Overview of Trinity Protocol, The Off-chain Scaling Solution for NEO
Off-chain scaling is all the rage in cryptocurrency communities these days. From the Bitcoin Lightning network to Ethereum's plasma, developers are trying to find ways to scale a cryptocurrency off of the blockchain.
Now, the NEO smart economy coin has their own off chain solution: the Trinity Protocol
Developed specifically for NEO, this project has been gathering steam over the past few months with the goal of creating real-time payments with low transaction fees, scalability and user privacy.
The protocol also has its own token called the Trinity Network Converter (TNC). This is the utility token that will help settle payments that are taking place in the broader network.
More recently, there have been some interesting announcement by the Trinity team. For example, they have released news about their Cross-Chain NEO and ETH swaps.
Let's take a deeper look into the Trinity Protocol.
What is the Trinity Protocol?
The Trinity protocol makes use of an off-chain state channel network for NEO. This state channel will allow for countless private transactions and payments to take place off of the main NEO blockchain. Two participants in the NEO ecosystem can set up their private channels and transact without broadcasting to the blockchain.
These transactions will take place over a period of time and only the final balance will eventually be broadcast and propagated through the NEO blockchain. The technology behind the protocol is open source and can be downloaded by anyone.
This could also allow other app developers to build on top of the Trinity protocol technology and make more user friendly decentralised applications (dApps). For example, a payment processor can build a user friendly application on top of the Trinity protocol for instantaneous settlement.
This is something that the Trinity network is working on itself with the Rai Stone mobile app. This will help facilitate off chain payments and a release is planned for the middle of 2018.
Why is it Needed?
Many may be curious as to the need for an off chain scaling solution for NEO currently. There have been no major transaction bottlenecks and the NEO blockchain is able to process these transactions at a speed of close to 1,000 tx per second.
Yet, if there is one thing that we have learned from the Ethereum transaction backlog, it is that scaling limitations can present themselves quickly. In that case, it was the huge popularity of Cryptokitties that caused the network backlog.
As more developers create dApps and as more users begin using it to make payments, the NEO blockchain is likely to face similar problems. Hence, by introducing the Trinity protocol, the Trinity foundation and indeed the larger NEO ecosystem is planning ahead.
The TNC Token
As mentioned, the Trinity network has their own utility token that is used as the fuel on the network. This also has the added benefit of introducing incentives for those holders who take part in the network itself.
The TNC token is an NEP-5 token which is the NEO token standard. This is in comparison to other smart contract cryptocurrencies such as Ethereum that follow the ERC-20 token standard. These tokens were released a private donation round last year. You can read more about the TNC donation timetable on the trinity protocol website.
Currently, there are only 3 exchanges that have TCN trading. These are KUCoin, BiBox and Gate.io. The hope is that as more coins are released through the public donations, the demand for more exchange coverage could ensue.
TNC-ETH Cross Chain Conversion
It was recently announced at the NEO trinity meet up in Berlin that they will be releasing the cross chain convertor.
This converter will allow for NEO tokens (NEP-5 standard) to be exchanged for ETH tokens (ERC20). Unlike cross chain atomic swaps that are being developed for other cryptocurrency chains, the chain conversion makes use of the TNC as the conversion token.
The conversion will work as follows:
- The TNC tokens will be sent to a conversion address which is a Trinity smart contract. This transaction will also have the details of the ETH address of the recipient.
- These TNC tokens will then become frozen by the NEO conversion address and the corresponding ETH will become unfrozen.
- The same amount of ERC-20 TNC will be sent back to the user via an Ethereum conversion smart contract
Using a similar process in the opposite direction, ERC-20 tokens can be exchanged for the NEP-5 TNC tokens. The conversions are also done with tokens that are currently in circulation with no new ones being created.
The cross chain conversion is still in the early stages of development yet the Trinity Network founder, David Li, tweeted that the MainNet will be live in 2 weeks.
There has also been some speculation that the implementation of the cross chain conversion could be in the soon to be released NEX exchange. This will provide users with the opportunity to trade NEP-5 tokens for ERC-20 ones on the decentralised trading platform.
The NEX exchange is scheduled to be released later in the year and the cross chain exchange would allow these trades to be done through smart contract technology.
Further Trinity Developments
There are other important initiatives that the trinity network is working on. These include the Trinity Loyalty Reward which will be launched by the end of March. This will allow TNC token holders to lock their tokens into a smart contract that will pay out a bonus at a later date when it can be unlocked.
There are also more partnership discussion in the works and the team has alluded to a "big secret" that they plan to reveal in April. This has left speculation rife in the NEO community.
Nevertheless, the opportunities presented by off-chain scaling solutions are unparalleled. If NEO eventually reaches a level of parabolic adoption, the true benefits of the Trinity protocol will be fully realised.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.