ICON (ICX)
What is ICON (ICX)?
ICON is a decentralized blockchain network focused on interoperability. With ICON’s “blockchain transmission protocol”, independent blockchains like Bitcoin and Ethereum can connect and transact with each other. This opens up cross-chain use cases that are impossible without an interoperability layer like ICON.
ICON Network describes itself as a general-purpose blockchain protocol based on the native cryptocurrency ICX that can run smart contracts, adopt the BFT-DPoS (Delegated Proof-of-Stake) consensus protocol, and use an economic-governance protocol called DPoC (Delegated Proof-of-Contribution). The ICON Network is powered by a proprietary blockchain engine called 'loopchain' and has the ability to handle hundreds of transactions per second. The ICON project was started to ensure the integrity and transparency of data shared between institutions and companies, and to move mutual assets on heterogeneous blockchains without a centralized organization. In the long term, ICON Network aims to become an 'interchain' that connects multiple blockchains based on BTP technology.
The ICON blockchain is powered by loopchain, a blockchain engine designed by ICONLOOP. ICONLOOP is responsible for loopchain’s government and enterprise adoption in South Korea. Loopchain is the Seoul Metropolitan Government’s standard blockchain platform.
Who created Icon?
Founded in 2017, Icon was released by the Icon Foundation, an organization based in South Korea that drives development for the project.
In September 2017, an initial coin offering (ICO) for Icon’s cryptocurrency, ICX, raised 150,000 ETH (roughly $43 million) in a sale that included 50 percent of Icon’s token supply.
The official Icon blockchain launch occurred in January 2018 and ICO participants received their ICX cryptocurrency in June of that year.
How does Icon work?
The Icon blockchain uses a delegated proof-of-stake consensus algorithm to determine which nodes can add new blocks to its blockchain.
The idea, used by other major cryptocurrencies like Tron and EOS, is that by not determining blocks through competition (like mining), the network can more quickly reach consensus.
Icon’s blockchain, in particular, ensures collaboration between five major components.
These include:
- Icon Republic : The network’s governing structure and the decision committee for the blockchain’s operations. Icon Republic is composed of nodes from Icon communities.
- Icon Communities : A network of nodes within a single governance system, Icon communities can operate with their own set of rules and consensus algorithms.
- Community Representative (C-Rep) : Elected nodes from each community trusted to communicate with Icon Republic. C-Reps receive ICX for their work.
- Community Nodes (C-Nodes) : Act as infrastructure for each community and are responsible for governing and maintaining a community’s blockchain.
- Citizen Nodes : Don’t have voting power, but have the ability to make transactions within a community, with other communities and with the Icon Republic.
How Loopchain Works
Loopchain is the algorithm that powers the Icon blockchain, integrating messaging between all the nodes that make up the Icon Republic.
To accomplish this, Loopchain uses something called the Loop Fault Tolerance (LFT) algorithm.
Similar to other delegated proof-of-stake (DPoS) algorithms, Loopchain assigns nodes to group transactions into blocks, add those blocks to the blockchain and distribute these blocks to other network nodes. Validation nodes, in turn, confirm the creation of the block, check if the block hash is correct and validate the block data.
How Icon differs from a traditional DPoS blockchain is that it reduces the number of steps needed for the consensus process.
More specifically, LFT uses a technique, called Spinning, that simplifies the algorithm used to select who can create blocks and the validator nodes that confirm them.
Why does ICX have value?
Core to Icon’s economy is a concept called the “Icon Incentives Scoring System” (IISS), an algorithm tasked with measuring contributions to the ecosystem and distributing ICX.
This model differs from what is commonly implemented on Bitcoin (BTC) and Ethereum (ETH), where a single group (miners) must buy specialized computer hardware and burn energy to compete for the new cryptocurrency it mints.
ICX Staking
Each ICX cryptocurrency can be locked, or “staked,” to represent one vote that can be delegated to support various entities.
These include:
- Representatives : Block producers and validators in the Icon Republic, consisting of public and community representatives.
- Dapps : Decentralized applications operating on one or more smart contracts.
- EEPs : Projects funded by the Icon blockchain and that are meant to encourage the growth and expansion of the ecosystem.
By staking ICX, owners and the entity they delegate votes to receive a small reward. The IISS uses staking to determine I-Score, a unit used to quantify a user’s contribution to the network.
More details on ICX staking can be found here.
ICX Rewards
The IISS dynamically determines the rewards and issuance rates per block using variables including Public Representative votes (C-Reps), the amount of transaction fees in a block and the total amount of ICX staked. These variables are also used in the I-score calculation.
New ICX cryptocurrency is minted every block and sent to a public treasury contract where contributors can claim ICX as determined by their I-Score. The amount of ICX minted is determined by the amount of transaction fees in each block.
If the amount of transaction fees within a block is equal to the required ICX issuance, no new ICX cryptocurrency will be minted.
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Cryptocurrency