Helium Concerns

The elephant in the room here is SpaceX's Starlink project which is looking to bring the internet to the entire planet via satellite. Starlink cannot provide the 5g speeds that helium is hoping to host and it's possible if not likely that the two could co-exist. Whether enough people would care to use 5g if a functional connection is available without having to use a complicated cryptocurrency.

Amazon sidewalk

In terms of IOT amazon seems to be dead set on becoming the king of the IOT industry with the Alexa devices and something tells me that it took a few pages from helium's playbook. 

Amazon: A 900MHz TELCO

Because amazon announced amazon sidewalk in October 2019 just a few months after helium's main net went live helium's code is open source which would make it easy to copy and helium must have been on amazon's radar too because google ventures was one of helium's early investors.

Helium founder Amir Haleem seems to suspect the same thing. Because in 2017 he was saying open source all the way quote almost entirely open source. 

What helium's documentation says today keeping secrets close to your chest is best when you're trying to topple trillion dollar tech giants but it could also create some serious issues for helium down the line

One thing that comes to mind is the classification of HNT as a security by us regulators which is almost certainly the case. Helium literally has security tokens that are held by helium inc and its investors. This could mean that HNT won't be listing on any US Exchanges anytime soon and that's where most traders and investors are located including the ones that invested into helium inc. The solution is for helium to become sufficiently decentralized and that's probably why Amir has been very hesitant to answer any questions related to a roadmap it would send a signal to regulators that helium inc has retained control of helium.

This does seem to be the case though and it's easy to understand why helium has been a massive success and helium inc could someday become one of the biggest companies in the world as a consequence. 

Handing over helium to the community would be nothing short of crazy for helium inc and its investors which is why i think the proposal to introduce on-chain governance will pass this will conveniently give control of the protocol over to HNT holders and it's likely that helium inc and its investors hold most of its supply especially since they've been running hotspots since the start. 

This ties into another concern i have and that's the potential privacy risks people could face for installing hotspot devices i'll start by saying that all of the data transmitted over the helium network is encrypted and helium ink's own hotspots protect privacy to the fullest degree as noted by Emea in many interviews.

However helium's own documentation seems to imply that this isn't the case for all third-party hotspots and it even recommends you do your own research so you know what you're getting into.

Helium is the chip shortage that's currently going on some experts believe this chip shortage will continue for years and this means hotspot costs could stay inflated for a very long time. Even though helium's decentralized incentive structure makes 5g feasible if the price tag for the hardware is too high then not many people will be willing to participate. This could put pressure on helium to increase HNT rewards going to 5g hotspots so they can easily make back the cost but this could then put a strain on the hundreds of thousands of people who jumped on the longfire train. 

The good news is that all these issues can and likely will be resolved in due course and helium will almost certainly continue to thrive. if helium's peer-to-peer networks managed to reach global adoption it will change the world forever and it will make cryptocurrency truly unstoppable.

Links:

1. Helium History

https://fcnmn.blogspot.com/2022/02/helium-history.html

2. How Helium Work

https://fcnmn.blogspot.com/2022/03/how-helium-work.html

3. The Helium Blockchain

https://fcnmn.blogspot.com/2022/02/the-helium-blockchain.html

4. HNT Tokenomics 

https://fcnmn.blogspot.com/2022/02/hnt-tokenomics.html

5. HNT Price Analysis Helium 5G & Helium Roadmap

https://fcnmn.blogspot.com/2022/02/hnt-price-analysis-helium-5g.html

6. Helium Concerns

https://fcnmn.blogspot.com/2022/02/helium-concerns.html

HNT Price Analysis Helium 5G & Helium Roadmap

HNT uptrend accelerated in April when the helium community voted to introduce support for 5g infrastructure.

First there was the HNT halving which took place on August the 6th .

On August 10th Helium announced that Andreas and Horobits had led a massive VC funding round for HNT which totaled over 111 million dollars and featured other big names such as Alameda research.

On august 31st freedom phi announced that it would be the first to manufacture Helium Hotspots with 5g support. 

