In the recent past weeks we’ve been receiving a lot of “Why” questions, especially centered around our intersection with blockchain and the decisions around it. All of the questions are covered in our Whitepaper and surely all of them were answered multiple times within our community channels, such as Bitcointalk or Telegram. Nevertheless we’ve concluded that our community needs a central point where all blockchain related questions are gathered and addressed.

This article should act both as a reference point for those who couldn’t read through the entire Whitepaper and as a refresher for those that previously heard the answers. Therefore, in the rest of this article we are going to cover the following question:

Why do you use/need blockchain?

Why do you initially use Ethereum and an internal ledger?

Why Tendermint & Cosmos Network?

Why do you use/need blockchain?

If there is one question that every ICO must have answered at least once, this is it! And we are no exception.

Although several years ago, when Kuende started, we were not aware of the existence of blockchain, a gamified approach to social media interaction was already deeply embedded into the inner workings of our network.

As soon as we found out about blockchain and understood its potential and implications, it became clear that it really suits us and there are a lot of benefits from using it.

Therefore, blockchain came as the next step to us, enabling us to upgrade our symbolic tokens to ones of real value, decentralize the mechanics of our gamified economy and hold an ICO instead of going for a Series B round of investment.

There are several benefits that aroused from making this decision and some of the most notable ones are:

Being pioneers in the blockchain sphere

With no big player in the social media space that uses blockchain, being pioneers and facilitating an easy to use product opens a perspective in which Kuende has the opportunity of becoming a market leader in a new space.

Scaling the creation of challenges for a faster adoption of our platform

As the ecosystem is built around the idea of challenges, we’ve always looked into designing the fairest way for our users to contribute in the creation and curation of challenges and get rewarded. Doing so in a transparent way, on blockchain, and being able to reward them in a borderless manner is better than we could have ever imagined! Now we can definitely scale the creation of challenges so that we cover a way bigger part of the huge spectrum of possible ideas, therefore ensuring a better market penetration and increased chances of user retention

New revenue streams

Social networks in their current form rely heavily on their ad system to generate revenue. Considering the downward trend of digital advertisement penetration (mostly due to Ad Blockers), we see blockchain as being the gateway through which any company can interact with their audience in real life. By becoming the go-to platform to connect the blockchain businesses with their target market, through offline challenges, we can build a solid revenue stream. Companies who will take advantage of the challenge-based advertising will see a bigger and long lasting impact on their growth by engaging and rewarding their customers in both their token and ours.

Enabling our users to contribute

Holding a crowdsale instead of another private investment round enables us to have a potentially large number of members from within our community actively taking part in our vision, mission and journey. This is extremely beneficial, considering that the power of our network is provided and sustained by our users. Their willingness and motivation into helping us evolve will have a long lasting impact on both our product and growth.

Why do you initially use Ethereum and an internal ledger?

Back in 2017, when we started our blockchain journey we had to figure out the most suitable solution while taking into account not just our needs but also our constraints.

Therefore, the characteristics of the solution we were looking for were:

Security

Ensuring that the solution we embrace involves minimum risks for us and our users is critical. It could have all other qualities such as speed and scalability but if it is not bulletproof when it comes to security, then that is a big problem. When your entire business relies on being sure that under no circumstance one can tamper with your economy, there is no room for compromise here. Therefore, we had to take into consideration aspect such as the consensus method of the network, the previous (if any) attacks against the network and the technologies used on developing the network as well as the current adoption status.

Maturity

Although “maturity” is relative in the blockchain space, with the current great solutions such as Tendermint or Ethereum having emerged right around the year when Kuende started, we still wanted to pick one of, if not the best that was out there in terms of this aspect. We were looking for a network that has a high adoption rate and was validated over and over again and went through multiple cycles of improvement. And, of course, has more than a handful of companies using it in production.

Scalability

Given the nature of our product, it is of extreme importance that the network can scale in accordance with our ecosystem. Getting to have tens of millions of users is impossible if we don’t provide an ecosystem where user actions happen in the time-frames they are accustomed to, those of milliseconds. Waiting for seconds or more to get your action (transaction) validated is unacceptable for the average user, especially in the social media space.

Cost-efficiency

Once again, considering that we are building a social network centered around challenges transactions, transactions that involve one of our two tokens (KUE and Kp), we must ensure that users are able to engage in creating, curating and participating in challenges without being charged a fee at every transaction. At the same time, we need not to find ourselves in the position where we cover a great deal of costs for keeping the network free of charge for our users.

On the other hand, we were also facing a few constraints when picking a solution:

Budget

Considering that, as a future blockchain company, we opted for a ICO instead of a third VC investment round, it was just a matter of a bit of research and discussions with our peers in order for us to be able to fully grasp the associated costs that go with organizing a quality, successful ICO (and it cost us a lot). With the newly acquired knowledge, we had to rethink our forecasts and split our budget between product development and ICO strategy.

