Amid the competition among public chains, what is Alephium's trump card? | Dialogue with the frontline

Competition among L1 in today's blockchain market is increasingly fierce. Mainstream public chains such as Ethereum and Solana have occupied a major position in the industry with their huge ecology and network effects. If emerging public chains want to stand out in this pattern, they must make breakthroughs in technological innovation and ecological construction. With the development of the market, many projects have begun to pay more attention to community building and market operations, while the investment in underlying technologies has been relatively reduced, which makes public chain projects with real technological innovations extremely valuable. Alephium has emerged in this context. It is committed to integrating the advantages of Bitcoin and Ethereum, using a unique PoLW consensus mechanism, an innovative sUTXO model, and the self-developed Alphred virtual machine, providing a new solution for the scalability and security of blockchain.

Related reading: (It will take Alephium 5 years to improve POW performance to the extreme)

During the Token2049 conference, the BlockBeats team had the honor to interview Alephium's founder Wang Cheng and COO Maud Bannwart, and talked with them about how Alephium found its core competitiveness in the current fierce public chain competition environment and continued to build user-oriented ecological projects. Technical support is the background of Alephium, and how to achieve more sustainable value accumulation on this basis is a more worthy direction of attention. I hope that through this conversation, we can have a deeper understanding of how Alephium insists on technological innovation and creates a unique ecosystem in the fierce public chain competition, bringing new possibilities to the blockchain industry.

The following is the full text of the interview:

BlockBeats: Could you please introduce yourselves to each other? Why did you choose to enter the crypto field and how did you join Alephium?

Wang Cheng: I used to work for a large company, but I gradually felt that this working model could not help me realize my personal value. It happened that I had been following the development of Ethereum at that time, especially their sharding technology. I realized that I had the ability to design a system that was better than their original solution. So starting in 2017, I tried to verify this idea. As my ideas gradually matured, I decided to devote myself to this project full-time, and eventually the Alephium project was born.

Maud: I joined the team in 2021, a while before the project was officially launched. I had worked with Cheng and several other core contributors on a startup project before, but I left that project. I was like a "Swiss Army Knife", mainly responsible for operations.

I got into crypto in 2017, initially working for a small cryptocurrency exchange. It really started in December 2017, when Bitcoin first hit $20,000. That was also when we first felt the scalability challenges of the industry, especially the skyrocketing transaction fees caused by the Cryptokitty phenomenon on Ethereum. This was a painful first taste of the blockchain world, but it also made me clearly aware of the many challenges that the industry still needs to overcome.

Left: Wang Cheng; Right: Maud Bannwart

Technological innovation: Alephium's integration and breakthrough

BlockBeats: How do you understand that Alephium combines the advantages of Bitcoin and Ethereum? How to balance the different advantages of the two in design, and how to avoid their respective disadvantages.

Wang Cheng: From a technical perspective, Bitcoin is simple, secure, and easy to maintain; Ethereum, with its powerful programming capabilities, has become the first blockchain platform to successfully introduce smart contracts. However, the complexity of Ethereum brings many potential security risks. When we designed the system, the main goal was to combine the advantages of both while trying to avoid their respective shortcomings. From the results, we basically achieved this goal, and the entire design process followed several key first principles.

First, we use the UTXO model to handle all assets. The biggest difference from the account model is that the UTXO model allows users to fully control their assets, which has greater advantages in security. In addition, this model is also more convenient for sharding expansion, which facilitates the future expansion of the project.

Secondly, we introduced the programming ability of the account model, which enables the smart contract to have a variable state, thus providing extremely strong expressive power. In this way, almost all applications that developers want to implement can be completed through this model. Our core goal is to successfully combine these two features into the same project.

Although other projects have tried similar integrations before, they often encountered various problems. Ours is the first project to successfully combine the two, and we can discuss the technical details in detail later.

BlockBeats: There are relatively few projects that use the PoW consensus mechanism in the market now, mainly because Ethereum and Bitcoin each have a strong "geek culture" in culture, so it is difficult to see other similar projects. Although the Bitcoin ecosystem does have a trend of recovery, when developing public chains, everyone generally believes that the PoW consensus mechanism is a bit outdated. In the Ethereum community, concepts such as sharding technology are no longer widely mentioned. How do you view this issue? Why do you still insist on PoW consensus and these technologies?

