Kadena is another blockchain project that is trying to address the Bitcoin trilemma. The trilemma concerns that resolving any of the scalability, security, and decentralization issues will be possible at the price of deemphasizing the two others. In other words, the trilemma implies that there is a tradeoff between the three points, and it’s not practical to address them all equally.
Kadena has approached the problem by braiding (i.e., integrating) several blockchains together to execute transactions in a model called Chain Web. The model can be described as a form of sharding that distributes data to different nodes of a network. Moreover, the project has created a unique programming language for developing smart contracts called PACT that aims to address Solidity’s (Ethereum programing language) deficiencies.
Kadena was established in 2016 by two American developers, Stuart Popejoy and Will Martino. They had previously worked together at JPMorgan, an American multinational investment bank and financial services in New York. Stuart was the executive director and head of the blockchain team, and Will was the lead engineer for Emerging Technology’s open-source Juno project. Stuart got his BA from the University of California in Comparative Literature, and Will graduated with a bachelor’s degree from Yale University in Economics and Mathematics in 2010.
In addition to a well-rounded founding team, Kadena enjoys the counsel of the blockchain co-inventor, Dr. Stuart Haber, the most cited author in Bitcoin’s whitepaper. Other Kadena team members have also been introduced on its website, and Kadena has been reasonably transparent in presenting the project’s team. You can read more about other Kadena engineers and programmers here.
What is Kadena, and how does it Work?
As Will Martino explained the project in an interview with Dukascopy TV, Kadena is currently the only ‘scalable Proof-of-Work layer-one blockchain protocol’ that allows for high speeds and low transaction fees. The platform’s functionality and throughput are powered by combining Directed Acyclic Graph (DAG) and PoW mechanisms.
By way of explanation, Kadena combines up to 20 chains that work simultaneously and asynchronously which makes it capable to execute 480,000 transactions per second (TPS). However, it should be noted that all chains are not connected to each other, and a chain can be linked only to three other chains.
Kadena has modeled its blockchain on Bitcoin and added its unique architecture to the blockchain. Bitcoin has only one chain, and when a new block is created on the chain, it is connected to the previous one. In a two-chain ecosystem, whenever a new block is created, it is connected to the last block on its native chain and the previous one on its peer chain.
A two-chain ecosystem is twice as secure and scalable as a single blockchain because it contains proof from two blocks instead of one. Kadena has significantly increased the scalability and security of the blockchain by braiding 20 chains based on an algorithm that connects all chains using only three connections. All the while, Kadena has been faithful to its model by maintaining the anonymity of the transactions on its blockchain.
What are the Advantages of Kadena?
Scalability: Kadena’s architecture is designed with a focus on scalability. With braiding 20 blockchains, the developers claim that the platform’s maximum capacity will never be reached. In addition, the use of PoW consensus guarantees the platform’s security and anonymity.
Interoperability: Many blockchains have modeled Ethereum and used Ethereum Virtual Machine (EVM) to develop dApps. The downside of the dApps and decentralized games developed based on EVM is that they need a connection to the user’s wallet. Kadena’s wallet integration has eliminated the need to connect the dApp to your wallet, making the interface connections easier.
Gas station: the transaction fees in Kadena are very low, but the platform has even made it cheaper by developing its gas station mechanism. The gas station features dApps with the ability to allow users to use the dApps without paying transaction fees. The elimination of transaction fees paves the way for mass dApps development.
Programing language: Kadena’s developers claim the programing language, PACT, is truly human-readable and is created to simply smart contracts.
What are the Limitations of Kadena?
Transactions: Kadena claims to have the capacity to handle 480,000 TPS. While the number may captivate the reader, it should be noted that the platform’s TPS capability is theoretical and is achievable only by combining the platform’s private chain with its layer-one public network.
Architecture: Kadena’s project is based on sharding which makes it inoperable for certain types of dApps. It can also increase the latency in the network.
Mining: the blockchain’s native token (KDA) can only be mined with ASIC miners, which are extremely expensive for average users. Also, since it is based on PoW consensus, it consumes tremendous power resources. However, it should be noted that, unlike Bitcoin, KDA mining difficulty stays the same as new blocks are mined.
Tokenomics: the issue concerns two points: inflation and concentrated distribution. Kadena fees are very low and, therefore, not a good source of income for miners. As a result, the platform pays the miners through token emissions by creating a tremendous amount of KDA tokens. Miners will have to sell the tokens to pay for the required power resources to keep the devices on, creating an oversupply in the market, and ultimately resulting in inflation.
Regarding the token distribution, only 23 percent of KDA tokens are owned by insiders. Still, you should keep in mind that 70% of all tokens are allocated to miners, which, thanks to the unaffordability of the mining, is out of average users’ reach. So, miners and insiders own a large portion of the asset, which centralizes the ownership of the tokens.
Kadena’s unique design for addressing the Bitcoin trilemma makes it outstanding among the many projects with the same intention. However, using PoW consensus at a time when blockchain giants like Ethereum are inclining toward PoS is not rational. Also, the costs of mining the blockchain’s native token are very high and unaffordable for average users. Overall, the project seems quite legitimate and has a great use case, but regarding the above limitations, traders and investors should be more cautious when dealing with Kadena.
Official Website: www.kadena.io
Source: The Pipsafe Team