 2017.
The history of the ICX token differs a bit from that of similar blockchain-native assets. ICX started as a cap-less ERC-20 token built on the Ethereum blockchain. ICON managed to sell more than 400 million units during the 2017 ICO at nearly $0.11 per token. However, those tokens represented only half of the initial supply of ICX minted by ICON.
The rest of the 400 million ICX tokens were distributed as such:
- 16% was given to the team, early contributors, and advisors
- 20% was given to the project’s community and its partners
- 14% was given to the ICON Foundation
In October 2018, the ICON Mainnet was launched, and the ICX token was swapped to Mainnet ICX coins with a 1:1 swap exchange rate (1 ERC-20 ICX token = 1 Mainnet ICX coin). After the swap, ICX holders could not convert them back to ERC-20 ICX tokens.
The participants on ICON can use ICX to pay fees for smart contracts, as well as for staking and transaction fees or any other financial operation on the platform. The token is also used as an incentive for user activity on the ICON network.
In August 2019, ICON enabled ICX staking on the network through the platform’s ICONex wallet and the Ledger Nano X.
The evolution of ICX on the cryptocurrency market was highly-promising in its early beginnings. After the token’s release in late 2017, one unit was trading for just $0.40.
A few months later, and in the aftermath of the Bitcoin Bubble Crash, its price skyrocketed and one ICX was valued at nearly $13.
Unfortunately, it all went downhill from there for ICON’s native token, which quickly reverted to its starting value, and it never recovered.
At the time of this writing, ICX has a market capitalization of $230,176,329. There is a total supply of 800,460,000 ICX, out of which more than 567,298,490 ICX are in circulation. Currently, ICX is trading for about $0.40.
ICX is available for trading on numerous exchanges, such as:
ICON also provides users with a unique network ID, called ICONick, which should replace the long and complicated default wallet address to make ICX transfers more convenient.
How does ICON work?
The ICON network aims to build “one of the largest decentralized networks in the world.” It has a hard and heavy task on its hands, which explains the sheer number of elements that compose it:
- ICON’s consensus mechanism
- ICON’s Incentive Scoring System (IISS)
- ICON’s DApp Ecosystem
- ICON’s governance structure
- ICON’s Blockchain Transmission Protocol (BTP)
Some of these critical components have existed since the launch of the network. Others are new, and almost all of them are under development until the platform becomes an open-source ecosystem.
Let’s break down these elements and see how they work so far!
The ICON Consensus Mechanism
Upon its release, ICON started using a modified version of the Byzantine Fault Tolerance (BFT) consensus mechanism, which they called the Loop Fault Tolerance (LFT).
Through the LFT mechanism, several nodes on the chain are responsible for verifying transactions and generating new blocks. From September 2019, ICON started using Delegated Proof of Stake (DPoS) to elect these block-generating nodes.
The ICON Incentive Scoring System (IISS)
The ICON network divides its users (ICONists) into two categories to determine the method of incentivizing them:
- Active ICONists – the users that generate blocks or develop dAPPs
- Inactive ICONists – the users that stake and delegate ICX tokens to the active ICONists
All these users amass points for their contribution to the network, which is summarized as an individual I-Score. According to their I-Score, each user can receive ICX tokens at any time at a rate of 1000 I-Score to 1 ICX.
The ICON’s DApp Ecosystem
For now, ICON users cannot vote on modifications to ICONLOOP, the blockchain that powers the network. Nevertheless, they have the power to implement changes by completing an intricate sequence of mandatory steps:
- Propose a network change through a DApp by using the network’s DAPP Booster Program
- Stake minimum of 500 ICX for the dAPP
- Convince at least 10% of all staked ICX to vote on it
- Gain at least 66% favorable votes
If these conditions are not met, the dAPP will be burned. On the other hand, if the community votes favorably for the DApp, the user who proposed it has 90 days to deliver the product for auditing and implementation by ICONLOOP.
ICON Governance Structure
In terms of governance, ICON works as a Decentralized Autonomous Organization (DAO) where every community chooses its delegates according to their origin blockchains, and who represents them on the ICON Nexus.
The voting mechanism is much more complex than in other DAOs. The users on the ICON network are divided into:
- Citizen Nodes (C-nodes) who are the users on any given blockchain
- Community Representatives (C-Reps) who are the C-Nodes’ representatives
- Public Representatives (P-Reps) who compose the assembly in charge of the ICON network
The P-Reps are voted every 24 hours by the C-Nodes and C-Reps in a system where 1 ICX token equals one vote. During their governing period, P-Reps can vote on up to 7 different governance variables including transaction fees and block rewards.
ICON Blockchain Transmission Protocol (BTP)
In May 2020, ICON released the BTP (Blockchain Transmission Protocol) which will evolve into a sidechain to increase scalability and allowing LOOPCHAIN to focus solely on blockchain interoperability.
The BTP will consist of 3 elements that any blockchain will have to implement if it wants to interact with the ICON network:
- The BTP Message Center
- The BTP Message Verifier
- The BTP Service Handler
BTP should function as a virtual machine that will incentivize users to develop smart contracts on the network. The sidechain will have its unique governance and incentive mechanisms.
ICON 2.0 BATANG Release and Features
In September 2020, ICON announced the release of “ICON 2.0: BATANG, a new blockchain software architecture based on Go.”
The new software is the result of over a year of the developers’ hard work that resulted in a complete overhaul of the original ICON network. This version should be a “faster, more stable, and scalable high-performance blockchain that inherits the current ICON Network.”
The developers named it “BATANG,” which is the Korean word for “foundation.” They believe that ICON 2.0 will revolutionize the concept of cross-chain operations and its integration of DeFi solutions is their proof for it.
The former ICON network was built on Python, but the new one uses a completely rewritten blockchain engine on the Go programming language, called “Goloop.”
The most important ICON 2.0 BATANG features include:
Python SCORE Executor
Through this feature, ICON separates the executor process from the consensus engine, thus increasing the network’s stability.
Java SCORE Executor
This feature enables SCORE developers to create their applications by using Java programming language.
New P2P protocol
This new feature will help the nodes synchronize when they deliver and receive messages.
This option will enable users to join the network consensus quickly and without synchronizing all the historical blockchain data.
Object Merkle Patricia Tree (OMPT)
This Merkle Tree implementation will calculate hashes only when they will be required.
This feature will enable network participants to access multi-cores using multiple threads through Go’s go-routines instead of Python’s global interpreter lock (GIL).
This feature should solve the problem of vote stagnancy and allow active ICX holders to have a bigger impact on governance than inactive users.
The IISS 3.1 design aims to improve the economic model on the network by dividing inflation into a few different predefined categories:
- P-Reps: 17.5%
- Relayers: 2.5%
- Contribution Proposal Fund: 10%
- Voters: 70%
This feature will enhance the ICON’s scalability by transforming each dAPP into application-specific channels. Each channel will become its own blockchain and enable developers to develop and launch their own networks.
The Bottom Line – ICON (ICX) Blockchain Review
ICON is a highly-ambitious initiative, to say the least. Behind it is the ICON Foundation, an organization that wants to build a world consisting of digital communities characterized by their origin blockchains and where the users function as voting citizens in a real-world country.
Connecting the entire world’s blockchains to an inter-operational hub may seem idealistic to some, but ICON has already made decisive steps forward in achieving its goal.
The network is progressing steadily, and while it may not be a fully decentralized organization yet, ICON has what it takes to evolve from South Korea’s Ethereum into an open-source, global rival of Buterin’s brainchild.