Wang Cheng: Developing a public chain is indeed an extremely difficult task. We have been working on this project full-time since 2018, and it has been several years now. In the early days, we spent a lot of time on the development of protocols and infrastructure. At that time, if you didn’t have something substantial for everyone to experience and feel the progress of the project, many people might think you were just making empty promises, or even suspect you were a liar.

Fortunately, our design idea is to simplify the system as much as possible, similar to Bitcoin. Therefore, our small team completed the development of core functions in a relatively short period of time, including sharding technology, virtual machines, and smart contract implementation. As the project went online, the situation began to improve slowly, because everyone could see with their own eyes that the technology had been implemented and was no longer just a concept.

On the other hand, this is also a very risky process. We set very ambitious goals from the beginning, and what we did was almost unexplored by predecessors at the time. Many things were explored while doing. This is the biggest challenge we face, but it also makes me feel that this is very interesting. As I mentioned before, when working in a large company, the model is relatively fixed and the space for innovation is limited. And doing this project, especially in the early stages, is almost every day to solve new problems, and the brain is in a state of high fatigue every day.

Especially in highly complex fields such as system engineering and blockchain development, a small design detail, if not handled properly, may lead to security risks and may even ruin the entire project.

This situation is especially common in smart contracts, where a vulnerability may cause all funds to be cleared. Similarly, in the development of public chains, L1 has extremely high security requirements. If the security is not up to standard, the entire project may suffer a fatal blow. Therefore, during the development process, we must always stay highly focused and pay attention to every detail to ensure the security and stability of the project.

BlockBeats: Since we are talking about technical security, I think another issue that needs to be discussed is the direction of the consensus mechanism. Because in the underlying public chain, the consensus mechanism is a very critical part. Many readers or video viewers may not know much about consensus mechanisms such as PoW and PoS. Can you briefly introduce what these mechanisms are, how they work, and how they resist security threats?

Wang Cheng: First of all, regarding PoW, our original intention of introducing it was to solve the energy consumption problem in the proof-of-work mechanism. I can give a simple example. Suppose that Bitcoin now uses 3% of the world's electricity for mining. If we can reduce this electricity from 3% to 2%, how much impact will it have on its security? From the user's perspective, the impact is actually minimal. Users will hardly feel any changes, and security has almost no impact on them. However, from the perspective of energy consumption and environmental protection, a reduction from 3% to 2% is a huge change. Therefore, when we introduced PoW at the time, our main goal was to control energy consumption within a reasonable range without compromising the security of the system.

At that time, an article was published in the Bitcoin community to discuss this issue, although it did not attract much attention because Bitcoin's consensus algorithm is very difficult to modify, and any suggestions for changing the Bitcoin algorithm or core protocol are usually difficult to adopt. But after reading that article, I thought the ideas it proposed were very good, so I made appropriate adjustments and applied them to our project, which is the core method of our PoLW (Proof of Less Work).

The basic principle of PoLW is that when mining, not only electricity is consumed, but also tokens are burned to improve security. That is, when you mine a new block, not only energy is consumed, but also tokens are consumed. The benefit of this mechanism is that the overall energy consumption is reduced. Just like the example mentioned earlier where Bitcoin power consumption dropped from 3% to 2%, our design goal is to reduce power consumption to a reasonable range.

Related reading: (In-depth analysis of Proof of Stake Work (PoLW): An in-depth conversation with Alephium founder Wang Cheng)

Specifically, our design parameter is to reduce energy consumption to about one-eighth of the original. In this process, we replace part of the energy consumption by burning tokens, which greatly reduces the dependence on energy. Ultimately, such a mechanism can not only ensure the security of the system, but also significantly reduce energy consumption, thereby achieving a more environmentally friendly consensus mechanism.

BlockBeats: Yes, this is indeed in line with the current trend. You just mentioned that the native algorithm of Bitcoin is difficult to modify, and only teams like BTC Core can touch these underlying protocols. And Alephium has also made some adjustments in this regard. As you mentioned, it has innovated in the algorithm and sUTXO model. After the recent recovery of the Bitcoin ecosystem, people have had more interesting attempts and innovations in the UTXO model. Can you briefly introduce your thinking when designing these models?

Wang Cheng: Yes, in fact, the research and extension of the UTXO model has a long history. Before the current Bitcoin craze, projects like Cardano and Ergo proposed the eUTXO model, as well as some other similar projects. However, from what I have seen, their dissemination effect is not particularly good, and I think there may be two reasons.

