What is ICP?

Introduction

As a blockchain service provider, the Internet Computer (IC) has a grand vision to become an important infrastructure for large-scale smart contract operation. It operates in a low-cost and fully decentralized way. Similar to AWS (Amazon Cloud Computing Service) and Azure (Microsoft Cloud Service Platform) which provide solutions for network services and cloud computing in Web2, the Internet Computer embraces the aim of becoming a service facility for basic computing in the crypto world.

IC has two main tokens. One is “ICP” which is the governance token, and the other is “Cycles”, a stable currency that is used to pay for computing and transactions in the network. Cycles can be obtained by burning ICP.

Founded by Dominic Williams in October 2016, the Internet Computer was first named DFINITY. DFINITY launched the initial mainnet of Internet Computer on December 18, 2020, and then publicly released it on May 10, 2021. Meanwhile, the open source code of Internet Computer and the transaction and governance functions of the ICP token were also announced.

Application and Prospect

ICP is the native token of Internet Computer, with three critical roles in the network:

1. Governance token: Users can stake ICP tokens to become “neuron” nodes, and participate in governing network transactions via voting.
2. Used to calculate the generation of Cycle: Operating smart contracts in IC will consume Cycle tokens as a handling fee, and Cycle can only be converted through ICP. ICP can be compared to the fuel on the IC, powering all operations.
3. Reward participants: The network will generate new ICPs to reward those who contribute to the network. For example, those who participate in governing the network will receive “voting rewards”, and it can be used as “computation rewards” released to those who provide node machines, etc.

Provide services for decentralized data storage and computing of blockchain

Presently, many Dapps still store data in centralized servers such as Amazon’s AWS and Microsoft’s Azure. However, the cryptocurrency wallets we use now are usually plug-in extensions of browsers (such as Google Chrome). Just in case one day these companies suddenly determine to shut down their services, even Dapps that are advertised as decentralized will be under the influence.

The main reason for the current situation is that it will cost a fortune, including money and time, to store and compute these network services on the existing blockchain.

In terms of time and cost, data from Dfinity Community shows that the current calculating speed of each blockchain is as follows:

Etherium: about 15 transactions per second

Polkadot: about 1,000 transactions per second

Solana: about 50,000 transactions per second

Imagine that if we build a social platform like Facebook on the Ethereum blockchain, it will never achieve hundreds of millions of users like Facebook with a speed that can only allow 15 operations per second.

Moreover, thanks to architectural innovation, data that the Internet Computer can handle in theory per second is unlimited, so it is able to support more and more real-time network services.

(Source: https://www.dfinitycommunity.com/introducing-the-internet-computer/ )

Besides, the cost of money is another high benchmark.

The data provided by Dfinity Community shows that if a user stores 1 GB of data in Ethereum for a year, it will cost an astonishing $240,000,000. Even Solana, known as the “Ethereum Killer”, needs $840,000, but only $5 through IC. Moreover, the cost will not fluctuate with the currency price because it is denominated in Cycles, a stable currency.

(Source: ​​https://www.dfinitycommunity.com/enough-ethereum-killers-internet-computer-is-the-ethereum-savior/)

Technology

Although the current mainstream Internet services have provided a platform that allows everyone to connect all information, these systems, services, and even the infrastructure providers, are still managed by privately-operated companies. The ICP mechanism expects to change the previous mode that the blockchain is used to store and compute data by creating Chain Key Technology, thus advancing toward a truly decentralized architecture.

It can be said that Chain Key Technology is the engine that enables IC to operate.

Chain Key Technology consists of several complementary components, such as a new consensus model mechanism (Threshold Relay), a Non-Interactive Distributed Key Generation (NI-DKG), an on-chain governance system (the Network Nervous System, NNS), and “decentralized identity” (Decentralized identity).

Chain Key Technology includes a set of encryption protocols. It coordinates the nodes that make up the Internet Computer. Capable of enabling the IC to have a sufficiently small public key, Chain Key Technology can even allow devices such as smartwatches and mobile phones to verify the authenticity of transactions from the IC.

Consensus Mechanism: Threshold Relay

Nodes on the IC can only be run by an independent data center, which must have a data center ID (DCID) issued by its on-chain governance system NNS. NNS is an open algorithmic governance system that controls the IC network. Providers who want to become nodes must submit an application to NNS and meet the minimum requirements, as well as purchase specialized node machines. Only then are they eligible for DCID.

