What is Aeternity?
Aeternity is a blockchain-based distributed computing and digital-asset platform. The AE token is Aeternity’s utility token that serves as “energy,” or in other words, a unit of account used to pay for operations on the Aeternity platform (AE is similar to gas on the Ethereum network).
The AE token was released as an ERC20 token. However, when the Aeternity mainnet launched on November 27, 2018, the ERC20 AE token’s could be swapped at a 1:1 rate for AE tokens on the Aeternity main net.
How Aeternity works
There are three key components to the Aeternity platform; state channels, a proof-of-stake, proof-of-work hybrid consensus algorithm, and the Aeternity oracle machine.
In order to facilitate fast transactions, Aeternity uses state channels. State channels allow users to transact off-chain, securing their private transaction data from the public. The only information that is recorded to the public blockchain is the settlement amount that belongs to each address.
Unlike most blockchain networks, Aeternity does not use a consensus algorithm that is solely proof-of-work or proof-of-stake. Instead, Aeternity uses a unique hybrid-consensus algorithm that is a combination of a proof-of-work and proof-of-stake.
Blocks are created and added to the Aeternity blockchain via a Proof-of-Work consensus that incorporates a cuckoo-cycle — an implementation that makes it inefficient to mine with ASICs, and therefore encourages a higher level of decentralization.
The proof-of-stake component used in Aeternity’s consensus is purely for governance: The AE token holders control Aeternity’s on-chain governance system. Individuals who hold AE tokens are allowed to vote or delegate their votes to a third party on proposals regarding the Aeternity network. The more AE tokens a user has, the more weight their vote holds in elections.
Some smart contracts on the Aeternity network might require information that comes from outside the blockchain before they can execute; oracles are the entities on the network that bring that external data onto the blockchain for use by smart contracts. For example, the information that an oracle obtains from the real world and implements onto the blockchain may be information that triggers a smart contracts pre-defined condition — for instance, the result of a political election.
All in all, the goal of the Aeternity blockchain is to provide a foundation for developers to build blockchain networks and decentralized applications without the transaction processing and scaling limitations that plague most blockchain networks. To accomplish this, the Aeternity network leverages the use of state channels which provide a significant advantage in terms of scalability and transaction processing compared to blockchain networks where most of the operations take place on-chain.
Currently, the Bitcoin network is only able to process about 7 transactions per second while Ethereum can only handle 15 transactions per second. On the contrary, the team at Aeternity predicts that the Aeternity blockchain can process around 100 transactions per second — and that does not include the activity that takes place off-chain in state channels.
The Base app
In addition to the three components that are crucial to Aeternity’s success, Aeternity also offers the Base app. The Base app is an online platform that acts as a wallet, allowing users to send and receive AE tokens, as well as an app store, allowing users to browse and run any of the applications created on the Aeternity blockchain.
If you are looking for a blockchain with better scalability and transaction throughput than most blockchain networks on the market, then you might be interested in building on Aeternity.
If your project requires a higher transaction throughput than most blockchains are able to handle without becoming backlogged, then you might want to use the Aeternity blockchain as the foundation of your decentralized application or blockchain network.