The first 5g helium hotspot was delivered just a few days ago and freedom phi hopes to have 20,000 5g enabled Helium Hotspots set up by the end of the year.

Helium has onboarded over 150,000 Hotspots for its IOT network in less than a year. we will see at least the same amount of exponential growth for its 5g network and probably much more. 

This is because the demand for 5g couldn't be higher and there's only one reason why 5g hasn't reached mass adoption yet. As highlighted by Helium founder Amir Haleem centralized 5g infrastructure is running into the same bottlenecks as IOT infrastructure.

5g signal has a very short range and this signal is easily disrupted something as minimal as too much humidity in a room could be enough to cut a 5g connection.

This means 5g towers need to be installed on almost every single home for 5g to be usable and the cost of setting up this kind of infrastructure in a centralized manner is too damn high. That's why Helium's goal is to incentivize people to run their own 5g towers and earn passive income for providing that service. 

Now because the currency used to pay for this 5g connection will be HNT derived data credits this will increase the demand for HNT.

If legacy internet service providers begin leveraging helium as part of their own 5g infrastructure as emea recently hinted this would turn the HNT demand dial up to 11.This would send HNT well past the moon and into the next galaxy.

Now with a market cap of under 2 billion HNT could easily 10x within the next year assuming the crypto market continues to rally.

Besides 5g helium has a whole host of other milestones on the horizon these can be found on the helium github as helium improvement proposals or hips.

Helium Roadmap

HIP 24: Reward Splitting

There are about a dozen hips currently being discussed and a few are worth pointing out the first is HIP 24 which wants helium to introduce block reward splitting this would make it possible for helium hotspots to send their HNT rewards to multiple wallets instead of one.

HIP 31: Governance by Token Lock

HIP 31 which wants helium to introduce on-chain governance via HNT token locking the proposed governance mechanism is quite robust. 

HIP 33: Regional Reward Adjustments  

HIP 33 which wants helium to optimize hot spot rewards in certain regions something which is arguably required given the different rules regulations and network resources around the world.

HIP 34: Validator Node Security Implementations

HIP 34 which wants helium to mask validator locations on the grounds that publicly broadcasting their IP could pose a security risk.

HIP 37: Omni-Protocol PoC on Helium Network 

HIP 37 which wants helium to adjust block rewards to sufficiently incentivize and compensate hotspots running other networks including 5g. 

HIP 38: Validators Oracles 

HIP 38 which wants helium to allow validators to become oracles for the HNT data credit conversion rate something which is currently done by just nine unknown oracles.

HIP 39: HNT Redenomination

HIP 39 which wants helium to redenominate HNT by a factor of 1000 meaning one HNT would be split into 1000 new HNT the author of the hip admits that redenomination has a habit of increasing price so that's definitely something to keep in mind. 

One hip that seems to be missing is a scaling solution for the helium block chain which will be required for it to sustain its exponential growth helium. As incredible as helium is it has no shortage of competition from legacy network providers.

Links:

1. Helium History

https://fcnmn.blogspot.com/2022/02/helium-history.html

2. How Helium Work

https://fcnmn.blogspot.com/2022/03/how-helium-work.html

3. The Helium Blockchain

https://fcnmn.blogspot.com/2022/02/the-helium-blockchain.html

4. HNT Tokenomics 

https://fcnmn.blogspot.com/2022/02/hnt-tokenomics.html

5. HNT Price Analysis Helium 5G & Helium Roadmap

https://fcnmn.blogspot.com/2022/02/hnt-price-analysis-helium-5g.html

HNT Tokenomics

HNT is the native cryptocurrency of the helium blockchain. HNT has a maximum supply of 223 million and there was no pre-mine and no ico.

Helium recently saw its first halving event which cut this annual emission down to 30 million. HNT's emission will continue to be cut in half every two years until the maximum supply is reached and at the current pace this should take about 50 years. 

Newly minted HNT are divided between helium hotspots validators Helium INC and investors. The percentage of newly minted HNT that these participants earn will also change over time specifically. the amount of HNT given to the team investors and proof of coverage rewards will decline and the lion's. Share will be given to helium hotspots handling data requests from developers.

