Waltonchain — Update I

01.11.2018

TL;DR. Ecology:3 (3). Technology:2 (3). Decentralization:2 (2). Valuation:4 (2). Rating:3/10 (2/10)

Six months have passed since the initial BD Ratings article on Waltonchain was published. Here is how that prediction has turned out so far.

2018-05-01: USD 17.78, Satoshis 163 599.

2018-11-01: USD 3.34, Satoshis 52 757.

The price has dropped considerably in USD terms, but in Satoshis as well. Let's map what happened during the last 6 months.

On 5th of June 2018, the Waltonchain team revealed that some of it's technical supporter Silictec's RFID chips had neared and even entered mass production stage. At around the same time, the 100 000th block was mined, marking the progress of testing the network up until users can swap their ERC20 tokens to real WTC tokens. On the 23rd of June a second child-chain project was introduced with the goal to address the problem of counterfeit fashion products. Later in July a new initiative called WTC-Food was revealed - a project that addressed the problem of food untraceability.

New information about the master node system was also released. Additional to the Guardian Master Nodes, the new Super Master Node (SMN) was introduced. A total of 99 slots were reserved for SMN's, and each slot required 100 000 WTC stored. Also in July, the community started to speculate that some miners had found a serious flaw in the mining algorithm that made it possible to test nonces in a specific pattern in order to find blocks much quicker than if applying nonces randomly. Outlined in this thread, some anecdotal evidence is given where some miners of past blocks have provided very specific nonces for said blocks.

A couple of new versions of the wallet/mining software has been released during the last couple of months. These are all closed source. On the 4th of September, a new version of the whitepaper was released. In it, it was also confirmed that Waltonchain is indeed a spin-off from the Ethereum Go implementation.

As of 30th of September, 13 of the 99 SMN slots had been filled. The community is currently waiting for a complete mainnet launch with accompanying token swap. This ought to happen as soon as there are more reserved SMN's and as the team completes all different security preparations as well as token migration logistics.

Ecology

When inspecting the Waltonchain subreddit, it is considerably more active than many other cryptocurrency subreddits. There are also some meetups going on. Furthermore, Waltonchain has expanded on the partnership front, resulting in more future child-chains connected to the WTC mainnet. BD Ratings awaits the full launch of mainnet to properly estimate economic activity on the chain.

The continuous integration between RFID chips and blockchain technology, combined with Waltonchain's involvement with Chinese authorities does not bode well for the project in the long run. China is already implementing mandatory RFID chip installations in the windshields of domestic cars. The country also has police with specialized eyeglasses that try to verify drivers against a blacklist database. Obviously, if Waltonchain was to become popular, the platform could easily be used by the dictatorship in creative ways, ensuring that growth would stagnate.

Additionally, during these last months BD Ratings has still not seen a clear outline in how RFID chips integrated with a blockchain should help supply chain management in a meaningful way. Obviously there might be advantages in de-siloing databases, but in terms of mitigating counterfeit goods, a blockchain is certainly not a magic bullet. Stakeholders ought to still be able to 'trick' the distributed database with regards to what goods are connected to what RFID chip.

Waltonchain still runs unprofessional competitions where they give away tokens. Users can't transact on the mainnet yet so to promote the project like this is just to shift focus on short-sighted profit instead of creating a decentralized and secure blockchain.

Grade: 3

Reasons: Active community. Partnerships. No usable mainnet.

Technology

The introduction of Super Master Nodes is complicating the already somewhat diffuse consensus mechanism that is the center of the Waltonchain blockchain. In the official specifications it is remarkably hard to try to map exactly how and in what way financial incentives are constructed. Instead, the main takeaway that the community seems to focus on is the large lock-up of around 10% of all WTC in existence. To obtain a SMN slot, stakeholders need to first obtain 100 000 WTC in the form of ERC20 tokens. To set a time limit in this fashion seems very irresponsible as it ought to impact demand of the relatively few circulating WTC out there. One could in fairness speculate that the goal is WTC price appreciation rather than having a solid consensus mechanism. The long term implications of the MN/GMN/SMN construction is a blockchain where game theoretic forces might drive the project in a bad direction.

The mining bug mentioned earlier was never clearly addressed by the Waltonchain team. This is strange as it clearly benefited some miners by an order of magnitude. BD Ratings will follow up on this and correct this article should the sporadic information provided be wrong.

Sadly, the Waltonchain code base is still closed source.

Grade: 2

Reasons: Complicated master node system. Closed source.

Decentralization

By going for a closed source code, the Waltonchain is currently extremely centralized. The team has promised to make code public once the 'time is right', but this is not good enough in a space with thousands of scam projects. Further more, as the network integrates RFID chips, the risk of having code taken by competing projects ought to be extremely low as those projects would have to design and produce hardware as well.

On top of this the WTC token allocation distribution is heavily skewed towards addresses owned by the Waltonchain. This means that even if they embrace full open source, they can still control certain aspects of mainnet.

Grade: 2

Reasons: Still closed source. Token concentration.

Valuation

The drastic fall in WTC token price have taken the total valuation of Waltonchain down to less insane levels. With a more than USD 300M valuation, however, it is still overvalued considering bad fundamentals.

Grade: 4

Reasons: Fall in market valuation.