They’re trying to solve blockchain’s biggest problems

Aelf co-founder Chen Zhuling / Photo credit: Aelf

One of blockchain’s most popular experiments last year hinted at the technology’s brimming potential and one of its most harrowing problems.

As the mania over CryptoKitties pushed prices of unique digital cats up to six-figure dollars, fervent trading clogged the Ethereum network where the cats lived, which made transactions across the network slower and more expensive to execute.

While the CryptoKitties frenzy has died down, Singapore-based blockchain foundation Aelf is working on a way to unclog the blockchain so transactions don’t bog each other down. It raised US$40 million via an initial coin offering in December 2017.

Aelf’s solution is a new blockchain that uses “side chains” to improve the nascent technology’s scalability and performance so it can fuel transactions and smart contracts – or blockchain-based commands – on a commercial level. Its objective is not to gain 100 million users, but to build a platform that can be easily adopted.

“I think people will find building smart contracts becoming very easy, and turning ideas into an actual business also becomes possible based on our technology,” says Aelf co-founder Chen Zhuling.

But here’s why it’s hard

Chen sees a strong potential use case for blockchain adoption especially in Asia, where some countries such as Myanmar still lack a national identity system. If the internet allowed for the free flow of information, he says, blockchain offers the unrestricted flow of value. “That really excites me and it opens up a lot of possibilities,” he shares.

He started out in blockchain as an investor and saw ideas which sought to decentralize everything from the housing market to lending. But Chen kept circling back to the same fundamental problems: even in its nascent stage, blockchain technology is slow.

Because each transaction is verified hundreds or thousands of times, blockchains can only verify about three to 20 transactions per second. That’s nowhere near enough for successful commercial use, he points out.

When investigating solutions for this latency problem, Chen met Ma Haobo – someone who’s considered a veteran of the space. Haobo started out mining bitcoin for fun in 2013 and built GemPay and AllCoin, two popular blockchain solutions in China.

Chen and Ma joined forces in August 2017 to develop Aelf. The name is a stylized nod by its game-loving founders to the elves in “World of Warcraft.”

They wanted to solve three problems: speed up transactions for smart contracts, create a flexible system with resource segregation, and develop a more sophisticated voting system to incorporate new features.

Solving smart contracts with side chains

One of blockchain’s most promising benefits is the smart contract, an execution on the blockchain that allows people to crowdfund, issue loans, process insurance claims, and many other tasks without needing third-party verification. A blockchain can host thousands of smart contracts for banking, insurance, gaming or securities, each one with unique needs.

But putting all contracts on a single chain mixes together all the different applications. Aelf wants to sectorize the services on different chains – much like a city’s downtown might have separate districts for banking, shopping, and entertainment. Aelf calls these neighborhoods “side chains.”

Flexible resource segregation

Voting system