Now even though there was no ICO for HNT helium INC did sell security tokens to investors. HNT rewards earmarked for helium INC and investors are allocated according to how many security tokens they hold. So as a simple if helium INC holds 50 of helium's security tokens they will get 17.5 of all newly minted HNT that's half of the 35 that's currently allocated to that portion of the block reward pie.

This clever architecture allowed helium to raise over 145 million dollars from token sales without actually conducting any ICO's those investors just purchased the security tokens that guarantee them a portion of future block rewards.

Now HNT technically isn't used to pay for network fees all transaction fees on helium are paid in data credits including fetching data from devices connected to helium hotspots data credits are created by burning HNT and data credits are pegged to the us dollar at a ratio of one hundred thousand to one. 

So this means that burning one dollar in HNT will create 100,000 data credits data credits are non-transferable and cannot be converted back to HNT. This makes HNT a deflationary cryptocurrency to ensure helium networks participants are sufficiently incentivized. After the last HNT coin is mined the helium community recently passed a proposal to enable net emissions. Now net emissions essentially involved taking a small portion of data credits and converting them back into HNT net emissions are currently 1 %  per year and will rise when demand for data credits is low and fall when demand for data credits is high.

Links:

1. Helium History

https://fcnmn.blogspot.com/2022/02/helium-history.html

2. How Helium Work

https://fcnmn.blogspot.com/2022/03/how-helium-work.html

3. The Helium Blockchain

https://fcnmn.blogspot.com/2022/02/the-helium-blockchain.html

4. HNT Tokenomics 

https://fcnmn.blogspot.com/2022/02/hnt-tokenomics.html

The Helium Blockchain

 

The helium blockchain was built from the ground up and it uses a novel consensus mechanism based on honey badger bft which is specially designed to support nodes with a spotty connection.

This is needed because not all helium hotspots are always online. It's also possible that a helium hotspot that's part of the consensus group could go offline in the middle of validating a block in addition to Honey Badger . 

BFT helium runs a sort of secondary consensus mechanism called proof of coverage which is helium's primary incentive structure.

As the name suggests proof of coverage involves checking whether a helium hotspot is broadcasting a long phi signal or not. 

This check is done by a randomly selected helium hotspot within the range of the helium hotspot. Which is being challenged this encourages network participants to set up their hotspots so that their signal range overlaps with others nearby isolated hotspots can still earn rewards but not nearly to the same extent.

If a helium hotspot passes the proof of coverage challenge both the challenger and the challenge earn a portion of block rewards hundreds if not thousands of proof-of-coverage challenges are taking place at any given time around the world.

The large percentage of block rewards allocated to helium hotspot operations have made hosting one quite lucrative now this is a big part of why there are over 200,000 helium hotspots and counting.

Now in addition to helium hotspots there are two other sets of network participants which earn block rewards one of these is helium's validators.

Validators are a recent addition to helium and they were brought in because the rapid growth of the helium network was making it harder for hotspots to effectively participate in the honey badger based consensus. Helium Validators must stake exactly 10,000 HNT which is nearly 200,000 at the time of shooting staking more or less than 10,000 HNT is not allowed and delegation is not possible staking rewards vary according to the amount of HNT being staked with the highest staking reward being 360 percent per year.

Although validators can withdraw their staking rewards every 15 minutes or so the 10,000 HNT they staked has a staggering five month unlock period validators must be online at all times and a failure to do so will result in fewer block rewards and other penalties though slashing is not one of them at least not yet.

Now even with these high barriers to entry and harsh conditions helium has attracted more than 2,700 validators and counting with staking rewards sitting slightly south of 7 per year as a result. Now the third set of network participants that earn helium block rewards are helium investors and helium INC. The software company behind helium and say that is a perfect segue into HNT's Tokenomics.