The first problem is that many projects are too complicated when expanding the UTXO model, or completely follow the traditional UTXO model, which makes it very inconvenient when developing DApps. For developers, managing the UTXO status itself is a huge technical challenge. For example, inscriptions are very popular now, but when developing inscriptions, you need to write special code to manage these special UTXOs, which adds a lot of burden to wallets and developers.

The second question is how to combine the UTXO model with other models and ensure that the user and developer experience is not affected. This is also a big challenge. In the development of blockchain, we have seen many protocols that, despite having very good ideas, the final products are often difficult to use, or the threshold is too high, which makes it impossible to attract developers to join, and sometimes even encounter functional limitations.

In our design process, we attach great importance to user experience and developer experience. When designing and developing, we always give priority to reducing the difficulties encountered by developers, avoiding those places that may "dig pits" for developers, and strive to optimize the development experience. From the final results, we have basically achieved this goal. Although we are a new public chain, we still attract a lot of developers, and the community has developed a lot of applications.

BlockBeats: How does the Alphred virtual machine help developers based on the sUTXO (stateful UTXO) model? How does it integrate with the needs of developers in this regard?

Wang Cheng: The virtual machine is actually the core driver of the DApp platform. Almost all transactions that interact with DApp are executed through the virtual machine. Under the Alephium architecture, the virtual machine mainly processes transaction information related to the sUTXO model.

The function of the virtual machine can be divided into two parts. Compared with the account model, it has two significant differences. First of all, since we are based on the sUTXO model and all assets are stored in UTXO, the virtual machine must have specialized logic to handle UTXO when processing assets. And our virtual machine does this so well that I haven't seen any other project handle it like we do before.

The virtual machines of most projects can only operate on a single UTXO, while our virtual machine can process a large number of UTXOs at one time, which means that it can process multiple inputs from different addresses at the same time, which greatly enhances the functionality of the virtual machine and brings great convenience in programming.

This is the first important difference - our virtual machine fits perfectly with the sUTXO model. The second difference is that we designed a very efficient way to handle the state of contracts. In the account model, all state - both tokens and information within the contract - is stored on the blockchain through state. In our model, assets are handled through UTXOs, and the rest is handled through mutable state on the blockchain. This is different from other UTXO models because we allow a certain degree of mutability. This mutability makes the development experience more similar to traditional programming languages, except that special logic is required when handling assets.

Through this design, we have retained the security of the UTXO model and improved the programmability of the system. The key challenge of the virtual machine is how to combine the two, and we have found a good solution through the above two points, and the overall effect is very ideal.

Doing truly valuable things, Alephium's cultural vision

BlockBeats: We just talked about a lot of technical aspects, and all of this has prompted developers to join Alephium, which is a very positive sign for the project. What are the key components of the Alephium ecosystem at present? In addition, Alephium is constantly expanding the DeFi field through the support of native smart contracts. What is your long-term vision for DeFi?

Maud: Since the end of last year, our ecosystem has indeed seen explosive growth, with TVL growing by nearly 2,000%. As a non-EVM Layer 1 chain, it is very important to introduce native stablecoins and achieve cross-chain interoperability. Therefore, a core component of our ecosystem is the cross-chain bridge, which is based on the fork of Wormhole. The launch of this cross-chain bridge is an important turning point for our ecosystem because it enables us to transfer mainstream stablecoins (such as USDT, USDC) and other assets that exist on the Ethereum blockchain to Alephium. The introduction of this key component has greatly promoted the first wave of growth in the ecosystem.

Our ecosystem really started when the first DEX was launched on Alephium by a third party in the summer of 2023. Soon after, NFT marketplaces, Launchpad, and a few small DeFi-related applications appeared one after another. Since then, the development of the ecosystem has shown a snowball effect, and every project launched on Launchpad has been oversubscribed and sold out quickly. Although the ecosystem is still relatively small, the mutual help and support between developers is very obvious, which is gratifying.

Another recent boost to our ecosystem is oracles. In July this year, Alephium introduced its first oracle service, which supports the construction of more DeFi and other applications, such as overcollateralized stablecoins, native stablecoins, lending protocols, prediction markets, etc., all of which will rely on oracles. Therefore, we are very much looking forward to seeing these applications drive the further development of the Alephium ecosystem in the DeFi field and even other fields.

In the future, we plan to further expand the functionality of the cross-chain bridge by adding interoperability with more chains. Currently, our next goal is to integrate into BSC.

