Article contributed by Tin Money. Follow them on Medium here.
(Cover Image: PixTeller)
What is Constellation Network?
According to CoinMarketCap, there are over 20,000 crypto projects. Given that, it shouldn’t be surprising if a few hundred interesting ones slip by unnoticed.
Constellation certainly slipped by me. The project launched in 2018 and the first I heard of it was from a Tweet a couple weeks ago. Only a handful of projects keep my attention beyond their whitepaper.
Constellation is certainly one of them.
The Constellation Network (CN) is a distributed ledger on a Directed Acyclic Graph (DAG). For consensus, CN uses a custom built Proof of Reputable Observation (PoR) mechanism.
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Directed Acyclic Graphs
Unlike a “traditional” blockchain like Ethereum or Bitcoin, a DAG does not rely on cryptographically secured sequential blocks of information. Instead of a “chain”, DAG transactions are topologically ordered in a graph as a series of vertices and edges.
I know that sounds like a mouthful and that’s because it is. DAGs grew out of the field of discrete mathematics. It’s big-brain stuff or, at least, it’s certainly bigger than my brain.
The short of it is (and my apologies to the mathematicians if I’m butchering this) edges are directional from one vertice to another. That direction from vertice to vertice ensures that no edge can return to a previous vertice and close a loop.
This way each vertice can be “connected”, but the graph won’t ever “close”. Thus you end up with a linear order to things, but it doesn’t have to be sequentially laid out.
Hope that helps. It’s the best I got, other than to call it “block graph technology”. Think I’ll have to work on that one a bit.
Image: ImgFlip
Proof of Reputable Observation
Similar to Hedera’s Hash Graph, CN uses a “gossip” protocol to broadcast transactions as messages to the network. Nodes send messages to a random neighbour who then sends those messages on to their neighbours and so forth until the message reaches the entire network.
This works much the same way as a Tweet might go viral. The more people that receive and then pass on the Tweet, the faster it spreads across the Twitter network. Same thing happens with CN transactions. And much like Tweets, reputation is a key factor in the message going out.
Where Hedera hashes those messages together as a graph, Constellation routes those messages (transactions) to check point nodes.
Check points nodes are chosen based on their reputation. The more reputable the check point, the more often it will be selected to perform the check point function.
Once the check point buffer is full, it will create a checkpoint block. After a check point block is created, it is hashed as a transaction and sent to a validation node.
In turn, validation nodes are also selected based on their reputation. Once all check points are validated as a new block, that block stamp is hashed as a message and broadcast to the network via gossip, starting the whole process over.
Sort of.
One of the novel things about Constellation is these processes can be run in parallel through node clustering. In fact, during the most recent CN “Hypergraph Hour”, one of the devs demonstrated parallel block creation with two simultaneous 40,000 transaction blocks.
If you’re not a tech-nerd like me, and find yourself wondering why that’s a big deal, just know that it is.
Like huge.
The Crypto Crash
Every crypto bear market brings doom and gloom. This one might be a little different. Having lived through the “Dot-Com Crash” of the late nineties, there are some striking similarities to the “Crypto Crash” of 2022.
In the lead up to the dot-com bubble, people were apeing into all kinds of ridiculous schemes. There was enormous hype around web-based businesses that mirrors a lot of the “use case” talk in crypto today.
All the amazing things the internet was going to do created twenty five year-old billionaires. All of that hype was driven by venture capital (VC) backed IPOs pitching theoretical uses for these websites and online services to retail investors.
Then the whole thing crashed around their heads. With very few exceptions, almost all of those “online” businesses were kaput less than a year later. The VCs did fine. Retail investors got absolutely rekt.
Any of that sound familiar?
Decentralised money, decentralised finance, decentralised healthcare records, decentralised science. It was all part of the crypto revolutionary promise / hype machine.
Image: ImgFlip
All of it remains theoretical and unable to scale. And right now, most of it looks like another VC hype driven dumpster fire. Again, (most) VCs are doing just fine.
And again, retail investors got absolutely rekt.
But just like the “dot-com” crash swept out the trash internet companies, this crash is going to sweep out the trash crypto projects. Out of the 20,000 projects I mentioned at the top of this article, 99% probably won’t be around in two years.
