Emercoin — A Rough Amethyst

08.11.2018

TL;DR. Ecology:3. Technology:6. Decentralization:3. Valuation:3. Rating:4/10

Introduction

Emercoin (EMC) was introduced on bitcointalk.org by user Fixx as early as 2013. The coin began as a hybrid between NameCoin and Peercoin and was released as software on 11th of December 2013. In other words, the code base is taken from Bitcoin Core. The initial issuance was very high and went mainly to SHA256 ASIC miners before the difficulty quickly increased and block rewards subsequently decreased. Issuance continuously shifted towards Proof of Stake as the Proof of Work difficulty is programmed to increase.

The chain came to a complete halt in February 2014 as some relic from copied Peercoin code turned out to be dangerous. A new version was promptly released. In September 2014, the NameCoin DNS-functionality that was integrated into Emercoin resulted in new domain zones .coin and .emc. On the 3rd of November 2014, the 0.3.0 version of Emercoin was released. This version included easier registration and management of the new domain name zones as well as the broader feature of distributed trusted storage of general-purpose data. In the 0.3.2 version, the domain name zones .lib and -bazar were added as well.

In January 2015, Emercoin partnered with OpenNIC, an alternative DNS provider. Later that year, the team ramped up marketing efforts for the now tangible project to become more visible. On the 30th of November 2015, an unplanned fork occurred, splitting the coin in two. This was the result of an attack that again exploited code from Peercoin. A 0.3.6 version was released to patch the bug.

Continuous software updates occurred in 2016, with the 0.5.2 version adopting Bitcoin Core 0.10.4. On January 22nd that year, ChronoBank announced a partnership with Emercoin. In February, Bitcoin merged mining was introduced. With the 0.6.0 version, a bug was introduced that could make the blockchain synchronization freeze up. This bug was solved in 0.6.1. In 0.6.2 checkpoints inherited from Peercoin was made optional in favor of decentralization. The latest version of the software is currently 0.7.2, released just one day after the Bitcoin Core CVE-2018-17144 vulnurability.

Ecology

Like NameCoin, Emercoin has introduced useful features like a decentralized DNS called EmerDNS, ensuring that users can visit certain domains that are not part of the common ICANN structure. By for example adding browser extensions, users can navigate to these webpages and interact with the content. In theory, this makes them very hard to shut down should such orders come. The EmerDNS also tackles what the team considers to be security holes of the classic DNS system, like a possibility of hacking it to forward traffic to fake webpages. The feature is part of the Emercoin NVS (Name-Value Storage). Emercoin NVS is more generalized than Namecoin's DNS as it can function as a broader distributed storage system. In other words, Emercoin is designed to be used for multiple purposes. Multiple examples are listed here.

The project has a couple of partnerships lined up. One of the more recent is that with Coca Cola. Emercoin has been tasked with supplying infrastructure for a blockchain registry that will contain worker contracts. The hope is that sugarcane workers rights are protected by the added transparency of a public blockchain. BD Ratings has no idea how the verification itself will happen and needs evidence of a functional use-case before taking this into account when estimating the ecology. Evidence could manifest itself as on-chain transactions or a very clear description on how exactly it would work considering potential SISO (shit in, shit out) effects.

When looking at activity on the blockchain, there seem the be around 400 transactions per day. Taking into account only non-zero fee transactions, the number shrinks to around 50 per day. This is very low activity and is a result of general altcoin apathy right now.

The Emercoin project has been accused of being run by scammers connected to multiple other projects like Polybius, HashCoins and HashFlare. It is true that the Emercoin CTO Oleg Khovayko is a technical adviser to many of these other projects, and Eugene Shumilov, Emercoin founder and CEO, have also publicly praised Polybius on his blog. HashCoins' cloud mining project HashFlare failed after running for some years, and some investors have still not received money back. With all this said, BD Ratings concludes that Emercoin is not a scam project, nor are team members and developers scammers. The evidence are not convincing enough. Being an adviser to failing projects does not indicate bad intent.

Grade: 3

Reasons: Low on-chain activity. Useful features of software client. Need to see more concrete usage.

Technology

As Emercoin inherited code from Namecoin and Peercoin, it has a Bitcoin Core code base. Additionally, it has been continuously synchronized with newly released Bitcoin Core versions, ensuring a sound technical base. The development of the Emercoin NVS with its many sub-components is enough proof of competence. Many of these components were included in Red Hat's corporate catalog of certified programs. This further validates the team's technical strength.

The GitHub commit activity has been stable over time. Most commits come from three different developers. In the beginning of 2018, a total of 6 developers apparently worked on the code base and the different services.

Other than the above, not much more have impacted the rating. BD Ratings found no obvious negative technical aspects of the project - the case seems to be the opposite.

Grade: 6

Reasons: Stable code base. Competent developer team with now proven record.

Decentralization

One of the main issues with Emercoin with regards to centralization is the initial Proof of Work mining. During the first month after blockchain launch, more than 30M coins were issued. This is especially concerning as the project had Proof of Stake in mind already from the beginning. Now, half a decade later, 42M coins are circulating, indicating that the initial miners still probably carry a huge amount of weight in the network.

What initially looked like a centralized attempt to control transaction fees, turned out to have been handled with consensus seeking measures manifested in the 0.6.3 wallet. The changes would activate once 95% of past 1000 blocks were created by miners/stakers using the latest version, acting as a signaling point. This kind of process is much better than top-down forced changes.

Finally, Emercoin has a CEO. Such centralized structure with a profit motive is generally a bad thing for a cryptocurrency to have in the long run. Legal entities can get sued and shut down.

Grade: 3

Reasons: Something akin to 'instamining' during the first month.

Valuation

With a 42M EMC in circulation, the total value of all Emercoin is at time of writing around USD 40M. This puts the value of the blockchain at rank 132 on CMC. For comparison, Namecoin with its similar code base and decentralized DNS service fetches a total value of USD 9M. Considering the threatening centralization caused by initial inflation through PoW mining, Emercoin is somewhat over valued. Yet, overall the team is impressive and BD Ratings is eager to do a followup on this project in the future.

Grade: 3

Reasons: Similar blockchains with lower value. High possibility of token concentration.