BlockBeats: Which track or field are you most interested in? Prediction market, or something else?

Maud: Honestly, I'm very excited about the development of the entire ecosystem. What I'm particularly excited about is that the potential of the UTXO model has not been fully tapped, because the current smart contracts based on the UTXO model are not mature enough in terms of ease of use and programming. I'm looking forward to seeing how the uniqueness of the UTXO model can be used to improve the security of existing applications and protocols, improve user experience, and hope to see the birth of completely innovative new protocols, no matter what the field. So, my interest is broader, mainly to observe how people use the UTXO model to change the way we deal with user experience in the ecosystem.

BlockBeats: Today, community culture has become a significant trend for many major Layer 1 projects, or a very obvious marketing strategy. For example, Monad and some other projects, I previously talked with a team that worked at Ant Group, which is also a large Chinese Internet company. They also attach great importance to the construction of community culture. This culture does not refer to meme coins, but a community atmosphere similar to niche culture. I learned that Alephium also has a very strong sense of community, especially the tight connections between developers, community, and the core team. So, does Alephium have a specific operational strategy to foster this community culture?

Maud: I don't think it's a strict operational strategy, but more of a vision, which is also related to the personalities of the core team members. When I first joined Alephium, Cheng made it very clear that we are building something useful, or at least we think that's the value we bring. We want to create something useful for users and build an infrastructure that people can build on top of, and that's our main goal.

With this goal in mind, we have to stay very close to the developer community because we are building for them. I really like the idea of ​​starting small and building gradually as use cases and developers come on board. At the same time, we will continue to incorporate user and developer feedback to drive further development of the protocol. So I think this is more of a vision than a carefully planned strategy.

User experience is important at every level, both for developers and how we interact with the community. We strive to be very approachable and engaging, and that's what resonates with people. In turn, this has shaped our community culture, where members support each other and grow together. To be honest, we are really lucky that people in the community support each other and help each other move forward together. In some ecosystems, competition can be fierce, but we are lucky to still maintain this collaborative atmosphere to this day.

Feedback from the Alephium community

Also, we really try to avoid putting too much emphasis on the cult of personality of the core team members. Because ultimately what we want to build is a decentralized ecosystem that can continue to grow and be driven by the protocol itself. So it's important that Alephium is not just Cheng, it's not just me, it's the result of all of us together. Ultimately, each of us is just a drop in the ocean. We have always tried to ensure that every contributor in the ecosystem gets the attention and recognition they deserve, not just the members of the core team. We have insisted on doing this since day one, and everyone has been very recognized and appreciated for this, which makes us very happy.

How to win in the fierce competition among public chains?

BlockBeats: The market's view on L1 has changed a lot, especially for retail investors. Many people no longer pay too much attention to the technology itself, but pay more attention to community building and project operations, which makes the role of COO more important. Do you think that the importance of technology has declined in the competition between L1s? As a COO, how do you plan to enhance your role and better participate in this competition?

Maud: I think you are right that many projects nowadays do focus more on community building and less on basic technology. Many projects are similar in technology, and their main value proposition or differentiation factor is more reflected in the size of the community they can gather.

But I think there is a problem with this approach, and this is my personal opinion, not everyone's. It is not a sustainable strategy because if you don't have real utility, then all the efforts to attract the community will become very expensive and difficult to maintain in the long run. Such a strategy may work for a period of time, but if your only differentiator is the amount of money you invest in the ecosystem, it means you have to keep users' attention and retention all the time.

Alephium has made some adjustments to this trend, but from a sustainable development perspective, you need both: a strong technical foundation and real practicality, especially in terms of user experience, advantages that both developers and users can feel. At the same time, you also need strategies that can attract people, because people need to know that you exist, whether the incentive is financial or other, and not only attract them, but also retain them.

We did innovate differently on a technical level, especially in a way that was somewhat counter-intuitive to the industry at the time. But since the end of last year, there has been a renewed interest in PoW, and this trend is still there in the industry. We have also seen the UTXO model gaining more attention as a more secure asset and token system, and the renewed interest in these technologies as proof of work is seen as a more reliable way to ensure decentralization, which has positioned Alephium very well.

BlockBeats: There are many emerging technologies, and leading public chains such as Ethereum and Solana have already occupied many opportunities for ecological development. What opportunities do you think there will be in the future under this public chain competition pattern? Is it possible for new public chains to catch up?

