Blockchains by design are walled off gardens, existing in silos, independent from other blockchains. Attempts have been made at trying to bridge the gap between various technologies but the problem remains largely present.
These borders between networks reduce the financial efficiency of blockchain assets. Assets are permanently anchored to their own chain. Their financial potential and efficiency is stunted. Its bad for the holders of these assets, and its bad for blockchain as a whole.
pNetwork was founded with the aim of removing these barriers. Increasing financial flexibility and liquidity across a variety of blockchains. Creating use cases in a variety of DeFi apps and making blockchain better as a whole.
In this article we will dive into the pNetwork project to find out about the team behind pNetwork, how they are making these innovations, the value of the pNetwork token (PNT), the technology behind pNetwork and more.
The pNetwork Team
Founded in 2019, with the token launching in June 2020 pNetwork is currently being developed by two sister companies. Provable things, originally founding and developing the pNetwork. And Eidoo which joined the fray at the start of June 2020.
Eidoo has their own project and formerly their own token aptly named Eidoo. This token was then converted into pNetwork tokens (PNT). However, the Eidoo project continues, now just with PNT as the backbone.
When the Eidoo team joined Provable Things they burned 80% of the EDO tokens they held. The burn was done to ensure the Eidoo team could not exercise control over the pNetwork project.
Sometime in July the pNetwork decentralized autonomous organization (or DAO for short) is expected to launch. This will start the process of giving the community a bigger say in the project through allowing PNT holders to vote on issues. But we will discuss this at a greater depth later in the article.
How pNetwork Works
We have already stated that pNetwork was aiming to increase the financial efficiency and liquidity of blockchain. But how are they planning on doing this? The idea at its core is extremely simple and is something that has been applied by banks and governments for decades. Asset pegging.
Asset pegging is simply a term used to describe when one assets value is pegged to another asset. An example of this is in the first stages of modern banking in 17th century Europe.
In the 17th century gold was the primary method of exchange. But gold is heavy, cumbersome and generally something you don’t want to carry around in large amounts. So the first banks were formed. People would deposit their gold with a bank and get a receipt. This receipt then entitled them to the equivalent amount of gold they had just deposited, giving the receipt the same value as the gold. Except receipts are much easier to use for buying and selling goods and services than gold. So, people dropped gold and just continued using the receipts and so, paper money was born.
pNetwork does something very similar except with blockchain assets. I can’t put a Bitcoin on Ethereum network. But now with pNetwork I can transfer the value of my Bitcoin to the Ethereum network. This is done through the pNetwork dapp.
You simply open up the Dapp, send your Bitcoin to the address. In return you will receive an equivalent amount of pBTC. This pBTC is an erc-20 token that I can freely move around the Ethereum blockchain. I can use it on various decentralized exchanges, or DeFi apps, or simply keep it in my Ethereum wallet.
Like the 17th century receipt you got for depositing your gold. The pBTC you have just received is equivalent to the exact same amount of BTC 1:1. To get your Bitcoin back you simply do the transaction in reverse. You send your pBTC to the address given and in return you get the equivalent amount of Bitcoin.
These transactions are not exclusive between Bitcoin and the Ethereum chain. You can deposit Bitcoin and in return get a pBTC on the EOS network. With more planned in the future. Currently Litecoin and EOS on the Ethereum network are in testnet but a lot more are planned for the future.
At the time of writing over 680,000$ dollars has been converted into pBTC. With 630,000$ on Ethereum and over 60000$ on EOS.
The Technology Behind pNetwork
While the idea is simple, the technology that is required to make this simple transaction, trustless and in a decentralized is significantly more complex.
pNetwork uses network validators to ensure that transactions go through safely, securely, and correctly. Nobody wants to deposit their Bitcoin and get nothing in return. Alternatively nobody should be able to manipulate the system and print as much pBTC as they want economically ruining the system.
pNetwork in combination with blockchain uses two primary techniques. Trust Execution Enviroments (TEE) and Multi-Party Computation (MPC).
