Interviews

Interview with: xDai

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Introduction

We had the opportunity to talk to the team behind the stable payment chain that is empowering communities and embraced by developers around the world, xDai. We discussed the solid and respectable projects that are actively validating the networks as well as how and why a team of blockchain veterans decided to start this project with the purpose of making it easy for everyone to engage with cryptocurrencies. We also talked about the advantages of xDai over projects with similar visions and how independent developers fueled the growth of the largest userbase wallet within the commmunity; as well as their short, medium and long term goals for the future – enjoy!


Briefly tell us why we should all love xDai

xDai delivers on a key aspect of the blockchain “Internet of Money” promise. It is a platform for digital cash. Fast transactions, low fees, and most importantly stable, known and predictable costs. That means people can send money to one another and know that the value won’t change from one day to the next. It means vendors can sell food or any other items and not worry about price fluctuations. One xDai equals one US Dollar.

In addition to providing a stable payment platform, xDai has achieved wide community backing and support. Validators supporting the xDai transition to staking include MakerDAO, Gnosis, Syncnode and other well known and respected organizations in the Ethereum ecosystem. 

Tools like the Burner Wallet (and Burner Wallet 2) have been developed to make the onboarding and user experience simple and direct. The xDai chain has been used by diverse groups of people around the world, from thousands of technology conference participants in California to local communities in Kenya, all accessing the chain and transacting digital currency using only their mobile phones.

In the words of Anthony Pompliano, “xDAI is a magical first experience for people…I’ve used it multiple times with those unfamiliar with crypto. It leads to them wanting to learn more very quickly.”

 

Could you briefly introduce your team and tell us about the decision making process behind the launch of xDai?

The team is made up of industry veterans and developers. Igor Barinov is the tech lead and operations manager for the xDai project. Igor is the founder of POA Network, a public proof-of-authority based blockchain that uses United States notaries as validators. He has overseen the development of BlockScout, an open-source block explorer supported by the Ethereum Foundation, and the TokenBridge project, which enables interoperability between chains.

xDai was originally created as a proof-of-authority stable chain, drawing from the same technologies used to create the POA Network.

The idea of a stable sidechain, where a single token could be used for transactions and fees, originated during conversations at EthBerlin in 2018. At that time there were an increasing number of stable coins (which is still happening), but making actual real-world payments with these coins was hard to do. Igor realized the TokenBridge technology could be used to create a stable network with a native stable coin bridged to the Ethereum mainnet. By swapping Dai into xDai, users could take advantage of low fees and fast transaction times while still using a stable coin for payments.

When the Burner Wallet was introduced at EthDenver 2019, adoption really took off. Users saw how easy and fast it was to make transactions on xDai. This led to many other conferences and new use-cases for the xDai chain.

 

The blockchain industry is extremely saturated, what competitive advantage and features differentiates xDai from other blockchains?

Besides providing a stable platform for payments, xDai brings other unique features to the table. One of these is on-chain randomness. Using a RANDAO-like process, xDai validators create verifiable on-chain random numbers. This provides applications with a native source of randomness, so there is no need to look to outside, centralized sources for randomness (an important feature for secure applications). 

With the transition to staking and delegated staking, randomness will be used within the application for non-biased validator selection.

Since xDai is an Ethereum-based sidechain, applications designed to run on Ethereum are also fully compatible with xDai. Devs can make a few simple tweaks and the code is up-and-running on a stable sidechain. This means a lot of Ethereum projects and tools also support Dai.  Terminal, Pocket Network, AnyBlock Analytics, TheGraph, Tenderly and many others provide tools that make xDai easily accessible to users and developers. 

The bridge mechanism is another unique aspect of xDai. The TokenBridge is used to move assets between xDai and the Ethereum mainnet (or any other Ethereum-compatible chains like Ethereum Classic). Projects are taking advantage of this tech to perform microtransactions on xDai, then move the end results to the Ethereum Mainnet.

 

xDai has the largest userbase wallet in the community, how was this achieved?

This is really due to community collaboration and developer enthusiasm. Austin Griffith, a well known Ethereum developer, was interested in hosting small gatherings that would help teach new users about crypto. Basically these were nights out at the bar where groups of friends could use crypto to buy beers.  However, Austin found that onboarding a brand new user into a crypto wallet was not easy. There were private keys to deal with, seed phrases, purchasing Eth etc that made for a frustrating experience. 

