1. Quintessential Western Project Configuration

1.1 Stellar Technology Team

Comprising professionals from diverse backgrounds, Spacemesh's team, as showcased on LinkedIn, includes 27 members ranging from computer scientists and cryptographers to mathematicians, engineers, and designers.

Founding Pioneers

• Professor Tal Moran, a postdoctoral researcher from Harvard, has been instrumental in devising storage-based consensus mechanisms, pioneering the concept of Proof of Space-Time.

• In 2017, Prof. Moran, in collaboration with Dr. Iddo Bentov, developed Meshcash, a scalable and incentive-compatible cryptocurrency framework using a mesh topology rather than a traditional chain structure.

• That same year, the co-founders of Spacemesh engaged with Prof. Moran to explore applications of his research, culminating in the creation of the Spacemesh protocol.

Other Key Figures

• Aviv Eyal, co-founder, brings a wealth of experience in developing high-quality full-stack systems and founding consumer media startups.

• Tomer Afek, co-founder and CEO, former co-founder and CMO of SHOWBOX. His expertise also spans online advertising and investment, having served as CEO of ConvertMedia.

Core Members

• Raphael Ouzan, Board Member & Advisor, founder and CEO of A.Team and co-founder of BlockNation with Apollo CEO Mark Rowan, focuses on Web3 investments. An honored officer in Israel's Defense Forces' S technology unit, he has been recognized by Forbes as a standout under 30.

• Yaron Wittenstein, Chief Development Engineer, holding a BSC in Computer Science from the Israel Institute of Technology, specializes in decentralized, programmable cryptocurrencies based on Proof of Space-Time, having previously served as a software architect and backend lead.

Lane Rettig, key developer and former core developer for Ethereum, holds a high reputation within the Spacemesh community. He is now selecting the Spacemesh Virtual Machine (VM).

1.2 Top-Tier VC Funding: High Investments & Valuations

• In its nascent stages in May 2018, Spacemesh attracted $3 million in seed funding from entities like BRM Group, iAngels, Alignment, and Bancor. By September, it secured a $15 million investment led by Polychain. Other investors include MetaStable, Paradigm, Coinbase Ventures, Bain Capital, 1kx, Arrington XRP Capital, Danhua Capital, Gumi Crypto, Electric Capital, Collaborative Fund, and Jack Herrick, among others.

• As of December 2021, Spacemesh raised an additional $4 million, with contributors like Leland Ventures, bringing the total funding to $22.5 million.

• According to Spacemesh official website, project builders and investors will collectively hold 6.25% of the total token supply, valuing the project at approximately $360 million.

1.3 A Theoretically Sound Technological Solution

Innovative Consensus Mechanism

Spacemesh employs a novel consensus mechanism, Proof of Space-Time (PoST), marrying the protocol with physical resources – storage space – and using a block mesh structure (layered DAG) to supplant the traditional blockchain for transaction ordering. This highly distributed protocol allows frequent rewards for independent miners, achieving high throughput by simultaneously releasing multiple blocks, thus creating a scalable, secure, and equitable blockchain network.

Incentives

Spacemesh requires its miners, known as Smeshers, to publish an activation transaction approximately every two weeks, or one epoch, to prove that they have continuously maintained the declared storage space throughout the epoch. This process involves several steps:

• Smeshers generate corresponding data based on Plotting (P) and initialize a Proof of Space-Time (PoST) proof.

• They submit this proof to a Proof of Elapsed Time (PoET) server to register their claim.

• After one epoch, using the membership root (a Merkle tree root hash containing node information), they generate a PoET proof.

• They then use both the PoET and the data from Plotting to create a PoST proof, demonstrating data accessibility both before and after the PoET.

• Finally, they publish an Activation Transaction (ATX) to the network, awaiting packaging and activation. Once activated, a Smesher can participate in block proposals and voting within that epoch and must stay online to share block rewards proportionate to the activated storage space.

Notes:

• Each epoch in Spacemesh consists of 4032 blocks and spans two weeks, from the registration deadline to the end of the plotting period.

