April 11, 2023: Conflux Network π§§π
PoS-PoW blockchain with regulatory compliant RMB stablecoin receives Curve gauge
Leviathan News Livestream, April 11, 2023, starting around 7 AM PT:
Conflux Network
The Curve community welcomed Conflux Network with a rapid and overwhelmingly favorable passage of its gauge vote.
The Conflux gauge proposal drew far more attention than usual. Why exactly? See if you can spot it in this short bullet point summary of Conflux:
Conflux Network, launched in October 2020, operates an open blockchain with a hybrid proof-of-work / proof-of-stake consensus mechanism.
Confluxβs operates two network spaces powered by its native CFX token: eSpace, focused on DeFi applications, and Core, focused on the China market.
Conflux boasts itself as the βonly regulatory-compliant permissionless blockchain network in Chinaβ, including the first offshore yuan stablecoin (CNHC) and a likely Hong Kong Dollar coming soon.
Naturally, itβs the prospect of a stableyuan that attracted peopleβs attention, given the broader narrative interest.
At the moment, the only Curve pool in question is to pair the Ethereum wrapped version of their native CFX token with raw ether, but the team indeed has broader ambitions for their Curve pool.
On DefiLlama, Conflux is tracked as the 43rd largest chain with $32MM in TVL.
The scope here appears to be roughly on scale. Eyeballing the networksβ dual CRC-20 token trackers indicates the largest tokens on the network are in a similar range: FansCoin on Core has a market cap of $13MM and the two largest tokens on eSpace have market caps of $18MM and $16MM each.
An additional pocket of liquidity not tracked here is the staking portion of Confluxβs hybrid model. According to their block tracker ConfluxScan, 252MM CFX worth about $130MM is staked and earning 14.4% APY.
Why exactly a proof of work / proof of stake hybrid? The documentation explains that a pure PoW chain is always susceptible to a 51% attack, so adopting a blended PoS/PoW model increases the cost of such an attack.
Chris from Conflux was kind enough to explain the technology underlying this unique blended model:
From a tech perspective, our PoW Consensus (Tree-Graph) is the only PoW that can scale to 3000 TPS by including concurring blocks while maintaining high levels of decentralization. Conflux PoW incorporates all valid blocks, even concurrent ones, into a single data structure called the Tree-Graph. This Tree-Graph ledger, along with the GHAST chain selection mechanism, facilitates the order of execution of all transactions in the system in a scalable and robust manner. The Chief scientist of this is Prof. Andrew Yao (Turing Award Winner).
More here: https://confluxnetwork.org/files/Conflux_Protocol_Specification.pdf
The TreeGraph, which adopts a Directed Acyclic Graph structure, is described in further detail in their 2020 white paper. The consensus algorithm is referred to as a βGreedy-Heaviest-Adaptive-SubTreeβ (GHAST), in which blocks are weighted and grouped into a βpivot chain.β
Far more interesting reading in the developer docs, which are highly recommended.
By far, the most attention-grabbing aspect of this proposal is not so much the technical achievements, but the regulatory-compliant exposure to China and RMB stablecoin aspect of the project.
While none of their stablecoins yet have been bridged to Curve, it is clear the team has a deep understanding of Curve and its underlying architecture. Their ambitions regarding Curve are a key reason they pushed heavily to approve a gauge with a pool for their governance token. They also have ambitions for birbs for their pool, via their recent appearance on Leviathan News:
As westerners, we know China has a complicated relationship with cryptocurrency, having previously been among the top Bitcoin miners when not hammered by near-annual bans. Despite these past aggressions, a βChina narrativeβ took off earlier this year, as the western world realized late that the Chinese government was thawing towards cryptocurrency, in particular via Hong Kong. This led to a frenzy of speculation into any token westerners perceived to have something of an Asian glow.
The CFX token sits at $0.43, ranked 59th on CoinGecko and enjoying a truly blessed run since the Chinese New Year.
The yuan stablecoin being touted in this proposal is CNHC, which is issued on Conflux. Described as βthe only regulatory-compliant off-shore CNY (CNH),β the website explains the token is subject to the laws of βHong Kong and Singaporeβ and is applying for licenses in first world countries.
The team is also likely to issue a Hong Kong dollar stablecoin:
The recent China / HK narrative helped Conflux gain exposure in the West. When taking a closer look at Conflux and its unique regulatory position in China, it also expands into Hong Kong 2. Hong Kong Monetary Authority (HKMA) is set to demand licensing for stablecoin issuers in Hong Kong, and with already a regulatory CNH stablecoin on Conflux Network, an HKD stablecoin to be issued on Conflux seems to be very likely once the regulation officially kicks in.
If it is indeed the case that CNHC is the leading stable yuan (as a θε€, we canβt claim to accurately judge this ecosystem), then the digital yuan landscape is merely in its infancy. Confluxβs token tracker lists a total supply of 10MM CNHC and 637 holders. This contrasts with the United States, which by far has the lead in DeFi thanks to a whopping $131 billion in dollarcoins floating around the ecosystem.
However, the United States is making monumental strides towards self-castration on this front, attempting to bully stablecoin issuers out of existence in a stunningly idiotic gambit. Chinaβs footprint in stablecoins may presently be small, but if it continues moving aggressively to supplant the United Statesβ unearned lead, this flippening will easily rank among historyβs most catastrophic national blunders.
We hope the home-team leadership is wise enough to read the tea leaves here. Either our country can keep Genslering our national fortune into oblivion, or we can begin playing shrewdly with a strategic eye fixed on victory. Which way, western leader?
Further reading
Conflux Links:
Further Reading
Disclaimers! Author has no positions within Conflux or its ecosystem.