Links:

1. Helium History

https://fcnmn.blogspot.com/2022/02/helium-history.html

2. How Helium Work

https://fcnmn.blogspot.com/2022/03/how-helium-work.html

3. The Helium Blockchain

https://fcnmn.blogspot.com/2022/02/the-helium-blockchain.html

4. HNT Tokenomics 

https://fcnmn.blogspot.com/2022/02/hnt-tokenomics.html

How Helium Work

Helium Hotspots are like the routers you use for wi-fi the difference is that helium hotspots don't transmit a wi-fi signal they transmit a quote long phi signal similar to radio. This gives helium hotspots a range of dozens and even hundreds of kilometers compared to the measly 50 meter range most wi-fi routers have. This makes it easy to transmit small packets of data to from and between any supported wireless devices which fall within the range of a helium hotspot. The low signal frequency used by helium hotspots also means that they use next to no energy and take next to no energy from the devices. They communicate with best of all the instructions to make a helium hotspot are open source meaning you could make your own helium hotspot from scratch if you really want it.

As of  December 2020 manufacturers can also apply with the helium community to mass produce hotspots of their own and more than 13 companies have successfully done. Because helium hotspots are connected to the internet this makes it possible for developers to request data from any compatible devices which fall within the range of the helium network.

Individuals and organizations can also deploy their own Helium Compatible devices to do things like supply chain management and in the case of lime track the status of electric scooters. All this data can be accessed requested and managed using the Helium Console which can be easily integrated with popular platforms such as google drive and Microsoft. Azure fetching data from helium hotspots costs cryptocurrency and this is where the Helium Blockchain comes in.

Links:

Helium History

https://fcnmn.blogspot.com/2022/02/helium-history.html

Helium History

The first name sounds familiar that's because Shawn Fanning is the Co-Founder of Napster. The first peer-to-peer music sharing platform which amassed over 27 million users in its short 3 year lifespan.

Shawn currently serves as an advisor to helium likely because he has half a dozen other startups. Sean Carey is a Seasoned Systems Architect and he served as helium's CTO until he stepped down in 2015. Sean's presentation about helium at hardwired NYC is the oldest video about the project. 

Amir Haleem is a professional gamer and video game designer and he was once the best quake player in the world respect. He currently sits as Helium CEO and is a Die Hard Cypherpunk.

Now according to Amir Helium was the outcome of one of the many conversations. he had with Napster Shawn over the years after meeting him in 2005. They basically wanted to recreate the peer-to-peer model of Napster with wireless networks and without the risk of being shut down for breaking laws like Napster did with copyright.

Initially they were hoping to target the telecommunications market but realized that the red tape would make it next to impossible and the existing players had too much financial and political power. At the time the concept of the internet of things or IOT was becoming increasingly popular as wireless devices were becoming more common IOT is the buzzword of all buzzwords these days and it basically consists of extracting data from the real world.

Using sensors these sensors include things like laptops mobile phones parking meters and even dog collars. Amir had some friends who had tried and failed to get IOT projects off the ground and he realized that IOT companies were failing because creating IOT infrastructure in a centralized manner made zero economic sense.

The low frequency used for IOT also has no laws licensing or regulations attached at least in the united states. where helium was based this made IOT the perfect fit for helium's peer-to-peer network the only problem is that helium had no way to incentivize people to set up this peer-to-peer IOT network and the whole project stalled as a result.

when crypto started making headlines in 2016 however Amir realized that cryptocurrency could create the right incentives after being inspired by the file coin white paper in 2017.  Amir rallied the gang and they got to work in June 2019 helium revealed its first physical helium hotspot devices which would power its peer-to-peer IOT infrastructure.

Helium's main net went live one month later creating the cryptocurrency coin which would incentivize people to join their new decentralized network.

Anchor Protocol Risks

The Anchor Protocol also has risks for starters 

The anchor protocol is amazing but it also has its fair share of risks for starters there's the risk associated with the UST Stable coin. UST's peg effectively depends on the price of Luna and this is something that can and has been affected by crypto market crashes. UST has held its peg quite well despite the recent crypto market crash and some would say it's even more stable than centralized stable coins.

UST also doesn't run the risk of being shut down by regulators because it's fully decentralized but there are still some regulatory risks involved regardless. Now another risk on Anchor Protocol relates to the integrity of its smart contracts in plain. It's possible there's a bug somewhere in the code that could result in a massive loss of funds. 