• To share in the rewards of a particular epoch, a Smesher must complete registration, plotting, and pass the scanning validation before the start of that epoch, and have already published an Activation Transaction (ATX).

• After generating new data through Plotting, the first space proof is initiated. Following registration and upon receiving the PoET proof, the second space proof is generated. The PoET serves as a time proof. Combined, they constitute a complete proof of space-time, at which point the Activation Transaction (ATX) can be published.

• Once the ATX is confirmed in the network, the Smesher is set to earn rewards at a certain height in the new epoch.

• A Smesher who goes offline during an epoch only loses the rewards for that specific height; other Smeshers participating in the consensus at that height will share the rewards.

Lower Barriers to Entry

Spacemesh's most significant feature is its low barrier to entry for mining. It requires no permission, no specific machines, and is accessible to anyone who wishes to participate.

The minimum requirements for running a Spacemesh node are as follows:

• CPU: Intel or AMD x86-64 or 64-bit ARM processors, including Apple Silicon (but not Raspberry Pi), with at least 1GiB of memory.

• Operating System: Windows 10/11, MacOS, Ubuntu 22.04+ or Fedora 36+.

• Disk Space: At least 50GiB of available disk space.

• Internet: A consistently online and unlimited internet connection, with a minimum download speed of 5 Mbps and an upload speed of 1 Mbps.

As it is not guaranteed that users will recoup their investment, Spacemesh officially advises miners to participate using existing available hard drive space, rather than encouraging the purchase of specialized mining equipment.

1.4 "Fair Mint" - Tokenomics

Token Distribution

• The SMH token cap is set at 2.4 billion, with 93.75% (2.25 billion) gradually released as block rewards to Smeshers (Spacemesh miners), distributed according to the reward schedule.

• The remaining 6.25% (150 million) is reserved for team rewards, with no initial release, unlocking gradually over a year post-genesis.

Token Unlock

• In the first year, only tokens mined by the miners circulate in the market, with the circulating supply amounting to 240,000,131 SMH.

• In the second year, starting April 17, 2024, 25% of the team rewards will be unlocked from the Reserve and made available for withdrawal. The circulating supply after the second year will be 480,000,325 SMH. Rewards will then unlock incrementally in a linear fashion over the next 3 years.

• By the fourth year, the unlocking process will be complete, and the tokens held by the team and investors will account for nearly 40% of the circulating supply. By the tenth year, this proportion will reduce to 25%.

• In contrast to Bitcoin, which halves approximately every 4 years, Spacemesh's halving period is about 29 years, roughly 7.3 times slower than Bitcoin. The last Bitcoin is to be issued around the year 2140, whereas the final SMH is to be issued around the year 2899.

It is evident that although Spacemesh has secured funding, all tokens remain locked in the first year, with all Smeshers collaboratively maintaining network stability and sharing network rewards. Furthermore, the mining threshold is set relatively low, and maintenance does not require a professional operations team. While ordinary users may have disadvantages in terms of Plotting efficiency and scale, they can still participate using their idle machines and storage. Compared to previous storage mining projects (such as FIL and AR), Spacemesh entertains a strong initial "Fair Mint" attribute.

2. The Eastern Markets of Enigma

While nurtured and evolved by the team's relentless efforts, Spacemesh's global market analysis reveals an intriguing phenomenon: a lukewarm reception in Western markets but a meteoric rise in the East since November 2023.

2.1 Discord Community: Language Channel Demographics

In the official Discord community of Spacemesh, the total membership stands at 28,359. Of these, 1,816 members have opted for the Chinese channel, which is 3.3 times the number of users for the Russian channel, the second most populated language group in the community.

2.2 Google Trends for the Keyword "Spacemesh": Temporal and Spatial Distribution

According to Google Trends data over the past year (as of December 4, 2023)：

• Temporally, there has been a notable increase in search frequency for the keyword "Spacemesh" starting from July 2023.

• Geographically, the keyword has predominantly dominated search trends in China and its Hong Kong region, significantly surpassing searches in its country of origin, Israel.

• In terms of topic relevance, the search frequency for "hard disk drive" has been on an ascending trajectory, ranking first. This trend suggests that the Spacemesh project's mining activities have substantially benefitted the sales of hard disk drives and related services.