Wang Cheng: In general, we can draw lessons from the development history of databases to analyze the development trend of blockchain. From the development history of databases, there are several mainstream databases that dominate the market in each period, but at the same time, new databases continue to emerge and bring innovation and change to the industry. This is also applicable to the blockchain field.

Mainstream public chains such as Ethereum and Solana have established strong network effects. Without the introduction of real innovation, it is difficult for latecomers to compete with them. However, from a technical perspective, I think blockchain is still in a relatively early stage. Although some people say that the crypto industry is no longer in its early stages, I think there is still a lot of untapped potential from a technical perspective. If new technological breakthroughs can be brought about, it can still have considerable competitive advantages, similar to emerging technologies in the database field.

Finally, the diversity of mainstream databases provides options for different application scenarios. Similarly, the public chain ecosystem is complex, and different beliefs and needs may lead people to choose different public chains. Therefore, despite limited opportunities and high barriers to entry, as long as you have a strong team, innovative ideas, and enter the market at the right time, it is still possible to stand out in the public chain competition.

BlockBeats: So what are Alephium’s killer features?

Wang Cheng: As Maud said just now, we have not followed the crowd from the beginning, nor have we participated in the internal circulation within the industry. As early as 2019, when most projects turned to POS, we realized that POW still had unique advantages, so we chose to dig deeper in the direction of POW. Now, the competition in POS is already very fierce, and in terms of the combination and innovation of POW and POS, I think there is still more room for development. In addition, due to the existence of Bitcoin, the community base of POW is very large, and its potential has not yet been fully tapped. Although Bitcoin is currently hot, it is mixed with a lot of short-term hype factors. I believe that over time, the heat may gradually subside, and only truly innovative projects can survive for a long time.

First, our deep cultivation in the field of POW provides us with greater room for development. Secondly, our technical direction is relatively innovative. We use sharding technology to solve the expansion problem and use a new virtual machine to improve the security of smart contracts. In the long run, both aspects are crucial - one focuses on security and the other solves performance expansion. It is very difficult to achieve these technological breakthroughs. Ethereum has tried sharding expansion, but the results are not ideal.

I think we are the first to truly implement these technical solutions and come up with practical solutions. As long as we can persist long enough, the project will continue to grow, the community will become stronger and stronger, and eventually achieve network effects. At that time, I believe the probability of success will be greatly increased.

BlockBeats: What do you want to say to the developers in this ecosystem or our readers?

Wang Cheng: From my personal perspective, I think the entire industry should pay more attention to projects that are truly innovative. However, it is not easy to judge whether a project is innovative, because there are various forms of technology today. If people do not have a deep understanding of the technology, or even if they are very familiar with the technology, they will have different opinions due to their preferences. Therefore, this is indeed a difficult question to define, but my original intention is to hope that everyone can pay more attention to some truly innovative projects.

In addition, for developers, I think everyone should pay more attention to user experience. Now many projects are very "hardcore" in terms of technology, but the final products cannot be used smoothly by users. In the long run, this not only wastes money and manpower, but is also not conducive to the development of the project. Therefore, I think developers should pay more attention to user experience and avoid excessive pursuit of complex technical implementations while ignoring the final user needs.

As for users, people often mention the need to enhance security awareness, use hardware wallets, or learn wallet usage specifications. But from my point of view, what really needs to be improved is our developers, making the product easier to use and more secure in design. In this regard, I think we have done a good job. For example, in our UTXO model, we pay great attention to user experience when developing wallets. Therefore, I also welcome users to experience our products and feel our efforts in user experience and security.

Maud: I think it’s easy to get caught up in the market cycle and get obsessed with the trends of the moment. But I think it’s important for people to realize that there is still a lot of work and innovation that needs to happen in the industry to really make it easy for everyone to use. Today, even experienced users and developers still sometimes run into problems in the industry. And it’s easy to get caught up in the current mainstream narrative or the hot topics of today and ignore the fact that there is still a lot of innovation that needs to be done in the industry to achieve wider adoption.

We can't just stay at the user growth driven by speculation, but should promote the industry to truly become popular through innovation. I think projects like Alephium, although we are not the only one making efforts in innovation, are indeed worthy of everyone's attention and support. So, I hope everyone can support more innovative projects in the industry, and you are welcome to ask us questions or exchange ideas at any time.

This interview can be watched on YouTube: https://youtu.be/i7o3PCT8-_Q