Trust Execution Enviroments
A Trusted Execution Environment is a hardware isolated sandbox. It enables users to write code which can then be verified by the tech manufacturer that the process has been executed correctly. This moves the trust away from the operator and to the tech manufacturer.
pTokens is planning on using a ‘multi-TEE’ approach where multiple different TEE’s and operators ensure that there is no single point of failure.
Multi-Party Computation builds upon the TEE. On the pNetwork the TEE operators/ network validators work together to issue pTokens or release the underlying asset.
This is helped by MPC. Issuing or releasing assets occurs when multiple parties jointly generate key pairs and sign transactions. When this is done it authorizes the flow of assets.
As of now there is only one validator authorizing transactions. This is operated in house by the pNetwork team. This is obviously centralized but is necessary to test the network and dapp.
Sometime this month the DAO and more community validators are expected to be rolled out. This will begin the decentralization of the pNetwork ensuring that it eventually does become trustless.
The Value of the pNetwork Token
When discussing any new project it is important to also discuss what gives the token its value. A project can have the best technology in the world but if there is no real value in their token what is the point of getting involved?
PNT’s value is almost entirely derived from the DAO. The DAO allows PNT token holders to get a say in the network enabling them to make proposals and vote within the pNetwork.
By participating and voting in the DAO PNT holders can earn interest on their PNT. In the first year DAO participants can earn up to 42% on their PNT and in the second year they can earn up to 21%. This incentivizes PNT holders to participate in the DAO. If they don’t participate they don’t earn interest.
PNT also partially derives value from validators. To become a validator you must first hold 200,000PNT. You may ask the question of why someone would buy that much PNT to secure a network? As always there is an economic incentive. Validators can participate in the DAO and earn interest like every other holder. However, validators also generate income from the fees generated by the issuance and release of pTokens.
But there is a catch. If validators are found to be acting maliciously, or performing poorly in terms of network capability they can be voted out by the DAO. In doing so they lose their 200,000PNT stake. This creates a double edged sword for validators. Where they are financially rewarded for good performance, and harshly punished for poor or malicious actions
As previously mentioned validators and the DAO are expected to be launched this month.
The Use Case for pNetwork
The use case for pNetwork is largely based around the DeFi ecosystem. If DeFi sees continued growth, pNetwork will flourish. However, if DeFi dies away so to will pNetwork.
The two main use cases that pNetwork cite themselves are DeFi based. These being the use of pNetwork in decentralised lending platforms and decentralized exchanges.
By using pNetwork no matter what blockchain assets I hold I will be able to access liquidity and markets on other networks. I can quickly convert my assets to my desired network and get DeFi based loans or trade on decentralized exchanges.
One of the big problems with Decentralized exchanges in the past was that they could only support tokens on their own network. If it was Ethereum based I could only buy erc-20 tokens. Now with pNetwork we can potentially create an Ethereum DEX and trade every asset in crypto.
pNetwork also works to increase the speed of blockchain. Everyone knows that Bitcoin is secure however it can be incredibly slow and expensive at times. pNetwork opens up the possibility of creating synthetic Bitcoin on incredibly fast blockchains.
pNetwork’s pTokens are already integrated in a number of ways. pNetwork is integrated with the Eidoo app so users peg in and out their pTokens through there.
pTokens are also listed on a variety of Ethereum and EOS DEX’s. These include exchanges like Kyber Network, Bancor, Loopring, and Evolution Exchange.
There is however currently no lending platforms supporting pTokens as of yet.
The Growth of DeFi has brought a lot of interesting project to the cryptocurrency space pNetwork among them. pNetwork definitely brings something new to the table in terms of technology and its vision for the future.
While DeFi has brought attention to pNetwork and projects similar it can take it away just as easily. If DeFi does turn out to be a hyped up fad pNetwork and a variety of tokens will wither away as great as their tech may be.
But if you truly believe in the continued success of DeFi, pNetwork is an excellent place to look.