No such exploit has occurred on anchor protocol since its launch you can actually buy Insurance on any UST you deposit. This insurance doesn't cover any issues related to UST losing its peg.  Now the biggest risk associated with Anchor Protocol is arguably the solvency of the protocol itself. The current income of the Anchor Protocol makes it possible for it to pay a 20% interest rate on around 2.85 Billion UST.

The thing is that there is more than double that amount currently deposited on the Anchor Protocol and the yield reserve is being slowly drained. The Anchor Protocol might not be able to afford to pay a 20 interest rate to UST savers in the not so distant future.

 

If and when that happens ANC token holders will likely vote to change the Anchor rate to something that's more sustainable or more accurately an anchor rate that can be achieved with the incentive mechanisms the protocol has at its disposal namely ANC Token issuance to entice borrowers. 

In a worst case scenario however this anchor rate adjustment and associated incentives wouldn't be enough to bring balance to the anchor protocol at which point we could potentially see a massive ust sell-off which would throw it completely off its peg causing havoc across terra's ecosystem.

 

Now luckily it looks like this is unlikely to happen and that's because the terra community recently passed a proposal to refill anchor protocol's yield reserve with 450 million ust using funds from the recently formed lunar foundation guard a non-profit that coordinates terror's development.

This should make it possible for Anchor Protocol to maintain a 20% interest rate on deposited UST for another year and upcoming upgrades should improve the protocol's efficiency as well this just goes to show you how powerful cryptocurrency governance can be especially when there's a big treasury.

Links:

What is Anchor Protocol?

https://fcnmn.blogspot.com/2022/02/what-is-anchor-protocol.html

How Dose Anchor Protocol Work

https://fcnmn.blogspot.com/2022/02/how-dose-anchor-protocol-work.html

Anchor Protocol Offering Up to 20% APY

https://fcnmn.blogspot.com/2022/02/anchor-protocol-offering-up-to-20-apy.html

Anchor Protocol Offering Up to 20% APY

Anchor Protocol Produce a Stable Interest Rate of 20 % for UST Savers

Borrowers on the anchor protocol must deposit staked Luna or staked ETH to borrow UST. On Anchor Protocol staked Luna is referred to as Bonded Luna or b-Luna and staked ETH is referred to as Bonded ETH or b-ETH.  B-Luna is created by depositing regular Luna into a special smart contract on the Anker protocol that delegates the deposited Lunar to whitelisted.

Verified validators on Terror this Luna is locked for 21 days as per the standard staking lockup meanwhile b-ETH is created with the help of another crypto project called Lido Finance. 

Which makes it possible to tokenize staked ETH so that it's tradable on the Ethereum blockchain for context any ETH staked on the beacon chain is currently locked until Ethereum transitions to proof of stake Lido Finance's staked ETH or st-ETH is locked in a special smart contract on the Ethereum blockchain. Then mints a corresponding amount of b-ETH on the Terra Blockchain for use in the Anchor Protocol.

b-ETH can be withdrawn and converted back to st-ETH at any time and herein lies the secret source the staking rewards from the b-Lunar and b-ETH deposited by borrowers as collateral on the Anchor Protocol are actually earned by the Anchor Protocol. Itself note that this is in addition to the interest borrowers are paying on any UST they borrowed.

Staking rewards on terror are around 9 percent per year on Ethereum's Beacon chain the staking rewards are currently around 5 percent per year. There's currently around 3.2 Billion dollars of b-Lunar and around 650 million dollars of b-ETH deposited by borrowers on the anchor protocol that's around 3.9 Billion on the staking side.

On the borrowing side there's currently around 1.8 Billion dollars of UST that's been borrowed and borrowers are paying around 13 per year on that UST this means that there's a total of 5.7 Billion Dollars of interest bearing assets on Anchor Protocol.

The total interest rate on this amount is 10. This means the Anchor Protocol itself is generating 570 Million dollars every year in staking rewards and interest on UST debt. Some quick Math's tells you that 570 Million is enough to pay the promised interest rate of 20 for up to 2.85 Billion UST at which point the Anchor Protocol would break even this promised interest rate is known as the Anchor Rate and it is set by community governance using the ANC Token.

