Interview with Cypherium CEO Sky Guo: How should the trillion central bank's digital money market be set up

DeFi is hot, and DeFi is messy.

A variety of memes with emoji logo come one after another, and the secondary market price chart of tokens is uniform. After the high opening, investors seem to have been tired. Users have become numb to the annualized yield of dozens of times, the community began to take daily chemical yield rate as a speculative indicator.

On September 15, the token price of BakerySwap, a liquidity mining project, broke through $320 just minutes after it was launched, and then began to plummet. The current price is $0.23, down 99.92%. As you can see, the DeFi bubble was so big that it burst just as quickly.

Meanwhile, the major public chains have announced that they have deployed DeFi and launched their own Swap and liquidity mining projects. However, to attract a large number of counterfeit money, that is, on the line to smash the dish, run away project.

In the face of the fire and chaos of DeFi, some projects participate by copying open source code, while others enter with an attitude of "three sticks". However, there are projects that stick to their stated goals. Rhythblockbeats spoke with Cypherium CEO Sky Guo about what they've been doing and the prospects for a central bank digital currency and an enterprise app market.

DeFi is hot, and Cypherium is still working on the public chain

BlockBeats: Many Chinese users may not be aware of Cypherium's current progress and solutions for the central bank's digital currency and enterprise app market. Can you give us an overview of Cypherium?

Sky Guo: Cypherium is in the stage of continuous self-evolution and self-learning. The project was initially approved in 2017, and the hybrid algorithm of PBFT+PoW was adopted at the beginning. However, the limitation of PBFT algorithm is found in the later practice, which is difficult to be used in the public chain environment and even in the alliance chain environment. The reasons are as follows: 1. Complexity of PBFT itself; 2. 2. PBFT requires every node to communicate with all other nodes, and it has high overhead in communication, so its actual performance is very low.

Therefore, the HotStuff algorithm was later recommended by Ted Yin, the first author of the HotStuff algorithm. We found that HotStuff algorithm can be said to be the first truly practical Byzantine fault tolerant algorithm, which can meet the high performance requirements of blockchain and extend to hundreds or even thousands of nodes. Since Cypherium is a public chain, we set out to develop the HotStuff algorithm without a license. We then added a reConfiguration mechanism to HotStuff that allows nodes to enter and exit dynamically.

Rhythmical BlockBeats: At present, the biggest hot spot in blockchain industry is DeFi. Cypherium, as a project dedicated to payment, what do you think of DeFi project? How long can DeFi boom last?

Sky Guo: DeFi has gone through its early development and is now in a confusing period, just like IC0. At the moment, DeFi does not have a single definition and standard, and it has some immature aspects, such as the risk of being attacked at the technical level and not limiting the rights of the development team, which could result in a massive crash like the SushiSwap founders.

At present, it will take some time before DeFi can be used on a large scale, and the degree of decentralization of DeFi is difficult to quantify. However, DeFi is gaining speed in financial innovation and has great implications for the future financial system in the digital currency era. For example, in the future, there will be no need for a third party to be able to trade directly from point to point. It will be like a smart contract, automatically executing this transaction.

In the future, DeFi may be combined with central bank digital currency to achieve a wider range of applications.

With respect to DeFi tokens, there are both incentive tokens and community governance tokens by classification, so it is impossible to generalize. At present, the token price speculation is serious, it is difficult to judge the duration of the heat, the real value of the token still needs to be observed, investors should also be careful when buying tokens.

Rhythmical BlockBeats: In your opinion, what is the difference between a stable currency on decentralized Finance (DeFi) and a Facebook anchored currency such as Sept. 24, Sept. 24, and a centralized legal digital currency, DCEP?

Sky Guo: On the technical level, the three are similar to some extent. They are all the products of automatic execution of intelligent contract. However, the ownership of control right of the three is quite different. The issuance authority of central bank digital currency is in the hands of central bank, DeFi is mainly dependent on the community, while control of Libra is mainly in the hands of the Libra Association.

The jury is still out on the pros and cons of Libra, just as it remains to be seen whether the support system can be launched.

Of the three, DeFi is at the forefront of innovation because of its low barriers to entry. DeFi is also the area most likely to see the next big thing, because if you experiment enough, there will always be one or two success stories.

Rhythm BlockBeats: previously, you said "global DeFi jurisdictions can reference model, to allow for all parties to license issued by the real world, such as real estate and stock assets support for digital assets, and it is used as collateral to obtain bank digital currency loans. Cypherium can provide digital currency for the central bank and the interoperability between different digital assets, to the introduction of the People's Bank of China digital currency liquidity trillion-dollar DeFi market." In your opinion, should Cypherium stick with platform building or launch its own DeFi application?

Sky Guo: DeFi itself is the application scenario of the stability coin. Any DeFi application cannot be separated from the stability coin. At present, central bank digital currency is the largest stable currency market, the size of the market is trillions of dollars. In cryptography, Tether, the biggest stabiliser, has just over $10 billion.

Currently, DeFi is limited to the cryptocurrency market, but in the future, when combined with central bank digital currencies, the scope for its use will be several orders of magnitude higher. For example, real assets can be combined with DeFi, and real estate, securities and the like can be mapped on the blockchain and managed through smart contracts.

Currently, Cypherium's focus is still on platform building, and we encourage developers to use our blockchain to create new fintech products. We are still learning and researching whether we will launch our own DeFi application in the future. When we are more prepared, we will make some attempts within the scope of laws and regulations.

How does Cypherium play a role in central bank digital money

BlockBeats: This year, many countries have said they will launch their own legal tender for digital currencies. BlockBeats previously reported that CCB was conducting internal tests of digital currencies. According to the official WEBSITE of the International Monetary And Financial Institutions (OMFIF), Cypherium is currently discussing the digital currency experiment with Bank of Thailand, which includes the Thai baht in DeFi. Can you talk about what Cypherium is doing in the digital currency space right now, and what do you think of the future development of digital currency?