3. Deciphering the Eastern Enigma: The Interplay of Interests

3.1 The Miner-Led Surge in Crypto

Research indicates that the popularity of Spacemesh in Eastern markets shares intricate connections and similarities with another project named Kaspa.

Kaspa is a Proof of Work (PoW) public blockchain based on the GHOSTDAG protocol, utilizing a Directed Acyclic Graph (DAG) structure to enhance blockchain scalability. Since its launch in November 2021, Kaspa's token, KAS, has experienced significant price fluctuations, rising from its lowest point of $0.0002 in May 2022 to $0.144 in November 2023, an increase of over 720%.

The narrative of wealth creation associated with Kaspa has captured extensive market attention, broadening the discourse surrounding PoW coins.

Spacemesh and Kaspa, both originating from Israel and employing DAG architecture, similarly boast substantial capital backing, stellar teams, and steady progress. These elements have fueled market imagination and FOMO sentiment, particularly regarding SMH potentially replicating KAS's success.

According to sources within the Spacemesh community, some KAS miners were involved as early as the initial Spacemesh 0-1 epoch. Their proactive efforts in promoting the project included starting and operating the Spacemesh Chinese Community social media account as well as WeChat and Telegram groups, attracting users from other mining communities. They are the pivotal force in Spacemesh's early mining endeavors.

3.2 Repurposing of Hardware Resources Aligns with Vendor Interests

1. With the decline of early hard drive mining projects like FIL, Chia, etc., there is an abundance of idle machines and hard drives in the Eastern market.

2. The surge in the mining sector has opened profitable avenues for mining machine vendors and hardware service providers. To repurpose redundant hardware resources and recoup initial investments, they have actively marketed the Spacemesh project, promoting hardware products and cloud computing services. Major mining pools, such as Hpool, have also introduced Spacemesh mining services.

Screenshot from a Spacemesh discussion group dated November 30, 2023, show a significant rise in hard drive prices.

3. While Spacemesh is relatively friendly to small-scale miners, there are still technical barriers, network stability requirements, and hardware prerequisites for mining. For instance:

• The number and performance of graphics cards significantly impact the speed of plotting.

• Disk scanning is time-limited to 12 hours, and miners must pass this verification twice in each epoch to receive block rewards for that epoch. Failure to do so results in a loss of the 14 days' worth of block rewards in that epoch. In summary, small-scale miners with lower-end configurations may find it challenging to secure profits amidst the surge in computational power.

4. As Spacemesh gains widespread attention and participation among miners in the East, businesses like cloud computing leasing and plotting services have seen a rise in demand. Hard drives that have been plotted and successfully verified are being sold at high prices.(The market shows varied pricing, which decides on the per terabyte revenue and costs.)

Market price reference as of November 15: 600 RMB per terabyte; 5000 RMB for a 4TB home mining machine. The emergence of specialized Spacemesh mining machines is noted, as shown in the image.

5. Due to

• the current scenario where profits from selling data and mining/storage equipment significantly exceed those from mining operations

• and the fact that SMH is only listed on a few smaller exchanges (Safetrade, Exbitron, XT Exchange) with limited liquidity, making its price susceptible to manipulation,

stakeholders in the hardware service sector are starting to utilize a portion of their recaptured funds to purchase tokens being sold by miners in the market. This action is intended to drive up the token's price. Subsequently, they use the attractive upward trend of the token's price chart to reinforce their narrative, thereby continuing to attract more miners into the market.

3.3 The Opportunities and Risks on SMH's Appreciation Journey

Initially, trading PoW coins was highly inconvenient, primarily reliant on over-the-counter (OTC) transactions by miners. A PoW coin would only attract dedicated trading platforms after garnering sufficient market attention and trading volume.

