High Performance Blockchain (HPB) Analysis – Resolving Blockchain’s Scaling Issues
Seen by some as the Chinese version of EOS, High Performance Blockchain (HPB) aims at solving the scaling issues that many current blockchain platforms face. These scaling issues range from low TPS (Transactions Per Second) to long confirmation times (or latency) – impeding crypto adoption from businesses which process millions of active users per day and large amounts of data. Being able to quickly handle this amount of data is critical for BaaS (Blockchain-as-a-Service) systems to avoid issues, as in the future, data will come from a vast number of sources (IoT trackers and sensors from smart-fridges, smart-cars, and other objects).
HPB aims at solving this problem and at meeting real business’s needs by creating a platform for high-frequency needs (such as the IoT ecosystem, needing billions of end-points, requiring millions of transactions per seconds, and which cannot be hosted on centralised servers). The platform will provide a scaling solution by developing a software and a hardware architecture (unlike EOS which is not developing hardware solutions). HPB reduces the risks of having a congested network and decreases the confirmation time even when there is high traffic on the network, as has happened with the Ethereum CryptoKitties saga and the Bitcoin Cash “Flippening” FUD.
Basically, the project consists of two parts: the hardware and the software architecture. The network will use TOE technology (TCPP/IP Offload Engine) – used to offload the network by sending processing tasks to dedicated, highly customised, hardware acceleration chips (being developed by HPB), freeing computational power to perform other tasks. This will enable the platform to run at up to 1,000,000 TPS as well as having a 3 second confirmation time.
Last but not least, the team has already built and presented a prototype of the acceleration chips at the China Semiconductor Association IC Design Innovation Summit11. This demonstrates that the team is actively developing the project and moving forward in a space where many projects are promising mountains and marvels without showing anything on either the hardware or protocol side.
Team and Partnerships
Given the difficulty of the problems HPB intends to solve, having an experienced team is a must. Unfortunately there is not much information in this respect apart from the information provided on the Chinese version of the official webpage, which states that Wang Xiao Ming, the founder, “is a highly respected blockchain and crypto expert in China and has written many books” as well as that he is active in academic research directed at Industrial and Mechanical Engineering22. Recently, Wang Xiao was invited to a conference at Stanford University to speak about future applications of the blockchain, further demonstrating his knowledge in the crypto space.
One of the other founders is Li Jinxing, a research and blockchain expert who was a former analyst at Guotai Junan securities, one of the largest investment banks in China. We also have Wan Zongru, who was part of a CERN-related experiment and research group which went on to win a Nobel prize. Unfortunately, information regarding other team members is scarce.
Nevertheless, the backing of early investors and partnerships reassures us. Among the early investors, we notably have the NEO project itself, Lei Zhen, the founder of Bibox and co-founder of OKCoin, and Liu Jialing, who is part of the BitShares committee.
While analysing the project, it is clear that HPB is working alongside NEO. Da Hongfei, the founder of NEO, has mentioned the project a few times33 – demonstrating the legitimacy of the project. Moreover, HPB’s CEO was invited to speak at a Nebulas meetup session in Shenzhen on December 3 to speak about the technical advancement of blockchain technology44 – making a future partnership with Nebulas feasible.
Another blockchain project which is officially partnered with HPB is CPChain. Alongside HPB, the other partners are VeChain (read our analysis here), Qtum, and ETP Metaverse. CPChain is an IoT platform using blockchain technology – providing the data acquisition, storage, sharing, and data value maximisation acquired from IoT sources. The IoT being an ecosystem managing large amounts of data at any one moment makes high TPS and low transaction latency crucial – explaining the partnership with HPB.
In terms of business partnerships, in HPB’s white paper it is written that the company is currently partnered with UnionPay – the Chinese interbank network and largest card payment organization in the world, processing more than $8 trillion per year. This is to be taken with a grain of salt as it seems no source other than HPB’s whitepaper mentions the partnership. However, we believe the statement to be true as we do not see NEO and its CEO publicly backing a project lying in its whitepaper.
The token is native to the ecosystem and is required to use the network, as all accounts on the platform will have to fund their wallet with a minimum token amount in order to cover the costs of storing the data from that account (wallet). On top of this requirement, every transaction within the system will have to be sent with HPB tokens – driving the demand for the coin upwards as usage increases.
HPB uses a DPOS (Delegated Proof of Stake) mechanism, in which token holders are able to vote to appoint new block builders. This system enables the high TPS as only nodes having the necessary hardware are eligible to compute the transactions.
Unfortunately, no more information regarding the economic model is known as of the 05/02/2018. However, given the fact that blocks are created by so-called “Witnesses” having the accelerated chips, the DPOS system enables smaller stakeholders to benefit from the system, as they simply vote once for their choice of preferred Witness and are then rewarded for staking their HPB.
Roadmap and advancement
For the last few months, HPB has focused on building the architecture that will become the backbone to the technology. As stated earlier, the company already presented a prototype of its accelerated chip at a convention. During Q1 2018, the testnet is set to be released while Q2 2018 will see the release of the HPB mainnet.
For now, the project hasn’t yet made many headlines in the West. We see that as a good thing, as often in crypto, teams forget that having a product and a proof of concept is more important than having their token appreciate in price. However, the marketing towards Western audiences is set to change – the team is holding a competition to redesign the website (with a focus on the English community) and on the 5th of February, they will be listed on Kucoin.
Potential (Comparable analysis)
EOS, HPB’s direct competitor, is currently valued at $9 billion. As of the time of writing, 28 million HPBs are circulating (maximum supply of 100 million tokens). With a current price of $6.22, the project market capitalisation is $138 million. In comparison, the market cap of EOS puts it at roughly 70x HPB’s. In a conservative scenario, with HPB reaching only 10% of EOS’ capitalisation, the coin could see a 700% increase.
In addition to the clear connection with NEO, the fact that the protocol will be usable on other blockchains such as Ethereum and Nebulas is encouraging. Regarding the partnership with UnionPay, we haven’t seen any information backing its status (besides the whitepaper), but none refuting it neither. With NEO publicly linking themselves to and investing in the project, we have reason to put our trust in the team’s claims.
As in all investments, there are risks to consider. The first one is that the project needs blockchains and platforms to adopt it without them solving their scaling issues themselves – in which case, HPB becomes worthless. However, that is something we do not see occurring quickly enough, in which case HPB may have the first-mover advantage, allowing blockchain developers to focus on other issues.
Not only is the project ambitious, solves real issues, and has backing from NEO, the team already has prototypes of the accelerated chips they intend to use. Added to that, due to the fact that the coin is currently only available on Bibox and Kucoin but hasn’t yet hit many other high-profile exchanges, nor has it been spoken of much on western websites and forums.
Disclaimer: We are long HPB.
As always, this is not financial advice. This analysis is based on personal opinion, and we invite everyone to read HPB’s white paper, available on their official webpage before investing. Do your own research, contact the team on their Telegram channel, and consult a financial advisor if needed.
Jacek graduated with an M.A. in Finance from the Shanghai University of Finance and Economics. He lived in Europe and Asia, and always loved to dig into papers and research projects to really understand the key drivers and trends. He’s passionate about blockchain’s business application, the sharing economy, and FinTech.