Comprehensive understanding of Taraxa's token economy, technical features, and application scenarios

This article was published on TalkChain, original title: "The Millennium Old Demon Finally Issues Tokens, What is Worth Looking Forward to in Taraxa?" Author: Runchen

Taraxa will conduct a public offering on TokenSoft, and before this, many people may not have heard of this project. It has been established since early 2018 and has been continuously developed for nearly three years. In the restless cryptocurrency market, there are not many projects that can persist for three years without issuing tokens while still developing seriously. This piqued my curiosity about the project, so what advantages does Taraxa have compared to other public chains, and is it worth our anticipation?

The Taraxa project was established in early 2018, with seed investments from angel investors in Japan and Singapore, followed by several rounds of private financing in the Bay Area. While other projects were busy racing with the bull market, Taraxa has quietly traversed through bull and bear markets and has been able to continue its development. This alone is enough to surpass most "air coins" and eliminated projects in the market.

To understand what Taraxa is doing, I had a brief chat with their founder, Steven. Below are my thoughts based on Steven's answers and my reflections; it is not a conclusion and does not constitute investment advice. That being said, this is a highly uncertain market, and everyone needs to be responsible for their own money.

In summary, Taraxa is a dedicated, high-speed, scalable, and device-friendly public ledger that helps individuals and businesses make better and faster decisions. The protocol enhances stakeholder accountability and minimizes dispute risks, specifically addressing the challenges brought by friction in business coordination and decision-making processes.

Token Economic Model

First, let's talk about the token economic model, which everyone is most concerned about. The total supply of TARA is 10 billion tokens. TARA tokens can be used for network transactions and validating nodes. Token holders can use TARA to pay transaction fees, which will become the income of the nodes. Users can also use TARA for staking to become Taraxa network nodes and maintain network security. The supply for this public token issuance is 375 million TARA, accounting for 3.75% of the total supply.

Taraxa offers three investment plans for investors to choose from, with a minimum investment amount of $1,000 for each plan. Purchases can be made using ETH or ERC-20 USDT, but the difference between the plans lies in the token price and unlocking periods.

• Investment Plan A: TARA allocation is 250 million tokens, with an issuance price of $0.008 per TARA token. The minimum participation amount is $1,000, and the upper limit is $250,000. 10% of the tokens will be unlocked upon listing on the trading platform, i.e., after trading starts, and the remaining 90% will be unlocked over 6 quarters;

• Investment Plan B: TARA allocation is 100 million tokens. In this plan, the issuance price is $0.01 per TARA token, with a minimum participation amount of $1,000 and an upper limit of $50,000. In this plan, 10% of the tokens will be unlocked upon listing on the trading platform, and the remaining 90% will be unlocked over 4 quarters;

• Investment Plan C: TARA allocation is 25 million tokens. In this plan, the issuance price is $0.012 per TARA token, with a single participation amount of $1,000. In this plan, all tokens will be unlocked upon listing on the trading platform, with no lock-up period.

Interestingly, Taraxa has strict measures for the team and institutions in the design of the entire economic model. Only 3.5% of the seed round will be unlocked initially, followed by a linear unlocking rate of 12.06% per quarter. The full unlocking period for the seed and private rounds lasts 25 months, while the team's share will only start unlocking after 26 months (2 years and 2 months) of circulation.

Designed for Real-World Scenarios

After discussing the token economic model, we move on to the most important topic: What expectations can Taraxa bring?

When a new technology emerges, it often faces a problem: the framework of the technology exists, but there are no demand scenarios. This is what we commonly refer to as adoption, the issue of how to apply it. VR is like this, AI is like this, and blockchain is no different.

This problem has also troubled Bitcoin and Ethereum for a long time. Later, the two took different paths; Bitcoin deviated from the original intention of being the world's cash and took the path of SoV (Store of Value) to become digital gold, while DeFi grew on ETH, and consortium chains struggled to find direction in the enterprise market.

Ethereum has a first-mover advantage, so it could wait for years for DeFi to grow out of this system. Other public chains clearly do not have this opportunity, so those that hope to be Ethereum killers often have no follow-up.

For a new public chain to gain a foothold in the market, the only way is to take a different path from Ethereum. Therefore, those public chains with real application scenarios thrive, from last year's VeChain to this year's Flow.

Taraxa is also like this; from the very beginning, it has been clearly application scenario-oriented. When discussing public chains, we usually talk about ecosystems, but for Taraxa, we need to talk more about scenarios. Because before the ecosystem flourishes, Taraxa needs to first prove its value and necessity to the market. This point is well understood by Taraxa's founder, Steven, who believes that it is unrealistic to expect developers to come on board as soon as a public chain is launched.

