ICON (ICX): Public Blockchain Architecture and Utility

Main Components of the ICON Network

The ICON Network is composed of human participants and technology elements that interact with one another to create a trustless transactional system. Below are the main components that ensure the integrity, transparency, and longevity of the ICON Network:

• Public Representatives (P-Reps): P-Reps are responsible for the governance and block production in the ICON Network. ICON currently supports up to 100 P-Reps. The rank of each P-Rep is determined by the number of votes received from the coin holders, where one ICX (the native coin of the ICON blockchain) is equivalent to one vote. 

• ICONists: ICONists are voters who are responsible for electing P-Reps and are rewarded for submitting a vote. This is particularly important because the voting process makes up a large part of the ICON blockchain’s Delegated Proof of Contribution (DPoC) governance mechanism. ICONists are incentivized to vote for the P-Reps that contribute more to the ICON Network and whose policies they support.

• Network Proposal System (NPS): The NPS is managed by the P-Reps to create new or amend existing network policies. P-Reps have the opportunity to appeal to ICONists by proposing noteworthy policies.

• Contribution Proposal System (CPS): The CPS is a decentralized grant program managed by the network’s P-Reps. P-Reps have the opportunity to vote on and sponsor proposals. Sponsoring a proposal provides additional rewards to the P-Rep, but they must offer ICX collateral equivalent to 10% of the budget in the event the proposal is malicious or unsuccessful.

• Blockchain Transmission Protocol (BTP): ICON’s public blockchain aims to be a hub of economic activity for both public and private networks through the use of BTP. BTP is a unique interoperability architecture that does not require trust, game theory, or consensus amongst Relayers, or network operators. All data is verified by smart contracts on the connected blockchains.

• Relayers: Relayers are responsible for passing messages between connected blockchains using the BTP. They play a pivotal role in interoperability and are rewarded by the network for their work.

A Closer Look at P-Reps

The ICON Network makes use of P-Rep nodes to help ensure transparency and efficient governance. The network’s P-Reps create and verify blocks, while also taking part in ICON’s policy decisions. The ICON Network is made up of 22 Main P-Reps and 78 Sub P-Reps (100 in total). In general, Proof of Stake (PoS) and related consensus mechanisms rely on nodes that stake the network’s cryptocurrency as collateral (or receive a delegation of stake) to improve the transparency, decentralization, and security of the network. ICON’s BFT-DPoS is no exception and the network’s various node types rely on that basic structure — each node is backed by the stake of their voters. In this example, the voters stake ICX coins and delegate to validator nodes of their choosing. New P-Rep candidates can be added at any time, as ICON is a permissionless network. There are currently an additional 37 P-Rep node candidates vying to become one of the top 100 P-Reps that contribute to network validation. The P-Reps are run by teams of software developers, marketers, corporations, and other constituents that all contribute to the long-term vision of the ICON project. 

ICON Network’s Governance Structure

As part of its governance structure, the ICON Network utilizes a consensus mechanism called Delegated Proof of Contribution (DPoC). Through this mechanism, ICX coin holders use their coins to stake and delegate their governance power to the P-Reps. The P-Reps are then able to vote in the Network Proposals System (NPS) and in the Contribution Proposal System (CPS) using the delegation that they have received.

In the NPS, there are several different types of proposals. The most often used proposal types are highlighted below:

• Text Proposal: Used for agreeing on a direction before development.

• Revision Proposal: After the development of a software update (i.e., development of what was agreed in a Text Proposal), a Revision Proposal is used to adopt the new software.

• Step Price Proposal: Used to change the base transaction fee.

• i_rep Proposal: Used to adjust the reward rate for P-Reps. Higher i_rep leads to more rewards and more inflation, while a lower i_rep leads to lower rewards and lower inflation.

The CPS is more open-ended than the NPS. Anybody interested in applying for a grant can submit a proposal to the CPS. Then, the P-Reps will vote on whether or not to approve the grant. The CPS is funded through block rewards. Approved grants will receive monthly installments from the CPS on condition that they submit a satisfactory progress report. 

Both the Network Proposals System and Contribution Proposal System have the same bar for approval. They must reach greater than 66% approval from both a stake-weighted vote and individual vote of each P-Rep node (i.e., 1 P-Rep = 1 vote). 

ICON Network’s Economic Structure

The ICON Incentives Scoring System (IISS) is the reward mechanism of the ICON Network. The IISS rewards voters and P-Reps. The voters receive anywhere from 6% to 36% in rewards, depending on the percentage of the network that has voted; more voters leads to a lower reward rate. P-Reps receive rewards based on how many votes they have received relative to the other P-Reps.

All rewards through the IISS come from newly minted ICX coins. To counteract this inflationary mechanism, all transaction fees on the ICON Network are burned. ICON’s economic balance is based on the aggregate transaction fees and aggregate rewards, with the long-term goal being to reach a deflationary environment. 

The Launch of ICON 2.0: Batang

The ICON Network is built using programming languages that cater to mainstream developers who are building scalable enterprise systems and has undergone a series of developments aimed at improving this trend. In October of 2020, ICON launched the Gangnam testnet, which will pave the way for the release of ICON 2.0: Batang, ICON’s next-generation blockchain platform. ICON 1.0 was designed primarily in 2017 and was composed entirely using Python. In contrast, ICON 2.0: Batang, is designed to run on Golang. ICON 2.0 aims to facilitate cross-chain interoperability of assets and other data, which will be exchangeable between the ICON Network and other prominent blockchain networks. The initial launch of ICON 2.0 is slated for Q1 of 2021, with all data migration from ICON 1.0 to ICON 2.0 expected to be complete by June 2021. 

Here are some of the notable features of ICON 2.0: 

• Java SCORE Executor and Java-based Virtual Machine (VM): ICON 2.0 will make use of a new cutting-edge virtual machine solution that aims to exponentially advance the network’s capabilities. In contrast to the Ethereum Virtual Machine (EVM), which is built in Ethereum’s custom programming language known as Solidity, ICON’s new VM will use the more widespread programming language Java. ICON 2.0’s VM is designed to securely compose smart contracts via ICON’s SCORE (Smart Contract On Reliable Environment) smart contract framework — without requiring the cumbersome smart contract auditing procedure that hampered developers when using ICON 1.0.

• Fast Sync Technology: ICON 2.0 introduces Fast Sync technology to allow services to synch recent block data faster leading to a better user experience.

• Multi-Channel Technology: Multi-channel technology is a scalability improvement framework that enables each decentralized application (dApp) built on ICON to be an application-specific channel (essentially its own blockchain). As more transactions come to the primary network, channel chains will become more important.

• Improved Economic Structure: All P-Rep nodes will be required to stake and risk ICX equivalent to 5% of their votes received (if a P-Rep has 100 votes, it must stake 5 ICX) further aligning P-Reps with the success of the network. Reward distributions will also be allocated into clearly defined segments, such as P-Reps, Voters, Relayers, CPS, or any smart contract approved by the network. This structure gives the flexibility to allocate network resources into many different future initiatives while putting any complex logic of reward distribution into the smart contract layer and out of the core blockchain layer. BTP (as explained above) also adds more value to ICON’s economics structure in ICON 2.0.