But just like the dot-com bubble, I can just about guarantee that in the surviving 1% of crypto projects is the next Google, Amazon, Microsoft, or Facebook.
The Crypto “New Wave”
I predict Solana will be a dead chain within 2–3 years.
That said, I’m fully aware it’s a cheap crypto writer tactic. If Solana is thriving in 2–3 years, no one will remember I said it. But if it tanks, I get to toot my horn.
And yet, I actually believe it for a reason. Here’s a quote from the Solana whitepaper:
The protocol is analyzed on a 1 gbps network, and this paper shows that throughput up to 710k transactions per second is possible with todays hardware.
Pretty spiffy, right?
Except Constellation just tried to perform the same test on their network. I say “tried” because the Constellation Network was too fast for the test.
They maxed out transactions on a 1 gbps network connection, but the Constellation Network just kept gobbling them up.
In other words, Solana calculated a theoretical 710k transactions in test conditions and Constellation just smoked that without even trying. It wasn’t even close.
Remember that parallel block thing from earlier? That’s why it’s a big deal.
Not to mention, one of the founders of Constellation recently posted a video showing him running a full node on his phone. Live.
The point of all this is, crypto projects tend to be useful for crypto. All the layer 1s, even the handful of layer 0s, they’re all great…for crypto.
But the more I’ve been learning about Constellation, the more I’ve realised the dev stack for crypto projects is extremely limiting. Since Bitcoin, these chains have been primarily built for transactional security.
That’s the old “blockchain trilemma” thing. But today there is a “new wave” of crypto projects coming online that interact with the real world. Projects like Constellation, Hedera, and IOTA are offering cryptographically secured digital ledgers for anything.
Image: Constellation Network
This is the world of “consensus as a service” and it’s what crypto has been promising since the Ethereum genesis block. None of the large and mega-cap crypto projects has delivered anything near that and probably never will.
They can’t.
Almost all of those large and mega-cap projects force you into the Ethereum Virtual Machine (EVM) pipeline. And even if it’s not an EVM environment like Cosmos or Solana, there are inherent limitations on how data can be handled in a sequential blockchain environment.
While many a Crypto Twitter “expert” will tout Solana for their high profile VC backers, by and large the companies developing on Solana are other crypto projects. The companies that are developing and building with Constellation, Hedera and IOTA, on the other hand, are companies like:
IBM
PwC
AWS
US Department of Defence
Jaguar / Land Rover
Knowing nothing else, which projects look more likely to succeed? The ones promising real world utility, or the ones already delivering it to major multinational corporations?
Like I said, the crypto equivalent of the next Google or Facebook is probably already here. My best guess is it’s far more likely to be Constellation, Hedera or IOTA (or all three) than Ethereum, Polygon or Solana.
Developer Tools
Unfortunately Constellation hasn’t released their dev docs yet. But the promise (there’s that word again) is that the Constellation Network is data agnostic.
Moreover, for the crypto devs, Rosetta implementation was just announced. Rosetta is an open-source developer tool kit and set of specifications that a ton of crypto projects use, including most of the major CEXs and DEXs.
For developers in general, it appears Constellation is going to be a heck of a fun playground. Want to spin up an EVM compatible multi-chain DEX? Constellation should be a fine choice. Fast time to finality and process as many transactions as you can bring, with no fees.
Have a bicycle rental tracking app that needs secure transactional data recording, like for biometric or credit card data, while also keeping track of all the miles your bikes are racking up based on real-time GPS data? You can do that on Constellation.
Need multi-domain command and control of different communication, telemetry, weapon, guidance, and geolocation systems in real time with guaranteed data authenticity?
Pretty sure Constellation is already testing something like that for the US Air Force.
The point is, if Constellation lives up to the promise, it becomes a project that isn’t just useful, but rather a project that may become indispensable. Despite not knowing the specifics of the Constellation development stack, the development potential is what has me so bullish on the project.
Big Crypto?
The engineering behind the whole works is based on principles derived from Spark and MapReduce. For those not familiar, both are programmatic and implementation schemes to handle “big data”.
