Analysis of Oracles Network – Consensus by Respectable Individuals - Crush Crypto

Analysis of Oracles Network – Consensus by Respectable Individuals

Summary

  • Project name: Oracles Network
  • Token symbol: POA
  • Website: https://oracles.org/
  • White paper: https://hackmd.io/s/HkV8Vw7_-
  • Hard cap: US$12.5 million (public crowdsale ICO contributors own 70% of total coin supply if hard cap is reached)
  • Conversion rate: 1 POA = 0.000233 ETH
  • Maximum market cap at ICO on a fully diluted basis: US$18 million
  • Bonus structure: None
  • Presale or white list: Pre-sale registration ongoing at https://oracles.org/tokens# with a minimum of 100 Ether
  • Blockchain protocol: Oracles native chain
  • Timeline: Presale from November 17 / public crowsdale from December 1, 2017 at 9am PST to December 15 (please refer to Oracle Network’s website for the most up-to-date information)
  • Coin distribution date: When mainnet is launched – estimated to be December 1 to 15

Project Overview

What does the company/project do?

Oracles Network is a fork of the Ethereum network with a Proof-of-Authority (PoA, a modified Proof-of-Stake) consensus mechanism, reached by independent pre-selected validators.

All validators are required to have an active notary public license within the United States. With the identities of the validators being public, the validators are more likely to act in the interest of the network.

A block will be generated with an average time of 5 seconds. Each Oracle Network has a current capacity of around 1.5 million transaction per day. A faster network allows for building new types of applications where response rate from the distributed consensus is important.

Since Oracles Network is Ethereum-compatible, Ethereum dApps can easily migrate to and run on Oracles Network with a faster response time and higher capacity.

Replication of networks is also part of the strategy of Oracles Network. There can be many clones of the network (called “Clone Swarm”), each catering to a different community.

Oracles Network also has a cross-chain bridge connecting any Ethereum-compatible networks. A sample use case would be an ICO project collecting funds from the main Ethereum network while issuing tokens on another, more cost-efficient Oracles Network. On a bigger scale, such bridges will allow value to be transferred seamlessly between the networks.

Here is a cross-chain bridge video demonstration (video is 2:57 long):

The picture below shows how Oracles Network works:

Oracles Network flow chart
How advanced is the project?

The idea of Oracle Networks was announced in April 2017. In August 2017, the testnet was launched with 12 independent validators.

As of November 2017, there are 11 dApps built by the Oracles Network team, 3 of which are exclusive to Oracles Network. The list of dApps can be found here.

One of the dApps, ICO Wizard, was used by Upfiring for their ICO. The tool allows anyone to easily create ERC20 tokens and manage their own ICO. Here is a video demonstration of the ICO Wizard (video is 7:11 long):

What are the tokens used for and how can token value appreciate?

Similar to how Ether functions within the Ethereum network, POA coins are used as transaction fees on the Oracles Network. It is also used as validators’ reward for securing the network.

The emission rate for validators is 2.5% for the first year of the network. The network will use a disinflation model, and the rate of emission will decrease every year. An additional 2.5% will be added to support sustainability of the network.

As POA coins are used whenever there are transactions on Oracle Network, the more usage the Oracle Network has, the more valuable POA coins should be.

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Team

Oracles Network has a team of 10 contributors, some of whom are contributors to the open source project. The bios of the key members are listed below:

Igor Barinov, co-founder – serial entrepreneur. Co-founder of Block Notary, LLC, a blockchain-based verification project, and former Blockchain Consultant of Acronis.

Viktor Baranov, core developer – senior systems engineer at Hintsolutions LLC, also works on Block Notary.

Advisors of the project include David Thelander, Managing Partner of Par Equity LLP and former Managing Director of PricewaterhouseCoopers, Mark Pui, Executive Director of PricewaterhouseCoopers, and William Mougayar, Author of The Business Blockchain and Advisory Board Member of the Ethereum Foundation.


Opportunities

  • Team is solid with extensive experience in the blockchain space. The various dApps, including ICO wizard, shows the capability of the team.
  • The project is an innovative and quick way to solve the Ethereum scalability issue by using multiple Oracle Networks. It can be useful for dApps because of its 5-second block time – it will make transactions more responsive than the current Ethereum network.
  • After the team reduced the hard cap from $25 million to $12.5 million, the project now has a low hard cap for a blockchain protocol. 
  • If the project becomes successful, the potential can be substantial – the valuation of all the major blockchains are orders of magnitude higher than that of Oracles Network.

Concerns

  • Since the main advantage of Oracles Network is speed and scalability, if Ethereum is able to scale according to the roadmap and through off-chain solutions, the attractiveness of Oracles would be reduced dramatically.
  • All validators of Oracle Networks are US residents. Although they are independent, it might not be decentralized enough in the eyes of some.
  • POA is not an ERC-20 token, so it may take a longer time for exchanges to list it as some integration is needed.
  • The Proof-of Authority system is not bullet proof. If the incentives are large enough, validators can still act maliciously even if their identities are known.

Conclusion

Overall, we like this ICO for its short-term potential and are neutral on its long-term potential. Our thoughts of the tokens for short term and long term are as follows:

For ​short-term holding

Good. With the solid team and advisors, and the low hard cap considering it is a blockchain, we believe the project can sell out with unmet demand.

For long-term holding

Neutral. We believe the attractiveness of POA coins depends on whether Ethereum is able to scale through on-chain and off-chain solutions. POA coins can be used as a hedge in case Ethereum cannot scale.


For more information about the ICO, please visit the following links:

Website: https://oracles.org/ 

Whitepaper: https://hackmd.io/s/HkV8Vw7_- 

GitHub: https://github.com/oraclesorg 

Blog: https://medium.com/@oraclesorg 

Telegram: https://t.me/joinchat/FlX0FD_ndCsB4_n60sCu2w

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