Graphene (symbol GPH) is an industrial grade “crypto-equity”, peer to peer distributed ledger and network based on a Delegated Proof of Stake (DPoS) algorithm. It was created in 2014 by visionary Dan Larimer (“Bytemaster”), co-founder of Steemit, EOS and Bitshares.
Graphene is based on graphene technology, an open source C++ blockchain implementation, which acts as a consensus mechanism. Graphene technology is used by several other projects like Steem, Golos, Hive (decentralized Reddit, blog platform), and EOS (platform for smart contracts) indicating real-world usage.
Graphene operates more as an equity rather than a purist “currency” since GPH tokens are used as collateral for a variety of decentralized financial services like smart contracts, decentralized exchanges, banking, derivative creation (of market pegged “gpAssets”) and currency rails.
Consensus algorithm: Delegated Proof of Stake DPOS
Block time: 1.5-second average, 3 sec max, ~1.5 sec latency for 99.9% irreversibility certainty
Block reward: 0.3 GPH (from Reserve Pool)
Irreversible blocks: (2 * BLOCK_INTERVAL * WITNESSES / 3) ~ 34s
Coins not in reserve fund: 3 915 644 GPH (2021 Sept 28)
Coins in reserve fund: 96 084 356 BTS (2021 Sept 28)
Maximum Coins: 100 000 000 (constant)
Maximum Transactions Per Second: 100,000+ potential (proven 3,400+ tx/s)
Noteworthy is the lightning fast blockchain with 1.5 second average block times and throughput potential of 100,000 transactions per second (which is quite a competitive advantage in the market).
Graphene management is controlled by a Decentralized Autonomous Company (DAC), a framework which allows Graphene holders to contribute and ultimately decide on the future direction of GPH. This DAC operates independently but in tandem with the original open source code base that is developed and tweaked continuously.
This is way better than long cumbersome strings of letters and numbers which is just asking for bad user experience and errors. Your username acts as your wallet address (like your social media or google login). It’s much easier to remember and type “john-smith” then 21x9d8sv37sd6m282u4j2hg9h4orbjht2u98f3.
Graphene competes with banks by issuing collateralizing market-pegged and stable gpAssets (also called smart coins)
This means crypto-based assets track real-world market assets like the US dollar denominated “gpAsset” known as gpUSD. This tracks the movements of the dollar by aggregating a variety of data sources that are maintained by the Graphene community.
This Smart Coin token always has at least 200% (or more) of its value backed by the Graphene core currency (GPH), to which it can be converted at any time, as collateral in a smart-contract based loan managed by the blockchain.
What makes this platform unique is that it’s free from counterparty risk yet still has a loan backed by collateral. This is achieved by allowing the network (and software protocol) to secure collateral and perform settlements.
A Graphene market-pegged asset (MPA) can be viewed as a contract between an asset buyer seeking price stability and a short seller seeking greater exposure to GPH price movement.
Graphene offers the capability to loan your GPH holdings with customizable reserve levels (a minimum of 200%, reaching as high as 1000 or even 2000%+ reserves). Graphene integrates with any stock, commodity or currency pair provided there are price feeds available. In addition, gpAssets including gpGold, gpSilver, gpOil, and other crypto focused commodity pairings can also exist in this construct.
It’s a working, dynamic “smart” economy which adjusts to the needs of the market. To help preserve price stability, large collateralized loans (10-20x) can be created allowing loans to last almost indefinitely.
Traditional exchanges create counterparty risk as receivers of fiat and issuers of IOUs
Typically with exchanges, there’s a clearinghouse required to facilitate buyers and sellers. While providing a needed service for the market, there is room for improvement as centralized management is a constant security risk.
Exchanges have withdrawal limits and other regulatory restrictions which can include furnishing various forms of identifications, utility bills and other documentation to be onboarded
How Traditional Cryptocurrency Exchanges Operate:
Exchanges issue and redeem IOUs and maintain the market ledger
Has anyone ever considered how the same entity doing the above 3 steps is a conflict of interest? Not to mention a security risk. The same people are responsible for both the security of funds and the “books” of the whole market
There is no reason why the same entity needs to be responsible for issuing IOUs and for processing the order book. In fact, this is actually a disadvantage from a security standpoint.
Decentralized Exchanges (DEX) remove the single point of failure and counterparty risk
Because these two roles have been combined this causes centralization particularly in the Cryptocurrency space with exchanges. This has proved to be problematic especially when exchanges mismanage wallets, keys or any other vulnerable aspect of the infrastructure. (Causing breaches, hacks and other losses of assets like with Mt Gox, Bitfinex, or Mintpal)
Gateways broker entry and exit into different asset pairs
Gateways operate as trustless portals to trade various assets that are recorded on the GPH blockchain. A gateway buys the coin and then sends it to your wallet, under your control.
RuDEX is a project which allows users to purchase various assets (called rudex assets) which are IOUs like any Gateway coin. (Similar to buying from any other exchange IOU system like Bitfinex).
The DEX eliminates High-Frequency Trading (HFT), front-running and hidden orders
The DEX levels the playing field for trading by eliminating the ability to conduct the usual Wall Street shenanigans. In that system, shrewd insiders position their trading infrastructure close to the exchanges for faster order filling coupled with trading algorithms which shut out most non-insiders.