KAS Leads New Model for PoW Coin Price Inflation

An analysis of the KAS price surge reveals a distinct pattern commonly seen in the inflation of PoW coin prices: Initially, the price escalates on smaller exchanges such as SafeTrade, TxBit, Exbitron, XeggeX, and TradeOgre. This initial rise helps the coin gain popularity, which often leads to its listing on secondary exchanges like MEXC and Gate. Then this momentum can even propel the coin onto top-tier exchanges. A prime example of this trajectory is evident in the case of KAS: On November 3, the OKX Web3 Wallet integrated the Kaspa Network. Following this integration, Binance announced the introduction of KAS perpetual contracts on November 16, which triggered an approximate 20% surge in the price of KAS.

SMH's Similar Appreciation Trajectory to KAS

By juxtaposing the KAS price surge with the current SMH price inflation process, we can discern a highly similar logic in both cases.

Timeline of SMH Listings on Non-Mainstream Exchanges

On August 29, 2023, SafeTrade listed SMH, followed by an introduction tweet from a key KAS miner KOL who has started the Chinese Spacemesh social media and community.

From mid-November, the price began to rapidly increase (the authenticity of this data is questionable), leading to an influx of miners and secondary market investors to the platform for trading.

On November 21, Exbitron listed SMH, followed by XT Exchange on November 23.

SafeTrade's "Rug Pull" Controversy

Reflecting on KAS, Txbit, the first exchange to list it, capitalized on the PoW coin boom, becoming a primary liquidity exit for miners. However, on August 14, Txbit suddenly announced it would close on September 14, 2023, urging users to withdraw their funds by that date. This caused widespread discussion, with jokes about Txbit "retiring early due to the KAS surge". Although Txbit did not maliciously abscond, it still sparked concern among users of similar small exchanges. In a seemingly repeated history, on November 19, SafeTrade, the first exchange to list SMH, experienced issues like website inaccessibility and deposit/withdrawal problems following an upgrade announcement, causing panic among some users.

Then, on November 22, a KOL claimed that SafeTrade had "transferred user funds to Mexc Exchange" and warned of a high risk of Rug Pull. This KOL claimed to have detailed information about SafeTrade's domestic responsible persons and stated they were pressuring the exchange with several KOLs and security institutions in the crypto field.

Starting from November 22, the exchange began to gradually resume operations, initially only reopening withdrawals for SMH, leaving users still unable to withdraw USDT. According to the aforementioned KOL, on Nov. 22, the exchange witnessed a surge in high-priced SMH orders, while users, unable to withdraw USDT, had no choice but to purchase SMH at elevated prices so as to transfer assets to their wallets. This activity, the KOL analyzed, to some extent, ensured the continuous rise in the price of SMH and addressed the USDT liquidity gap caused by the previous extensive asset transfers. Furthermore, the KOL raised suspicions that Safetrade might be involved in fabricating TXID (transaction IDs) and deliberately delaying transactions, potentially embezzling user assets.

As of December 1, the exchange had not fully restored deposit and withdrawal services for multiple cryptocurrencies, with ongoing user complaints about transaction issues.

The Future of SMH

• With SMH listed on multiple smaller exchanges and successfully appreciating in value, calls for "SMH to be listed on MEXC" have been growing, though no definite progress has been made.

• The founder of the Spacemesh Chinese community has expressed willingness to provide technical support for JS wallet operations for SMH, promoting integration with exchanges.

• Some users in the official Spacemesh Discord community initiated a crowdfunding effort to push for SMH's listing on secondary exchanges.

4. Prospects for Spacemesh

4.1 Lessons from History: Western Storage Mining Projects Embraced by Eastern Markets in Crypto

Comparing Spacemesh with other storage-based cryptocurrencies like Filecoin (FIL), Chia, and Arweave, we observe these projects' successful experiences in blending Eastern and Western market characteristics.

• Firstly, these projects have adopted innovative technological solutions, such as Spacemesh's block mesh structure, Filecoin's decentralized storage network, Chia's "Proof of Space-Time" algorithm, and Arweave's concept of permanent storage, attracting global attention.

• Additionally, the success of these projects is closely tied to the interests of storage providers, miners, and workers in Eastern markets. For instance, Filecoin’s high storage requirements for miners and Chia’s simple mining model have attracted numerous Eastern miners. These projects, through various incentive mechanisms, have promoted technological development and market expansion, establishing a strong user base in Eastern markets.

