The excitement that came with blockchain and decentralization led to the creation of various types of platforms, each solving a unique problem. While this was good, it also brought about unlinked decentralized systems. To elaborate, Bitcoin functions well as an immutable currency but also suffers slow transactions, Monero brought strong privacy but lacks in smart contract functionality, Ethereum brought advanced smart contracts but still struggles with scalability (at present).
The current issue we face is how do we securely and reliably share information between these systems while addressing each individual network’s shortcomings. One area that is still a hard nut to crack is how to share native tokens between chains. And this is why projects like ChainX focus on enabling cross-chain interaction of blockchain assets.
The project stems from the need to rescue trapped blockchain assets and make them available across chains. Being a distributed system, ChainX allows the assets to be transferred in a peer-to-peer manner, significantly leaving less room for fraud and human error.
While the proof-of-work (PoW) consensus mechanism has a higher degree of decentralization, big miners tend to occupy the top seats while newcomers have to buy expensive machines to get a piece of the cake.
In some respects, proof-of-stake (PoS) systems are no better. A large chunk of their native tokens are held by early investors leaving latecomers at the mercy of the secondary market. This even affects the voting powers of the community, making it prone to centralization among those with more coins, which are mostly early investors.
Although ChainX uses a PoS consensus mechanism, its application is different and more welcoming to all users.
What is ChainX?
ChainX is a blockchain platform that interacts with other decentralized platforms to facilitate cross-chain blockchain asset sharing. The protocol employs a PoS algorithm to reach consensus. The project started as a single-system chain was upgraded to a dual-chain network, and currently operates as a multi-chain system.
The multi-chain version runs on the Polkadot blockchain as a layer 2 relay network. Its four major components include:
- ChainX Relay Chain – It mainly focusses on securing the entire network.
- Bridge Para-chains – This handles sections of a transaction to improve on throughput and enhance scalability.
- Trade Para-chain – Acts more like a decentralized exchange. It matches services on the platform, increasing throughput along the way.
- Dapp Para-chains – This handles decentralized applications (Dapps) developed by the ChainX community.
The platform has what it calls asset mining. Although the system accepts assets from various decentralized platforms with different consensus algorithms, the concept is very simple. First, each asset deposited on the platform carries a single vote.
Therefore, staking on the platform only requires users to deposit BTC, ETH, EOS, and other assets and get PCX in return, leveling the asset mining field. In the protocol, computing power emanates from votes.
As such, users get rewards depending on the computing power they contribute. Once the PCX has been generated, it gets assigned to either a BTC deposit pool, a nodes’ PCX votes pool, or a DOT mapping SDOT pool.
How ChainX works
To enjoy free transactions, a user has to deposit assets on the platform. They then qualify to be a participant. A participant can either be a voting user, validator node, trust node, sync node, deposit portal, inter-chain relayer, or be among the developer community.
- Voting user – Has to hold the platform’s native currency, PCX. A voter can vote for their preferred sync and validator node and receive incentives.
- Validator node – A validator is chosen from a pool of top 1000 nodes depending on the votes cast. These nodes are responsible for validating user transactions. In addition, the nodes produce new blocks.
- Trust node – These are 15 validator nodes with the highest overall strength and host cross-chain assets from users. Also, they are the key community leaders on ChainX.
- Sync node – These are the total nodes with less validator and trust nodes. They accept transactions and broadcast chain data. However, their rewards are the same as for validators.
- Deposit portal – Here, you’ll find community developers and all wallet types. Deposit portals help in inter-chain account binding. 10 percent of users’ deposit assets mining is used as rewards.
- Inter-chain relayer – Although ChainX is open for all, the allowable inter-chain transactions are determined by the protocol depending on their original consensus algorithm.
- Developer community – To capture different assets’ ability, the network offers the latest smart contract technology for use by developers.
ChainX and Polkadot
The interaction between the two systems is crucial to bring an absolute interconnection between blockchain projects. Polkadot powers the exchange of information between distributed ledgers while ChainX ignites the interaction of blockchain assets.
To bring these two ecosystems together, ChainX operates as a secondary layer on Polkadot. Originally, ChainX operated as an independent chain awaiting the birth of Polkadot. Interfacing the two uses a para-chain system.
The ChainX token (PCX)
ChainX has a total of 21 million PCX coins with halving done every two years. The founding team holds 20 percent of the total coins. However, community distribution is projected to start 24 months after launch.
Uses of PCX
- To pay miner fees
- Acts as the market capitalization unit
- As collateral for both consensus and trustee nodes
- As a standard during PoS consensus election
- Forms the base currency and exchange medium
Community governance on the platform is done by the ChainX parliament. The parliament is made of 11 mature nodes with the Polkadot team having one seat. The remaining 10 seats are shared among reputable nodes that make it to the top ten nodes by votes.
Once chosen, a member of parliament (MP) will occupy the seat for two months. Each member has one vote when settling community-based issues.
Such a process may attract dishonesty among aspiring MPs. To prevent bribery and kickbacks, ChainX rewards whistle-blowers. However, the evidence presented by a whistle-blower has to be validated by six or more MPs.
ChainX drives the possibility of staking cryptocurrencies like BTC that do not support staking. This opens new possibilities in the usage and application of virtual currencies.
The interaction between Polkadot and ChainX is a key combination in enhancing blockchain adoption. ChainX’s governance and token issuance model takes a new approach that ensures transparency and equality among early and late investors.
With the protocol, developers can develop different economic models and users can benefit from free transactions.