Image: ImgFlip
The topic is beyond this article, and indeed, likely beyond me in general. The takeaway is, a Spark (or Hadoop) implementation has to be able to handle a wide variety of data in high volumes to be useful.
The “4Vs” of Volume, Variety, Veracity, and Velocity underpin what it means to be able to handle “big data”. The technical engineering feat Constellation is trying to pull off is to handle the Big Data 4Vs in a permissionless, decentralised environment.
That is what makes Constellation a “buy” for me, even in a bear market that is almost certainly going lower. That’s because we’re talking about a project that appears to be right on the brink of decentralising and securing any data that gets generated.
This potential goes so far beyond a “Web 3” narrative. It’s more like, if this is true and it really works, the world is going to look very different in a couple of years.
What’s the catch?
Constellation apparently has absolutely terrible timing. The token launched in 2018 right into the teeth of the 2018 bear market. Now they are putting the finishing touches on their Mainnet 2.0 deployment right into the teeth of the 2022 crash.
Of course, the market will recover, sooner or later. Since the project is several years old, the presale unlocks came and went back in June 2020. Funny thing is, the presale price was $0.06, which is basically where it’s trading today.
For the presale folk back then, they got absolutely boned. They bought at $0.06 and the token apparently dumped hard, like sub-$0.01. By the time the presale tokens unlocked, the price had only gone back to $0.09 or so.
The launch tokenomics were absolute trash. A ton of insider coins and only 2.1% went to the community. The devs did burn around 280M tokens in response to community concerns.
Image: BlockFyre Research
I’d have to imagine the presale folks that stuck around through the summer of 2021 dumped what they were holding at the highs in 2021 (around $0.39). All of this adds up to being pretty groovy for today’s buyer.
As to other issues, Hedera and IOTA are legit competitors for sure. They both enjoy higher market caps and better name recognition. But Hedera is super centralised and proprietary. As for IOTA, their current deployment is kinda wonky.
IOTA was super centralised as well, but have recently launched a DevNet in preparation for the “Coordicide”. The new DevNet seems like a better deployment than the current “Chrysalis” version, but it remains to be seen how well it holds up.
Same is true for Constellation though. Like all crypto projects, these are all experimental protocols. After the internet goons have been bashing on them for a decade or so, we might be able to say how robust these solutions are for sure.
Constellation was vetted by the US Military though, and they are a paying customer. No small task there and a definite nod to CN security and potential reliability.
Either way, these projects are all going for the same “big data” pie. Nice thing is, it’s a HUGE pie. Network value should accrue to holders of the $DAG token, provided the network enjoys wide adoption.
From the looks of it, I think Constellation is probably going to have the best tech stack. But that’s just a guess. The dev docs are releasing soon and that will help determine how steadfastly I hodl (or not).
The Mission Statement alludes to a commitment to decentralised governance. I can’t seem to find how that is actually playing out though. It appears to be a Delaware corporation in good standing that has “forfeited” its registration in California.
They might want to look into that.
Not sure how “decentralised” that is. Which also means there is a non-zero chance if the Constellation Network takes off, one of the big GooSoftBook types could come along and gobble them up.
Not sure what that might mean for the token price. Might moon, or GooSoftBook might just deprecate it and leave you with your hoohoo in your hand.
Problems for another day.
Conclusion
At the risk of sounding like a babbling banana-head, Constellation might truly be “revolutionary”. Like the light bulb and gasoline engines and heavier-than-air flight kinda thing.
I’ll put it another way. Until last week, all of my crypto budget was in stablecoins. This week, a good chunk of those stables bought $DAG (the Constellation token).
However, I do tend to get excited about tech stuff, especially shiny crypto projects with smarty-pants devs. While this one feels different, I’ve been super wrong about those feelings in the past. With that in mind, I’m going to have a little banana-head, bear market prediction fun:
Solana = dead in two years.
Constellation = cover of Time magazine in three.
I’ll bet ya’ 10 $DAG.
Remember, these are just my opinions. I’m not a financial advisor, this isn’t financial advice, and always DYOR. Following any of these ideas might cause you to lose all of your money. I am 100% serious about that. I like tinkering with this stuff, but I’m on record acting like a total baboon. Invest accordingly.
Until next time, be safe, be smart and be sure to tie the camel.