In view of the above, Spacemesh possesses significant market potential for continued expansion and prosperity.

4.2 Newcomers: Comparative Analysis with Upcoming Storage Mining Projects EthStorage and Subspace

EthStorage

• EthStorage is a Layer 2 storage solution based on Ethereum data availability. It significantly reduces the cost of storing large amounts of data, better supporting a fully decentralized network. EthStorage is highly integrated with the Ethereum Virtual Machine (EVM) and is fully compatible with Ethereum tools like Solidity, Remix, Hardhat, and MetaMask, ensuring broad applicability and security.

• EthStorage adopts a key-value storage paradigm distinct from decentralized storage solutions like Arweave and Filecoin. By supporting CRUD (Create, Read, Update, Delete) operations, EthStorage has an advantage in managing dynamic data compared to traditional static file storage.

Subspace

• Subspace is committed to providing large-scale scalable and distributed infrastructure for Web3, supporting data availability, archival storage, and trustless cross-chain bridging.

• Subspace Labs developed an incentive-compatible Proof of Capacity (PoC) consensus algorithm and scalable perpetual decentralized storage for the Polkadot network. This innovation allows participation in the consensus without special hardware or energy consumption. Subspace combines an "effective storage solution" with PoC and incentivizes miners to collaboratively store block history data through the Proof of Archival Storage consensus mechanism. This unification of storage and consensus is key for handling large-scale data.

In comparison, EthStorage and Subspace strive to provide a comprehensive and decentralized data access network. In contrast, Spacemesh, which centers around proof of space-time storage as its core cryptocurrency mechanism, does not focus on data availability or the requirement to store actual data. This aspect seems to slightly diminish its practicality compared to the emerging solutions like EthStorage and Subspace.

However, Spacemesh is dedicated as "People's Coin", aiming to offer a currency that is more equitable, less dependent on computing power monopolies, and decentralized. Its consensus mechanism is notably inclined towards fair distribution for smaller-scale miners, effectively preventing the centralization of mining power. With the roadmap of Spacemesh VM and Spacemesh's combining fair digital assets with storage mining as a high-performance Layer 1 protocol, it fundamentally distinguishes itself from the traditional data storage sector. It is foreseeable that Spacemesh will make a significant impact in the realms of digital assets and programmable platforms, leveraging its unique mining mechanism and robust market demand.

4.3 Trading Risks of SMH

• Currently, only a few small exchanges have listed Spacemesh's project token, SMH, leading to frequent issues with asset security, causing significant distress among users.

• The project's management has not yet taken any steps to list SMH on more established and formal trading platforms.

In summary, the trading risks associated with SMH are currently quite high. Trustless Labs would like to caution users involved in trading to be aware of these risks and to take appropriate measures to protect their personal assets.

Conclusion

Spacemesh, emerging as a new star in the storage mining sector, is gradually making its presence known. Its quintessential western project configuration has laid a solid foundation for its development, with the team’s technological expertise and dedicated efforts ensuring its steady progress.

In the past, Spacemesh grew robustly, continually improving and optimizing, but its market presence remained tepid, as if only missing the "Eastern wind". Now, "the mysterious Eastern influence" has brought Spacemesh immense traffic and stimulated the circulation and reuse of redundant hardware resources. The storage mining model has ignited investment enthusiasm from storage providers, miners, KOLs, to retail investors, matching the new mining craze brought by KAS. Its popularity is reminiscent of storied storage coins like FIL and Chia. However, beneath this popularity lie issues such as inflated hardware and service prices, suspicions of token price manipulation, and exchange instability. Despite these challenges, miners and market participants still hold onto the beautiful vision of high returns. Considering its stellar team configuration, investment lineup, and more equitable mining consensus, Spacemesh remains a hotly pursued PoW coin in the market.

"On a quest to become the people's coin", for Spacemesh to truly embody "people's coin", it fundamentally relies on solid technological innovation and a commitment to fairness. The current heightened market sentiment and popularity centered on Spacemesh may gradually dissipate or shift elsewhere; The benefits currently reaped by its promoters may eventually be secured; Beyond the hype and noise, the path ahead for Spacemesh remains long and challenging.