Governance

As an on-chain algorithmic governance system composed of many independent data centers, the Nervous System (NNS) is the brain that controls the IC. It allows ICP holders to vote on improvement proposals, or to agree on parameter changes. Any user can submit a proposal to NNS, which will be executed immediately if accepted.

NNS help govern the network through users who participate in staking ICP to create voting “neurons”. Anyone can create a “neuron”. The voting rights of “neurons”, and the rewards they get for voting, are proportional to the amount of ICP they stake and the time they serve as “neurons”. In governance voting, “neurons” can vote manually, or can be set to follow other “neurons” to vote automatically.

Growth of Ecosystem

The development keeps going and there are already lots of applications on the Internet Computer, including encrypted wallets, DeFi, social networking, NFT, etc. Next, we will list several featured items.

Plug Wallet

Built and open-sourced by Fleek (an IC developer platform and startup), Plug Wallet is a browser plugin that allows users to operate ICP, Cycles, and other cryptocurrencies, as well as login to Internet Computer Dapps with one click. Currently, there are over 100,000 users.

source: https://plugwallet.ooo

IC Gallery

Combining GameFi and DeFi, IC Gallery is an interactive 3D metaverse, where users can play, mint, and trade NFTs via various immersive 3D experiences on IC and Ethereum. IC Gallery has achieved “full on-chain custody”, which brings an ultimate 3D NFT metaverse experience.

source: https://ic.gallery/

InfinitySwap

InfinitySwap is a platform in which users can create, stake, and exchange tokens on IC. It is supported by Polychain Capital and 9YardsCapital. Thus, InfinitySwap endows users with the ability to exchange tokens using its low-fee technology based on the ICP blockchain. This project has received a $1.5 million investment in total from PolyChain Capital and a16z.

source: https://infinityswap.one

DSCVR

DSCVR is like a decentralized Reddit, social media built with Web3 technology. Built on the decentralized ICP, all articles and materials on the platform are users’. Users can easily access them via any browser. Currently, DSCVR has over 40,000 users.

source: http://dscvr.one

Other information

Investors

DFINITY has raised $121 million from contributors. These contributors include Andreessen Horowitz, Polychain Capital, SV Angel, Aspect Ventures, Electric Capital, ZeroEx, Scalar Capital, and Multicoin Capital.

Token distribution

DFINITY Foundation airdropped ICP tokens to over 50,000 registrants in 2018. Among them, 9.5% is allocated to early contributors, and the remaining 90.5% is awarded to the Foundation. The 90.5% can fund operations, incentivize users’ participation, and distribute the token supply.

Early contributors: 9.50%

Seed donation: 24.72%

Strategy: 7.00%

Pre-sale: 4.96%

Strategic Partnership: 3.79%

Community airdrop: 0.80%

Initial community and developers: 0.48%

Node operator: 0.22%

Internet Computer Association: 4.26%

Team members: 18.00%

Advisors and other third-party token holders: 2.40%

DFINITY Foundation: 23.86%

Challenge and Observation

The current market is paying much less attention to ICP. This is because, in addition to the fact that the market is bullish as a whole, some developers believe that in order to run IC as a node, the application must be built to meet certain specifications, which will keep many people out of it and may further limit the growth of IC.

In terms of the capital market, IC has devised a grand vision that has been hailed as the third innovation of blockchain after Bitcoin and Ethereum, which has attracted many institutions to make investments and actually has advanced related technologies. However, the market quickly cooled down after it only showed expectations in the early stage of its launch. The price of ICP has slumped from over $400 in early 2021, to below $10 in early 2022, and to about $5 in October 2022.

(Source: https://coinmarketcap.com/zh-tw/currencies/internet-computer/)

Conclusion

The Dfinity team put forward very promising works In 2022. For example, they intended to develop projects that are compatible with Bitcoin and Ethereum, as well as more DeFi applications, so as to continue to attract investment from developers and users.

In the long run, if IC can keep going, it will have the potential to bring huge innovation to the blockchain industry. However, it is impossible for IC to develop a complete industrial chain alone. It can be seen that the team has begun to adjust its positioning. It is strengthening its services and assets linked to BTC and ETH. If IC can keep launching more practical applications to win users and prove its value, IC is believed to be able to make a difference.