Blockchain Manpower

With the technology being so young, it was difficult to find good and experienced developers, especially around the projects that were in a very premature phase of development. And from the few that were, most were only available for remote work, project based work or were extremely expensive for us. Considering that we restructured our budget, it wasn’t really possible to bring an entire blockchain development team.

At the same time, we had our “engines” running at full power in delivering according to our roadmap, and we didn’t really have resources in-house that we could allow to fully allocate on blockchain development. It would have been inefficient as the learning curve is pretty steep and it would have rendered us totally unable to deliver according to our roadmap at that time.

The Aftermath

Striking a balance was indeed harder than said.

Leaving aside our constraints, we have extensively analyzed the market with all its existing and emerging solutions, such as Steem’s Smart Media Token, Tendermint, EOS, Ethereum or NEO, just to name a few.

As we were looking for a solution that is secure, mature, fast and cost-free when it comes to our micro-transactions, it was pretty hard, as none of the solutions was really suitable. However, we narrowed it down to the following 2 options:

Fork a blockchain like Steem and customize it according to our needs Wait until Smart Media Token, EOS or similar ar production ready

Now taking into consideration our constraints too, although the best solution, forking a blockchain and then customizing it would have been way too much of an overhead, hard to assess properly in terms of duration and also extremely costly. Making Kuende’s development dependent on other project’s roadmap would have not been a optimum decision either.

Therefore, we found ourselves in a position where we had to step back and make the best decision that suits our needs and also allows us to deliver a solution in a reasonable time frame. An that is how we came to the agreement of building this semi-decentralized solution by mixing Ethereum network and an internal-ledger.

How well did it suit our needs? Well, let’s see:

Ethereum was mature compared to all alternatives and had a very good adoption rate

Ethereum was secure, given its size, consensus method and age

Ethereum was slow

Ethereum had big transaction fees

So it had the maturity and security strengths, but lacked the speed & cost-efficiency. Although projects such as Plasma and Raiden took off, none of them was production ready, all being under heavy development. So there was no way for us to optimize speed or reduce costs when using the Ethereum network.

Therefore, here comes in our internal-ledger, allowing us not only to make up for speed & cost-efficiency, but also take advantage of the current development power, without requiring new blockchain specific manpower. At the same time, the internal ledger will offer transparency in terms of transactions by fully emulating the functionality of a decentralized ledger.

Why Tendermint & Cosmos Network?

When we initially started, forking or developing our own blockchain wasn’t among the options we could have approached. At that time, even though there were fast developing projects such as Tendermint and the Cosmos Ecosystem, we were solely focused on building on top of the Ethereum protocol because it had the biggest community and their infrastructure was ready.

Luckily, we’ve had Aurel Iancu (Cosmos Validator) as our advisor from the very beginning. Therefore, we were among the first to find out more about the progress of Tendermint and Cosmos. By staying in touch with their community, we were introduced to Dokia Capital (one of the largest Cosmos Network stakeholders) which invested and supported us since the very beginning of our Private ICO.

As time passed, Cosmos and Tendermint continued to evolve, their technology attracting over 70 confirmed and approved projects in their ecosystem, Kuende being one of them.

Thanks to the amazing work that the guys at Tendermint have done, we can focus on developing only the application specific logic and invest no time in the mechanics of the network and consensus part that any blockchain relies on. That means that our development time will decrease substantially. Same goes for the security side of project, comparing to the scenario where we would have built our own blockchain from the grounds up.

With the Cosmos SDK framework being updated consistently this year, it made things even simpler for all projects developing on top of Tendermint. The amazing work that the guys at Tendermint have done provides a great support and infrastructure to build on top of. In turn, our focus will be on developing the application specific logic on top of the consensus and network mechanics provided by Cosmos. The Cosmos SDK framework was updated consistently throughout this year and it made things even simpler for all the projects which are developing on top of Tendermint.

Being part of the Cosmos Network will allow Kuende to seamlessly interact with other blockchains which are either part of the Cosmos Ecosystem (Zones) or other external protocols like Bitcoin or Ethereum. Through inter-chain operability, Kuende empowers blockchain businesses to engage with their audience through challenges and reward the participants both in their token and Kuende’s.

Now that our ICO is almost over, our main focus will be on building the best product out there and serve the community who supported us every step of the way. This is the first in many to come technical blog posts as we want to keep you in the loop with all things involving our technical roadmap, sprints and product decisions. Even though our product has been on the market for 4 years, we consider ourselves as just getting started and we thank you once again for being a part of this awesome journey.

Thank you and looking forward to our next encounter!