Any additional income made by the Anchor Protocol is put into the yield reserve which consists of UST. The UST in the yield reserve is used to pay out additional interest to UST lenders. When the Anchor Protocol isn't generating enough income to maintain the Anchor Rate which is again 20. A portion of the yield reserve is also used to buy ANC to ensure that the token increases in value as adoption of the protocol increases at least in theory. This is important because ANC issuance is how the anchor protocol incentivizes borrowing and borrowing is important because the Anchor Protocol generates income from the b-Luna and b-ETH deposited by borrowers. As well as the interest being paid on any borrowed UST ANC issuance is why you can currently earn around 1 percent per year by borrowing UST on anchor protocol even though you technically owe 13 per year on the UST you borrowed.

Links:

What is Anchor Protocol?

https://fcnmn.blogspot.com/2022/02/what-is-anchor-protocol.html

How Dose Anchor Protocol Work

https://fcnmn.blogspot.com/2022/02/how-dose-anchor-protocol-work.html

How Dose Anchor Protocol Work

To understand the inner workings of the Anchor Protocol you need to be familiar with two things Staking and Decentralized Lending and Borrowing. 

Staking

Staking is when you lock up your cryptocurrency for a certain amount of time in exchange for something. Usually more of the same cryptocurrency in proof of stake validators stake cryptocurrency to process transactions.

On that cryptocurrency's blockchain in exchange they earn transaction fees and block rewards in this case validators on terror stake. Lunar and earn about 9 percent per year in transaction fees and block rewards which are of course paid in Luna.

DEFI

Now the catch is that terror validators must lock up their Luna for at least 21 days and if they try and manipulate transactions on the blockchain they will lose some of their stake. In a process known as slashing staking is also possible in many DEFI protocols rather than earning transaction fees and block rewards in exchange for processing transactions. DEFI stakers often earn protocol fees and earn the right to participate in community governance AKA vote on how the protocol is changed in this case stakers on the Anchor Protocol stake the ANC token and earn about 20 per year in protocol fees. Which are of course paid in ANC stakers can also table and vote on proposed changes to the protocol.

The catch is that the ANC token is very inflationary and this means it has a harder time holding its value compared with other cryptocurrencies. ANC is a bit of an exception in this regard more on that later as for decentralized lending and borrowing this basically consists of two components lenders and borrowers so far so good.

So on the lending side lenders deposit their cryptocurrency into a borrowing and lending protocol. This makes it possible for individual lenders to withdraw their funds whenever they want. Since it's very unlikely that all the lenders will withdraw at the same time in this case lenders on the Anchor Protocol deposit UST into the protocol to clarify lenders are synonymous with savers in this context. 

This means that when you deposit  UST into the Anchor Protocol what you're actually doing is lending your UST to borrowers behind the scenes on the borrowing side borrowers deposit a dollar amount of cryptocurrency that's worth more than the dollar amount of cryptocurrency they want to borrow this is called over Collateralization and it exists to ensure the protocol always has enough money to cover the cost of the crypto being borrowed.

In this case borrowers on the Anchor Protocol deposit either Luna or ETH to borrow an amount of UST from lenders that's worth up to 80 of the dollar value of the crypto they deposited.

Suppose that, If a borrower deposits 1,000 of Luna they can borrow 800 of UST.  You're wondering why anyone would ever take out this kind of Over-Collateralized loan the answer is leverage. Many traders will use their crypto as collateral to borrow stable coins and use those stable coins to buy even more crypto when the market is rallying lots of people also use over collateralized crypto loans to pay their bills between paychecks without having to sell any crypto.

On the lending side lenders are incentivized to deposit their idle coins and tokens in exchange for the interest that borrowers pay on their crypto loans on that note if a borrower borrows more than 80 of the dollar value of their collateral in UST. If this threshold is met because of the interest they owe on any UST they borrowed the collateral they put up is liquidated.

Sold this again to ensure that the protocol has enough money to remain solvent.

To Understand Anchor Protocol Link:  

https://fcnmn.blogspot.com/2022/02/what-is-anchor-protocol.html