This article investigates the Venom Network, a hyper-scalable and quintessentially secure layer-0/layer-1 blockchain built by the Venom Foundation. We will briefly review its architecture, consensus mechanisms, and core features before speculating about the radical impact the Venom Network will have on the future of finance.
With over $1B in funding and a community approaching 1M, the Dubai-based Venom Foundation is causing a scene during the 2023 bear market. At a glance, one might be surprised that a non-EVM-compatible blockchain is so well funded. However, after investigating key components of the Venom Network architecture and infrastructure, we will understand that instead of conforming to current market trends, the Venom Foundation is building a groundbreaking new paradigm.
As Venom put it, “Our mission is to be the infrastructure for the next generation of digital services and products.”
Architecture - Masterchains, Workchains, and Shardchains
The heterogeneous multi-blockchain architecture of the Venom Network is designed to solve the scalability challenge while reducing transaction fees, all without compromising security. Using principles of dynamic sharding, the layer-0 masterchain utilizes shardchains as parallel processing units while communicating with the workchains that enable users and dApps to communicate with the network.
Official architecture documentation found here.
Masterchain
The masterchain is a layer-0 chain that facilitates communication between workchains, shardchains, and users. It serves as a high-security backbone for the Venom Network.
The masterchain is only validated by a limited number of validators with the largest VENOM stakes. The rest of the validators with lesser stakes create and validate new shardchain blocks.
Workchains
Workchains are specialized layer-1 blockchains secured by masterchain validators. Perpetual communication witht the masterchain provides total security for workchain blocks while lowering fees for layer-1 transactions.
Each workchain can be customized for the needs of its hosted application, including alternate block structures, virtual machines, and native currencies. This approach enables horizontal scalability for each application on the Venom Network without sacrificing the security of the layer-0 masterchain.
Shardchain
Shardchains each have a unique private memory space for executing a specific set of contrats. Each shardchain is a fraction of a blockchain state responsible only for a subset of accounts defined by a binary prefix. These ranges are validated by a group of shardchain validators responsible only for that shardchain’s range.
As the Venom Network expands and new dApps arise, the initial shardchain will split into two blockchains. As network load rises, each shardchain can split as necessary. When network load decreases, a merge event will recombine two shardchains back to one.
Interoperability and Implications
Venom’s native cross-chain communication protocol, enabled by the masterchain, allows workchains to interact seamlessly without relying on a third-party. Even workchains with different block structures or virtual machines are interoperable with every other workchain on the Venom Network.
This architecture leveraging a hyper-secure, hyper-scalable layer-0 to enable a seamlessly interoperable network of layer-1 workchains is the CVP of the Venom Network. Using cross-chain communication between Venom’s heterogenous chains, the Venom Network can maintain interoperability between public and private networks.
This creates powerful use cases, but I think the biggest implication lies hidden in Venom technical docs.
Venom Network: Linking CBDCs and DeFi
The Central Bank Digital Currency narrative is dominant in regulatory discussion of cryptocurrency. As the US economy continues to decline, speculators increasingly doubt the long term viability of the US dollar as the global reserve currency.
Current global financial systems rely on the fiat system, introduced in the 70s and largely unchanged. Despite recent innovations in the fundamental security of distributed networks, national governments have started little to no innovation in creating a national currency built on the internet.
The Byzantine general problem, historically lauded as the biggest roadblock for digital currencies, was solved in 2009. So why haven’t we seen governments implementing blockchain technology to create new reserve currencies? Previously pandits have cited network security and scalability problems as fundamental roadblocks. Based on what we learned from studying the architecture of Venom Network, could the Venom Foundation be developing the solution?
DeFi enthusiasts are often wary of the advent of CBDCs: Government interaction with financial markets usually means heavy and often unfair regulation. But for once, we find a hopeful solution in the Venom Network. CBDCs built on private-private workchains that are still interoperable with public workchains may be the foundation that enables CBDCs to interact with DeFi networks in international cryptocurrency markets.
VENOM Token: Live on Testnet
The VENOM token, as mentioned before, is the primary PoS cryptocurrency that is used for validation and delegation on the Venom Network. Investors who see the opportunity to enable CBDCs linked to DeFi should get involved today.
According to VENOM tokenomics, 22% of all VENOM tokens will be disbursed as community rewards. Note that this allocation will be vested linearly over 90 months. This is an incredibly long vesting period for a new blockchain’s initial distribution, evidence that the Venom Foundation aims to build a scalable interoperable network designed as the foundation for future financial systems.
Exact requirements to earn your share of this 22% of all VENOM are yet released, but you can be sure that participation in the live Venom Network testnet event will be an important qualifier. Venom testnet went live at the end of April 2023. Start your journey here.
What’s Next for the Venom Network?
Less than half of the NFT rewards for participation in the Venom Testnet are currently active. Venom Testnet users can expect the testnet event to run for many more months - possibly until 2024.
Though CBDCs are probably the most powerful use case for the Venom Network, there are plenty of other use cases, including game fi. Based on recent tweets and hints, testnet users might expect the next ecosystem to enter testnet will be Nuumi, the first anime metaverse project built on the Venom Network.
The Venom Foundation is building an innovative blockchain solution seemingly designed to enable secure CBDC infrastructure that communicates with DeFi. Like it or not, CBDCs are a crucial element that might allow cryptocurrency to finally reach a global audience.
Stay informed about the Venom Foundation by following their socials and keeping up to date with testnet events on Discord. Though airdrop hunters may be deterred by the 90 month vesting period of initial Venom, consider your efforts an investment in the future of finance.
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Though market outlook still looks bleak, now is the time that opportunities arrive. I’ll see you out there in the web3 world as we continue to build the future of finance.
Cheers,