So, what path does Taraxa choose? How is it different from Ethereum?

In a more abstract sense, Steven raised a very realistic question. In a commercial society, we have to face a problem: to solve complex issues, we need to scale up organizations. But as organizations grow, they create more problems. A typical phenomenon is the high cost of communication and coordination, exemplified by endless meetings and unending bureaucracy.

The current solution is to manage through OA systems, such as DingTalk and Feishu, and some large enterprises have their own customized OAs. However, this does not solve the problem, or rather, it only solves part of the problem. Steven mentioned that when he was doing strategic consulting, executives from large companies would constantly raise a question—they cannot obtain effective data, a lot of data is ineffective, or simply false.

This is indeed a widespread problem; management and data flow are difficult to penetrate. The system shows that a company has 16,000 employees, but there may only be 14,000. The system shows there are 100,000 in stock, but the warehouse may be empty. Therefore, companies (especially multinational corporations) have to spend a lot of money on audits, which causes disruptions to their daily operations. The simplest example is the cumbersome and complex reimbursement processes in large enterprises!

These issues are precisely where blockchain and the Internet of Things can improve. The Internet of Things can largely address fraud in the data collection process. For example, a hot pot restaurant has installed IoT temperature sensors and GPS on each transport vehicle. If there is a deviation or the door opens, the system can immediately record it. Blockchain can solve the problem of data being tampered with after collection, because as long as the hash is on the chain, any alteration of the data will be detected.

This is the macro perspective of the problems that blockchain and the Internet of Things can solve. So, from a micro perspective, what has Taraxa done?

Currently, two projects are running on Taraxa: Marinate and Helio. Specific project introductions have already been well covered in several articles, such as "Taraxa: IoT + Blockchain, What New Business Scenarios Can Be Created?" and "What Imagination Space Does Protocolized DocuSign Have?" I will briefly explain from my understanding.

Helio: A Credit Penetration Layer Based on IoT

Helio is quite simple; it is an IoT information auditing system. It can save a hash of the information fed back by IoT devices on the chain to ensure that the information cannot be tampered with after being fed back from the endpoint. For example, the constant temperature cold chain vehicle of the hot pot restaurant; once the data is on the chain, it cannot be altered.

This is actually a solution with many application scenarios. Steven gave an example in the used car trading market, where an important piece of data is the mileage. Mileage can be tampered with in various ways. Buyers have to find professional companies for evaluation, which incurs huge trust costs.

But if we install an IoT device that reports every 8 hours on the odometer, and the hash of this information is saved on the chain, this problem can be directly avoided. Malicious actors can tamper with the device's own records or the company's server records, but they cannot tamper with the records on the chain. Thus, during the second-hand transaction, one only needs to retrieve the data from the chain to clearly reflect the actual mileage of the vehicle.

To abstractly understand, the value of Helio lies in its ability to increase a penetrating trust layer through IoT devices. This trust layer can penetrate all participants (for example, directly placed in the car's engine) and minimize friction with the least trust (the information fed back by the IoT device must be true).

From this perspective, Helio and Taraxa have very broad application prospects.

Marinate: How Should Evidence Storage Be Conducted?

Another application called Marinate is also quite interesting. It is essentially an evidence storage tool where users can store the hashes of important chat records (such as borrowing money) on the chain. However, many people might wonder why this is necessary since emails and WeChat messages can already serve as judicial evidence.

This is where I find the logic of Taraxa most inconsistent. Most disputes in real life arise because we cannot record them in a timely manner (perhaps due to laziness or reluctance to face the situation). If we had recorded them, even just confirming on WeChat could have avoided many such disputes.

So why use Marinate? It actually adds an extra step, clearly complicating the matter. It is conceivable that Marinate may become a product that no one uses.

When I was pursuing my master's degree, there was a theory in consumer psychology that for a new technology to gain application, it must meet two conditions: first, there must be sufficient motivation, and second, it must be simple enough.

Steven shared a statistic with me that the construction industry loses up to $24 billion annually due to unrecorded and untraceable data. He also shared an observation that in the U.S. construction industry, the value of an insurance policy often exceeds hundreds of thousands of dollars, but the insurance company must be informed of any changeover exceeding $500. Most delays in payment and triggering of judicial procedures are caused by these seemingly insignificant changes—like moving a wall 50 centimeters to the left.

Such problems arise because the construction industry often requires coordination among dozens of companies, each doing different things, with varying cultural and technological levels, making it impossible to integrate everyone into a single system. However, the entire process is interconnected. Therefore, if applying blockchain technology can save this money, it is a global optimization process, and I believe these people would be willing to adopt it.

