The final day of June 2018 is significant in the crypto world given the mainnet transitions of a number of prominent tokens. Vechain, for example, will move from being an ERC-20 asset on the Ethereum blockchain, while Ontology will say goodbye to NEO and NEP-5.
In addition to these to major migrations, Fusion (FSN) a network with a $177 million market cap, will also shift from an ERC-20 smart contract to a main network, on the 30th of June.
While mainnet transitions such as these bring opportunities for the protocols to blossom on their own terms, they can also come with logistical challenges. For example, All Vechain VET token transactions were previously handled by miners from the Ethereum network, which is large, decentralized and possesses immense processing power.
The Vechain blockchain will now have to depend on its own native miners to provide processing power, handle block production and achieve network consensus for securing transactions. As we have seen with EOS this can be a challenging transition to make.
On the flipside of this, Vechain will be switching to a Proof-of-Authority consensus algorithm — a system said to allow more straightforward network governance and fewer mining bottlenecks. If faster transactions times and greater efficiency is achieved via the new consensus method, this could potentially bring more investors, Dapp developers and enterprise partners to the network.
How a mainnet begins its life
The process of switching ‘temporary’ ERC-20 token to a new network, can be a challenging. It requires a high level of coding literacy from the dev teams behind the networks, as well as coordination, particularly given that a vast majority of switching tokens sit on third party platforms such as wallets and exchanges.
In this sense, mapping to a new network can happen in two broad forms. Token holders can be made to shift their tokens away from sitting in third party addresses like exchanges or wallets, to an address controlled internally by the switching network (manual switching).
However, the process of shifting tokens between addresses is at the very least inconvenient for token holders who have chosen to leave their assets with secure third parties. In a number of cases, third parties support the switching and handle the network mapping on behalf of the transitioning blockchain. This means token holders can leave their tokens sitting on external exchanges and all switching will be handled for them, and the network, by infrastructure within the third parties (automatic switching). TRON during its switch, took this approach and mapping for all token holders could only occur via a third party exchange, a fully automatic token swap.
The ONT approach
Alternate approaches are an option, however. With Ontology, for example, the network lets users choose between leaving their funds with supported third parties, like Binace, Huobi Pro, Upbit, KuCoin, Gate.io, and CoinEgg, or switch manually via a secured Ontology address to be released after the mainnet launch on the 30th of June.
For Ontology (ONG) token holders, there is an additional consideration regarding its upcoming mainnet launch. Ontology post-launch, will be a smart contract network and as such, requires ‘Gas’ to operate. Similar to NEO, Ontology will separate the network and will have two operable tokens. ONT will represent an ownership stake in the network, which will reward the holder with ONG, which will then be used as the Gas to confirm smart contracts.
With the mainnet launch, there is a question of how best for ONT holders to receive ONG on the new network. The most efficient method would appear to be via a native Ontology native, which will deposit new ONG daily for ONT holders, and is run by the Ontology team. However, if a holder prefers, Binance has announced that it will also deposit ONG gas for ONT holders.
Binance handles millions of dollars worth of funds daily, and holders may feel safer with them being their fund’s custodian, versus a new network early in its lifecycle.
Vechain Thor launch – a staggered timeline
With Vechain, similar to TRON before it, the mainnet launch and migration will be two separate events. On the 30th of June, the main network will be launched. Interested developers and the Vechain team will explore code, test for bugs and establish new nodes, before a full migration set for mid-July.
Currently, a few exchanges including Binance and Huobi Pro, have announced support for the Vechain network launch. It should be expected that more will sign-up to handle the switch before mid-July. There will also be a Vechain Thor mobile wallet released before the migration, and it is likely that token holders will be able to choose the mobile wallet for the token swap, rather than use a third party.
For Vechain, the network move will signal a significant shift in the utility and tokenomics of the protocol. Holders should be wary of this. For purely aesthetic purposes, the VEN ticker will change to VET. Additionally, the tokens will be mapped 1 VEN to 100 VET, a psychological decision indicating that Vechain expects their market to expand in the future.
At the time of the launch, if 1 VEN = $2.50 then 1 VET will equal $0.025. Holders should be assured that their coins are not being diluted and the market cap of the Vechain network will not be changing. They are not being made richer or poorer as a result of the token swap. Any profit or loss for investors will be based on market views of the launch and if the new network is seen as offering novel solutions.
Similar to Ontology, The network is broken up into two tokens. In this case they are separately used as a stake in the network (VET), and as a medium to access more complex smart contracts run on the blockchain (THOR).
Holding VET will ensure that a specific amount of THOR will be allocated to a Vechain address. Unlike Ontology, where nodes will decide the conversion rate for tokens, THOR allocation is based on a static rate that can change monthly. As specified in the Vechain whitepaper, the THOR rate, based on its equation, will adjust to ensure there will always be partners wanting to participate in the network.
The launch also provides an opportunity for token holders to become involved with mining on the Vechain network. There are number of different types of block producers on the network, with each a tiered block reward program. For the highest level, authority masternodes, 25 Million VET will need to be staked (After 1:100 split). At current market rates, this equates to an approximately $650,000 worth of collateral.
The other altcoins switching
Also set to switch to their own mainnets are the smaller networks, Fusion (FSN) and Credits (CS).
Fusion will have a unique method for mapping, and will use its internally developed LILO (Lock in-Lock out) methodology.
In this system, private key information is sharded and spread out across different nodes in the network. Fusion’s algorithm is designed so that during a transaction, nodes holding shards of the private key are online and available during the verification process. Once each node has suitably confirmed the signatures of the shards of the original key making the transaction, the original transaction is confirmed and processed.
Because of the perceived security of the LILO system, Fusion has decided to handle all token-swapping via its own addresses, and not use any third parties.
For Credits (CS), news of its main network launch comes from a roadmap published in 2017. However, there has no been no mention of protocol, or nature of the switch from the official Credits twitter or medium accounts. It is unclear, therefore, if a token swap will actually occur on the 30th of June.
The importance of a testnet
Before a main network is launched, there is normally a test version of the network released where integral new features are trialled. Zilliqa (ZIL) a token with a marcap of $ 812,934,234, will release its testnet v1.0, in preparation for an eventual mainnet arrival in Q3 2019.
Zilliqa is a network vaunted for its transaction speed capabilities generated by a unique sharding protocol. Based on most recent closed testing, the network may be able to achieve speeds as high as 2,500 transactions per second.
The new testnet will begin the process of embedding a new security-focused smart contract coding language, Scilla. Zilliqa is hoping to cut out any potential hacking risks when hosting on the network, at the language level. Safe smart contracts are a recurring issue within blockchains given flaws such as those in the infamous DAO contracts and more recently found by bounty hunters within EOS’s code.
Disclaimer: This article has been designed for informational and educational purposes only. Readers are advised to conduct their own independent research into individual assets before making a purchase decision.
On the 30th of June major networks Vechain and Ontology will shift from existing as sub-tokens, operating as smart-contracts on parent networks, to their own proprietary networks.