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Block Chain - Coggle Diagram
Block Chain
Listing Requirement
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Security
The blockchain should demonstrate robust security measures to protect user funds and prevent hacks. This might involve audits from reputable security firms.
Adoption & Community
The project should have a growing community of developers and users actively building and interacting with the network.
Tokenomics
The tokenomics of the blockchain (if it has one) should be well-designed with a clear distribution model and utility for the token.
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Tecbnology
Concensus Mehcanism
What consensus mechanism does the blockchain use? Is it a well-established mechanism like Proof of Work (PoW) or Proof of Stake (PoS), or a less proven custom mechanism?
Scalability
Can the blockchain handle a high volume of transactions without sacrificing efficiency? Eg 20M/Block, 1000 TPS,
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Resources for Checking
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Caution
Remember: Don't invest in any blockchain project based solely on hype or promises. Conduct thorough research, understand the risks involved, and only invest what you can afford to lose.
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Terminology
Layer 1: Layer 1 refers to the base layer or the main blockchain itself. It involves improvements and solutions that are implemented directly on the blockchain protocol. Key aspects of Layer 1 include:
Protocol Upgrades: Changes or upgrades to the core blockchain protocol, such as increasing block size or modifying consensus algorithms (e.g., switching from Proof of Work to Proof of Stake).
Scalability Enhancements: Techniques to increase the blockchain's capacity to handle more transactions, such as sharding, where the blockchain is split into smaller pieces (shards) that can process transactions in parallel.
Security and Consensus Mechanisms: Improvements to how transactions are validated and secured, ensuring the integrity and reliability of the network.
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Bitcoin: Upgrades like Segregated Witness (SegWit) and the implementation of the Lightning Network (though the latter is considered a Layer 2 solution).
Ethereum: Ethereum 2.0 upgrades, including the transition to Proof of Stake and the introduction of sharding.
Layer 2 refers to secondary frameworks or protocols that are built on top of the existing blockchain (Layer 1). These solutions aim to improve scalability, speed, and efficiency without altering the underlying blockchain. Key aspects of Layer 2 include:
Off-Chain Transactions: Transactions are conducted off the main blockchain and only the final results are recorded on the blockchain, reducing the load on the main chain.
State Channels: Allow multiple transactions to be conducted off-chain between parties and only settle the final state on the blockchain. Examples include payment channels like the Lightning Network for Bitcoin and Raiden Network for Ethereum.
Sidechains: Independent blockchains that run in parallel to the main blockchain. They can interact with the main blockchain and are used to offload some of the processing work. Examples include the Liquid Network for Bitcoin and the Plasma framework for Ethereum.
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Lightning Network (Bitcoin): Facilitates fast, low-cost transactions off the main Bitcoin blockchain.
Raiden Network (Ethereum): Similar to the Lightning Network, but for Ethereum, enabling fast and scalable token transfers.