So he created a browser-based wallet called the Burner Wallet that exchanged some of the typical blockchain security (in this case private keys were kept insecurely in local storage) for ease-of-use.  The wallet was secure enough to hold a small amount of cash, much like someone would bring to a bar for a night out. Payments were stabilized using xDai, and users could simply scan a QR code and receive a ready-to-use wallet. When they were done, they could transfer out any remaining xDai and “burn” the keys. 

The Burner Wallet went over really well at these events, and Austin brought it to EthDenver where it was used by over 2000 participants to buy food from food truck vendors. Since then, Burner wallets have been used at many other conferences, and the Burner Wallet 2 created by David Mihal has brought more features to the wallet, including the ability to secure keys! Community developers continue to add features and make the Burner Wallet a go-to wallet for new users.

So the user-interface, along with quick transaction finality, really set the stage for user adoption. The user base has grown ever since.

 

Why is xDai shifting to POSDAO consensus? And what will be the purpose of the STAKE token?

To open up the chain to the larger community, we’ve been working to create a delegated Proof-of-Stake architecture called POSDAO. New candidates can provide stake and apply to become validators. Delegators can place stake on candidates they feel will do the best job. This creates a free-market system where the community determines who validates the chain. Each week – called a staking epoch – a set of 19 validators is chosen based on the amount of total stake they provide (validator + delegator stake) as well as a random number. Misbehaving validators are reported and programmatically removed from the consensus process.

STAKE is the token that secures the POSDAO process. Validator candidates will need to provide a minimum amount of STAKE to participate (20k STAKE) as will delegators (1K stake). In exchange for providing STAKE during an active staking epoch, validators and their delegators will receive STAKE rewards during that epoch. Although the initial use-case for STAKE will be to secure the xDai chain, its use may be extended to include multi-chain staking in the future.

 

What are the advantages of using the xDai token over native Dai?

There are a few, in general it comes down to lower costs and faster speeds. Once you bridge Dai to the xDai chain (or purchase directly with a fiat on-ramp), you can make about 500 transactions for $.01.  Each transaction takes 5 seconds to finalize. With Dai you also need Eth to pay transaction fees (gas) so you have to have both in your wallet. With xDai, you just need xDai. 

When you need to cash out your xDai or exchange it for another token, it’s a simple operation to move it back to the Ethereum mainnet either with the Bridge UI or a wallet-based app.

 

xDai powered large crypto and non-crypto conferences, what role does the network provide in these circumstances?

The xDai network runs the underlying infrastructure that powers a conference wallet and supports event transactions. The conference-based blockchain experience has really grown in the past year to incorporate food purchasing, charitable giving, experience points for completing tasks during a conference, and even conference voting.

While xDai was first used at crypto-centric events (like EthDenver and DevCon), its use has expanded to include non-crypto events, like the 10,000+ attendee Splunk conference. Participants download Burner Wallets which serve to gamify the conference and promote interactions among attendees. ERC20 event tokens are created as currency, and the xDai chain  – with 5 second blocks and up to 60 tx/second transaction speeds – is used to process all of the transactions.

Every company has short, medium and long term goals. What can we expect to see from xDai?

In the short term we’re really focused on the transition to POSDAO staking and delegated staking. While xDai continues to gain momentum in the community, the fact that it is a permissioned chain has been a sticking point. It’s important to us to move to a permissionless consensus, and this transition will bring us closer to full decentralization. Once we’ve got public staking and delegation, we’ll be working to expand our underlying consensus options – incorporating a BFT consensus called Honey Badger – and exploring multi-chain staking with the STAKE token.  

In the long term we’re committed to growing the xDai chain through grants for DApp developers. We will be starting a comprehensive grant program to support development for the next great Burner Wallet or Tornado.cash type application. And of course we’ll be following the Eth 2.0 transition closely to see how xDai can continue to compliment and provide value as a stable chain within the blockchain ecosystem as a whole. 

 


 

About xDai

You can learn more about xDai on their website and stay updated with their progress by subscribing to their Twitter account

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