Understand Chia Network in three minutes: What are the characteristics of the self-proclaimed "compliant and environmentally friendly Bitcoin-like public chain"?

Chia pursues environmental protection and efficiency, embraces supervision, and strives to build a secure, easy-to-use open source decentralized blockchain network, aiming to become a global payment and settlement network system to meet the needs of sovereign states, financial institutions, and large enterprises.

Technical features

According to its white paper, Chia uses the new Nakamoto consensus - Proof of Space and Proof of Time. Under the premise of ensuring the lowest energy consumption, anyone can use a computer, mobile phone or enterprise-level network to mine as long as the device has a certain amount of storage space. No mining machine or dedicated GPU is required. The Chia business white paper states:

“We expect Chia mining to significantly reduce energy consumption and resource concentration compared to proof-of-work (PoW) and proof-of-stake (PoSe).”

In order to ensure commercial application and customizability, Chia independently developed Chialisp, a smart contract language based on Lisp. The Chia team said that Chilalisp is a safe, concise language designed specifically for banking, payment and financial applications and needs.

Unlike the asset self-custodial (non-custodial) in existing blockchains, Chia allows users to customize asset custody and liquidation settings to prevent accidents such as key loss and hacker attacks. Chialisp will also promote blockchain applications to comply with Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

Other special features include:

• Multi-signature and atomic swaps: Allow businesses to use multi-signature accounts to quickly complete transactions.

• Authorized receiving wallet: Set up a specific wallet to specify the receiving account to reduce the risk of attacks and misappropriation of funds.

• Transaction rollback: allows transactions to be rolled back within a certain block to meet the needs of transfer errors, shopping refunds, etc.

• Deploy the "Colored Coins" smart contract to allow institutions to issue assets on the chain. The "Colored Coins" smart contract allows Chia chain applications to complete complex arbitrage transactions without "flash loans", improving DeFi applications.

• As well as limiting transfer amounts, sub-account paper wallets, and decentralized identities.

Compliance

From the perspective of technology adoption and function settings, Chia is fully prepared for compliance.

As early as 2018, Chia Network applied for a micro IPO to the U.S. Securities and Exchange Commission (SEC), attempting to raise funds from the public through Reg A+, but ultimately Chia Network was unsuccessful. Another blockchain company, Blockstack, obtained SEC approval and completed fundraising through Reg A+.

After that, Chia changed direction slightly and planned to be listed on the US stock exchange market. After the mainnet is launched, Chia will apply to the SEC for an IPO at an appropriate time.

Economic Model

The Chia Network mainnet was launched on March 17, 2021, with the native token XCH.

There is no upper limit on the total amount of tokens issued. A block reward halving measure similar to Bitcoin is adopted. The initial halving is as follows:

• During the first three years of the mainnet launch, each block will be rewarded 64 XCH (one block every ten minutes)

• From the fourth to the sixth year, each block will be rewarded 32 XCH

• From the seventh to the ninth year, each block will be rewarded 16 XCH

• From the tenth to the twelfth year, each block will be rewarded 8 XCH

• After twelve years, each block rewards 4 XCH

When Chia was launched, the "Strategic Reserve" managed by Chia was created with 21 million XCH. The Strategic Reserve is used for Chia's economic growth, shareholder rewards or investment in Chia network application development. Chia also hopes to reduce XCH price volatility by using the Strategic Reserve.

Mining

Mining of Bitcoin and Ethereum requires a lot of electricity and specialized equipment. In comparison, Chia is more environmentally friendly. As long as there is enough hard disk space on the idle device, you can mine and earn money. The Chia team has repeatedly stated that from this perspective, Chia can better achieve decentralization.

Chia mining requires two steps - device configuration (Plotting) and mining (Farming). The so-called configuration is to install and debug the mining software on an idle device. The configuration software needs to temporarily occupy about 332 GB of hard disk space. After the installation is completed, the software occupies 103.3 GB to 108.8 GB of space. After the installation is correct, you can start mining.

The mining process consumes very little bandwidth resources. Apart from requiring a certain amount of hard disk space, there is no other large amount of resource consumption.

For Chia configuration hardware requirements and details, please refer to the Chia Blockchain Wiki.

Summarize

Chia places special emphasis on the popularization of payment applications. Chia can be lent to creditworthy institutions such as governments and financial institutions for asset issuance, increasing market liquidity, etc. At the same time, it helps Fortune 500 companies to achieve low-cost and secure cross-border payment solutions.

Chia’s vision can be summarized in one sentence from the white paper:

“One day we can use Chia to buy coffee in California. Currently, banks, governments, and DeFi organizations will use it to build new financial technologies to solve cross-border problems, so that there will be no need for too many middlemen in the future.”

References:

1. FAQ - Chia Network

2. Chia plotting basics

3. Chia-Business-Whitepaper-2021-01

4. Chia Consensus - Google Docs