The second condition is ease of use. Marinate is embedded in the system; for example, my emails can be directly cc'd to Marinate, and the system will automatically extract important information for structuring. For the initiator, there is a platform to see all their sent records, while for the recipient, they only need to click a link to choose "yes" or "no."

A low application threshold and obvious improvement in effectiveness are the main reasons I believe Marinate will succeed in the market. With a clear application orientation, it can solve real problems, which is also what sets Taraxa apart from other public chains.

High-Performance Commercial Solutions

The above discusses the core applications on Taraxa; now let's talk about the underlying technology. To balance performance and decentralization needs, Taraxa uses a DAG (Directed Acyclic Graph) system, which is one of Taraxa's technical advantages.

The Taraxa chain is based on a PoS consensus mechanism, introducing a block DAG topology, combined with fuzzy sharding technology and VRF-driven PBFT consensus, ensuring fast and asynchronous block confirmations. Additionally, Taraxa has pioneered an optimized execution layer, rather than relying on the sequential execution methods commonly seen in current blockchain systems.

DAG is a mathematical model applied to data structures, consisting of vertices connected by directed edges, with no route starting from a vertex and eventually returning to the same vertex—meaning it is acyclic. Essentially, DAG is a low-level data structure that can be used to model various types of data, especially networks with dependencies.

More technical details will not be elaborated on in this article; interested readers can refer to the white paper for detailed descriptions of the technology.

In summary, the Taraxa chain has the following innovations and features:

• DAG block topology can achieve high throughput and low latency without sacrificing security (on-chain time is less than 1 second);

• Currently capable of reaching 5,000 TPS, with a roadmap plan to reach 50,000 TPS in the future;

• A secure and fair sorting algorithm based on DAG blocks;

• VRF & VDF support fair and effective proposals, replicating the advantages of PoW without wasting energy;

• A fast PBFT algorithm provides true determinism for DAG cycles;

• Highly optimized VM execution layer, resulting in exponential growth in smart contract processing speed.

Next Steps

According to Taraxa's roadmap, it plans to deploy the mainnet in 2021, with significant incentives for community participation, and then continue to develop to ensure network security, mainly including:

• Integrating GraphQL for more efficient node queries;

• Integrating DPOS staking, fees, and block rewards to improve the Taraxa economic mechanism;

• Cross-chain anchoring of Taraxa's state snapshot receipts to prevent long-distance attacks and achieve cross-chain asset exchange;

• Community-driven security and load stress testing and benchmarking to ensure network security.

Secondly, it aims to promote the adoption of Marinate, involving the release of public APIs and integration with all major communication tools (such as WhatsApp, WeChat), and collaborating with the community to drive adoption.

Team: Academic + Technical Genes

Interestingly, Taraxa has a team with a strong Stanford vibe. Its team members and advisors come from professional fields and have strong academic backgrounds, which often leads to more solid and stable work. However, this also means they may often seem "out of place" in the restless cryptocurrency market.

Taraxa's founder, Steven Pu, holds a bachelor's and master's degree in electrical engineering from Stanford University. He previously worked as a consulting advisor at Deloitte's Moritt (a subsidiary specializing in strategy and operations consulting) and has entrepreneurial experience in IoT (Internet of Things) and founded Leland Capital (investing in IoT).

The CTO also comes from Stanford, holding a Ph.D. in electrical engineering and having received research funding from the National Science Foundation while an undergraduate at Stanford. The team's consulting advisors include Dr. Maurice Herlihy from the Algorand team, co-founder of Distributed Capital Shen Bo, and Mamoru Taniya, founder of the well-known Japanese hedge fund Asuka Asset Management.

Final Thoughts

This market is not short of teams with academic backgrounds, especially in the public chain sector, which has gathered many big names. Professor Silvio Mical of Algorand is a Turing Award winner, Professor Gun of Avalanche worked on public chains before Bitcoin, and the domestic team Conflux is under the care of "Yao Class."

Looking at these academically inclined public chains, we can actually find many commonalities. For example, they often exhibit more patience than typical project teams and tend to prioritize product development over PR. From a long-term perspective, such projects often have the potential to go further, even traversing cycles (Taraxa has already done so once). However, from the perspective of secondary market investors, investing in such projects requires patience and long-termism.

I am not a prophet; all I can do is share the information I have gathered, what I see and hear, and my reflections based on rational logic. I believe in Steven and the team's determination to work diligently, and I also believe they have the opportunity to find their path in this complex market.

The road ahead is long and arduous; may all those who work earnestly in this industry discover true value.