Jinse Finance: What is chainization?

David Chen: Chainization refers to the introduction of distributed characteristics into existing applications through incorporating with a blockchain. This and the economic dynamics brought about through its tokens transform the entire system, bringing new vitality to the application.

Jinse Finance: What sparked the recent chainization discussion? Why would the chainization model be proposed at this time?

David Chen: Chainization is spoken of in relation to tokenization. Tokenization refers to introducing tokens into an application and changing user participation into a token-acquiring behavior. This turns original, ordinary users into stakeholders. FCoin proposes a transaction and mining model which achieved great success for a short period of time. This led to a rush in the community to explore using the same methods to transform applications. Tokenization mainly focuses on the application of tokens, but in circulation is more likely to form scam currencies.

Jinse Finance: What’s the difference between chainization and tokenization?

David Chen: First let’s discuss the similarities. Both chainization and tokenization cultivate the core role of tokens — transforming production relations in the distributed field. The difference is that chainization is more focused on blockchain’s distributed nature, and not just the tokens. It also focuses on other aspects like distributed storage, consensus, and cross-chaining. Meanwhile, tokenization focuses more on the tokens than on applications. Tokenization pays more attention to the role tokens play, and the various aspects of token circulation, including ICO, exchanges and so forth.

The essence of chainization is allowing applications to enjoy the PE valuation brought about by capital market and secondary market, in addition to the continuously providing the funds needed for the project in advance. In contrast, tokenization and stock IPO are two extremes. One is financing after the application is already mature to obtain PE. The other is to obtain inflated PE before the application is released. Chainization is the middle road between them.

Jinse Finance: What kind of projects are suitable for chainization? And what ones would you not recommend it for?

David Chen: It must have a large number of multi-centered users, like a WeChat audience. Then tokens can play a role, using a soft regulation approach to maximize the token’s economic momentum.

Projects that are unsuited for chainization share the same traits:

Small usership Strong regulation Tokens don’t work well for a variety of reasons, and so forth

Jinse Finance: Is chainization convenient to implement? Can it be done now, or are there conditions that haven’t been met yet?

David Chen: Chainization needs a suitable platform, a suitable audience and suitable applications. These next few years should see an outbreak in chainizing applications.

Jinse Finance: Which members of the current blockchain ecosystem can benefit from chainization, and why? What challenges will they face?

David Chen: First is wallets. Wallets are the way that an application’s users access the blockchain. Second is exchanges, however the tokens of most applications may not be suitable for transactions on centralized exchanges. This is because weak centralized exchanges have more space. Last is platforms. Suitable platforms can be greatly developed.

Jinse Finance: MOAC is a chainization solution based on a token-free blockchain. What are its advantages, and what makes it unique?

David Chen: Token-free blockchains are the first step to chainization. It can utilize the blockchain’s decentralized ledger, data storage, fairness and transparency. This performance is enough for some applications. And the risk of directly issuing tokens under existing polices and regulations can be avoided. Relatively speaking, the first step contains a low amount of risk, and has the further possibility of adding tokens to the system later.

Token-free blockchain solutions are represented by IBM’s Hyperledger. Tokens in blockchain are not used for circulation, they also play critical roles:

They prevent dust attacks They coordinate resource usage They maintain continuous system operation

Without tokens and a corresponding incentive mechanism, a blockchain can only exist as a private chain or coalition chain formed by a small number of access nodes. This is a closed system, that lacks significant advantages when compared with traditional centralized solutions. In addition, the cost of establishing a secure blockchain is high even in a private network.

Currently, token-free public blockchain solutions are only available on MOAC’s microchains. Due to MOAC’s unique base chain/microchain architecture, the base chain provides the necessary incentives and security while enabling microchains to utilize a token-free blockchain solution. MOAC’s flexible microchains also allow users to customize their consensus mechanism, select the necessary support nodes, and implement customized application support. In addition, MOAC’s one-click chain creation feature significantly reduces the cost of deploying blockchains.

Jinse Finance: What are the advantages of MOAC’s ‘chain-based tokenization’ compared to token-free blockchain solutions?

David Chen: Chain-based tokenization is a chainization solution that achieves token-based blockchains. Chain-based tokenization can be compared with traditional tokenization. A very important part of ordinary tokenization is token circulation, which is currently achieved through a centralized exchange. But it’s easy for tokens to become distanced from the original application, become a medium for speculation, and eventually become an scam currency when they’re circulated in an exchange.

However, exchanges are unnecessary with chain-based tokenization. Getting one’s tokens listed on an exchange isn’t an extra source of revenue for most apps. Rather, it’s a burden. This is because the market value for most applications isn’t necessarily that great, and liquidity is often low as well. And centralized exchanges can’t accommodate the tokens of a large number of DAPPs. Therefore, it’s not advantageous for an ordinary DAPP to get listed on an exchange. Chain-based tokenization achieves token circulation through the linking of MOAC’s microchains and base chain.

Jinse Finance: Are suitable projects for these two scenarios different? What’s the difference?

David Chen: The first scenario is for existing applications that aren’t sensitive to tokens. The second is more in line with the nature of blockchains and blockchain’s development direction.

Jinse Finance: How should MOAC’s “one-click chain creation” function be understood?

David Chen: MOAC is a blockchain platform that is moving towards application implementation. MOAC uses layered sharding technology. The lower layer processes overall account transfers, and the upper layer is composed of microchains deploying contracts. Upper layer microchains can choose their own consensus module, block generation rate and individual blockchain contract storing status. Microchain mining nodes can each choose. The system maintains multiple mining pools that support consensus protocols, from which the necessary nodes can be leased to microchains.

We provide a “one-click chain creation” functionality on this foundation, allowing DAPP projects to customize their own blockchain. Projects don’t need to maintain microchain operation, they only need to periodically pay for the leased nodes. MOAC’s unique microchain/base chain structure allows microchains to reach nearly the same level of security as the base chain. The innovative structure also removes the need for DAPP users to pay gas fees, allowing them to progress towards a day when users without any prior blockchain knowledge can use DAPP.

Jinse Finance: What are the key points of chainization as it relates to legal compliance?

David Chen: The key point lies in emphasizing applications while de-emphasizing speculation. Because we believe that suitable chainization needs to change the current frequent volatile appreciation of blockchain project tokens. Chainization must be based on actual application implementation, giving system participants appropriate expectations while removing hype. This will allow tokens to play a role in the application with a suitable PE ratio.

Jinse Finance: Do you think that there will be changes in the market after chainization happens? What will they be? Will this continue to put pressure on the stock market?

David Chen: The nature of chainization is allow applications to enjoy PE valuations from capital and secondary markets in advance, while continuing to provide the funds needed for the project. Therefore, a good project can get the financing needed during its beginning stages, which can greatly accelerate development progress.

The financial market will probably receive a lot of attention and investment, but the influence on the stock market will probably not be very big, because these are two different types of investment, with differ risks and audiences.

Jinse Finance: Do you think chainization will make blockchain mainstream?

David Chen: Chainization is an ordinary blockchain process, The ICO-triggered craze is now fading, and chainization is the right direction to go in for sustainable blockchain development.

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