You can trade a variety of Crypto based instruments and other derivatives
Things like silver, gold, oil, and other crypto-based derivatives including stocks, bonds, and other market baskets. These pairs can be traded against each other so you could trade silver to gold or gpUSD to BTC.
Smart Coins are marked assets (MPA) backed by real-world value
These are built-in features and are pegged to assets such as gpUSD mirrors the USD fiat value. 1 gpUSD will always be redeemed for at least $1 of GPH. Price parity is retained through a price feed maintained by Witnesses. This allows collateralized shorts and options opening the door for Graphene to take a bite out of the estimated $1 quadrillion derivatives market.
No trading limits and low fees create a new level of financial freedom
Most exchanges require furnishing personal information, bills, tax paperwork and other data compelled through Know Your Customer (KYC), Anti-Money Laundering (AML) and many other regulations. With a DEX there would be no limits and no hoops to jump through or gauntlet to conduct your own transactions.
The problems with expensive, power-hungry proof of work and its rule of the few
Proof of Work (PoW) as seen with Bitcoin chews up a significant amount of energy using computing resources to solve math problems. Many consider this unsustainable long term. In addition, with the emergence of ASICs, many users are shut out that cannot afford or scale up quickly enough with the difficulty. Those miners ultimately have the power to support the network or not to, as their machines are the backbone of the blockchains security and validity.
Enter Delegated Proof of Stake (DPoS)
Traditional Proof of Stake (PoS) operates by users holding coins which create additional coins. Delegated Proof of Stake (DPoS) eliminates Proof of Work and adds onto the traditional Proof of Stake architecture with a Governance layer. Users “delegate their stake” and allow electing of Witnesses who collect transactions, bundle them into a block, and broadcast to the network. Witnesses and are paid in shares for this service from the reserves pool.
Proxy voting allows voters to give and retract power to a Witness
1 GPH = 1 vote in the Graphene network. For most users, this process is burdensome which is why proxy voting was proposed. This helps reduce voter apathy and allows shareholders to react quickly to immediate business and security concerns. Traditional bureaucracies, “red tape”, are slow and make governance slow. With delegated Witnesses, you get temporary contracted centralized management with the right to retract that power thus preserving decentralization.
Witnesses package and validate transactions, publish price feeds (the basis for gpAsset market tracking), maintain the blockchain and improve the Graphene ecosystem.
Committee members are responsible for adjusting the fee schedule of transactions to ensure they remain at a low level as the price of GPH rises. To be elected, the protocol calculates the difference between up and down votes for each Committee Member. (Similar to Reddit post voting) Then, the median of top rated users will become Committee Members.
Code acts as a channel to submit proposals, contribute value and earn Graphene
You can set up a “worker”, a specific GPH account, to propose work for the Graphene network. You would include a scope of work, start/end dates and your pay rate which would be sent to the network of GPH token holders. They receive and vote on the proposal which can be accepted or rejected by the network. A counteroffer (like with requested pay rate) can also be issued back to the initial user proposing.
Graphene shares network fees among members
Graphene offers membership subscriptions which provide a “lifetime” membership of reduced fees for using the Graphene rails. In addition, there is a referral program for members that is one level deep which allows them to receive reduced fees and a percentage of the fees that are paid by those they refer.
Sounds great, but what about the downfalls? There’s always something…
The collateral risk of a “black swan event” (sudden crash in value)
Market pegged assets track the price of real assets through a crypto derivative that’s backed by collateral with established market value. Ultimately all gpAssets are denominated and collateralized by Graphene (GPH). This token is not immune from price action including drastic drops in value.
Although there’s a built-in construct to trigger margin calls (selling out positions to cover original principal), it’s isn’t foolproof. The biggest risk is the value drops too quickly and collateral can no longer purchase the asset. Sort of like if a home drops in value below the total loan due to a market downturn.
While the total market capitalization of Cryptocurrency has overwhelmingly increased exponentially to date, that has not been without a long bumpy ride. This Black Swan event would greatly erode confidence in the system and disrupt the ability to conduct a safe transaction (such as a loan), especially on a large scale.
People and businesses (banks even more so) are sensitive about their money so it must work flawlessly. This is still all very experimental technology, which is probably scary for “big money people”.
No one can prevent the possibility of unforeseen breaches, software bugs or exploits
While this argument could be made about any project to date including Bitcoin, it is still valid for this projects. As seen with the $53 million DAO hack in Ethereum, they had to hard fork the network which caused a split into two different coins: Ethereum and Ethereum Classic.
User error is the documented cause of most problems with IT and cybersecurity. This is a perpetual threat not only with Cryptocurrencies but Technology in general. As with all Crypto, this is experimental tech so a healthy amount of skepticism and caution must be exercised, always.
Ultimately, Graphene leads the pack with exemplary thinking and architecture
Just to recap the main ideas covered:
Despite all of these risks and challenges mentioned, the team perseveres, grows and continuously irons out kinks. Their services are just awesome (despite definite risks and pitfalls). I have personally used their DEX and find it fairly intuitive, smooth and quick.
As the platform matures and proves itself, it will attract interest from FinTech and financial services players.
I tend to show extra heavy interest in projects that promote decentralization and real-world use cases.
Shaky market confidence, token dilution, hidden hackers, lurking regulations, and other unforeseen pitfalls await us. (And frankly many “coins,” maybe even most, will not make it long term)
That’s why it’s super important that we put our attention toward helping build meaningful long-term focused communities and projects.
I believe Graphene is one of them.