Sky Guo: We are one of the co-founders of the official FORUM of INTERNATIONAL Monetary and Financial Institutions. The main function of the official Forum of International Monetary and Financial Institutions is to provide central Banks of all countries with research, paper reports and related activities on digital currency. Over the past few months, we have held roundtable discussions with major central Banks around the world, including the Bank of France, the European Central Bank, the Dutch Central Bank, the Federal Reserve, the People's Bank of China, and the German Bank.

Through the roundtable, we learned about these countries' progress on central bank digital currency, and then made corresponding presets and updates on the development technology route.

We find that one of the most discussed issues in central bank meetings is how to implement interoperability between central Banks' digital currencies. In consideration of national monetary sovereignty and information security issues, central Banks of various countries generally issue digital currencies based on private blockchain or alliance chain. How to interoperate with private chains is a difficult problem. In the case of paper money, the parties do not need any intermediary and can simply transfer it. But in the world of digital money, how to gain the trust of the other side and make digital money circulate around the world like paper money.

We think public chain is the best choice. Cypherium itself is based on HotStuff and can perform thousands of transactions per second, making it an ideal platform for digital currency interoperability. This is similar to "cross-chain", but not in the traditional sense, as not all central Banks' digital currencies are based on blockchain. Many countries take a wait-and-see attitude towards blockchain, and they may not necessarily use it to issue their own digital currency. Cypherium's interoperability framework is not limited to blockchain, and traditional centralized systems can also be docked.

On August 19 this year, Cypherium, together with the Bank of England, the Swiss National Bank and the Central Bank of Hungary, also held a forum on "The Application of The Blockchain in Central Bank Digital Currencies", which highlighted the advantages of the common Cypherium chain in realizing the interoperability between central bank digital currencies.

Active BlockBeats: Libra's current consensus protocol is based on HotStuff, and Cypherium's HotStuff upgrade creates a CypherBFT Consensus protocol. What are the similarities and differences between Cypherium and Libra? What are the advantages of Cypherium over Libra in practical applications?

Sky Guo: The most important difference is that the access mechanism of nodes is different. Libra is actually a PoA blockchain, and its nodes must be approved by the Libra Council to be elected. The Libra Committee has been set up, but the number of nodes, technologies and mechanisms are not disclosed.

In Byzantine fault-tolerant algorithms, a set of nodes is required to act as a transaction verification committee, so that in the case of S node failure, the entire network can continue to function normally as long as there are 2S+1 nodes remaining. Under this premise, the Cypherium node's committee can enter and exit dynamically, and elections can be conducted using the PoW consensus.

When a miner has found a valid block, he can broadcast the block to the whole network, and then the validation node committee verifies the block validity. After the block validity is verified, the miner becomes a new validation node. The earliest nodes in the current committee automatically leave the committee, creating a rotation mechanism, which means that Cypherium does not verify that nodes can exist on the committee forever and unconditionally. This is similar to a presidential election. Like Bitcoin, Cypherium is a completely license-free public chain.

The Cypherium blockchain is composed of two chains, KeyBlock and TransactionBlock. KeyBlock is used to hold the identity information of each session of the committee. The TransactionBlock is used to hold information about all current transfers and smart contracts.

In addition to the difference in the chain, there are also differences in the algorithm mechanism. There is a Pacemaker mechanism in Libra, and Cypherium USES the Heartbeat mechanism. The Heartbeat mechanism can be used to ensure validation nodes are valid.

BlockBeats: Cypherium introduced the modules of "big data analysis" and "clearing system" in the white paper. Could you please explain in detail the functions of these two modules under the central bank monetary system?

Sky Guo: These two modules belong to the application layer. Cypherium itself is the infrastructure system for processing transactions. However, in order to meet the requirements of KYC and AML of the central bank, it still needs to rely on the system outside the blockchain. Cypherium actually provides an interface for accessing big data centers, for example, where a country or government needs to review transactions involving money laundering or crime, and we can access the system to restrict some transactions. When the central bank conducts clearing, it will involve the launching mechanism, such as retail digital money or wholesale digital money. According to the needs of different central Banks, we will define the commercial logic of the clearing layer.

After two years of polishing, Cypherium is coming to the main web

BlockBeats: Cypherium, in addition to its presence in central bank digital money, is also known to be active in the enterprise app market. Back in 2019, Cypherium partnered with IBM, Amazon, the Fed, Randstad and other giants. What products are Cypherium currently offering in the enterprise application market, and what are their effects?

Sky Guo: before, we jointly launched a decentralized digital identity human resource system based on block chain with randstad and Google cloud. In addition, we implemented the DID standard (decentralized identity) on the blockchain, allowing users to complete background checks on job applicants without uploading sensitive personal information to a centralized server.

Some job seekers may submit false information or even hide bad records when they submit their resumes. Randstad's traditional method of manually verifying information submitted by job applicants is extremely inefficient, and background checks can take weeks or even years. The background check process is also prone to errors, but randstad can verify the comparison by linking the data. They don't have to verify all the information the candidate has provided, they just have to compare hash values to verify the candidate's credentials or academic work. This process takes only a few minutes to complete. This cooperation has been selected by Google as a special introduction case on the official website of Google cloud.

In its white paper, the BlockBeats: Cypherium team identifies five goals: instant ledger to handle real-time transactions for billions of users; smart contract platform; trusted database; open network; and secure vault. What have Cypherium achieved so far, and what new features do you plan to implement next?

Sky Guo: Technically speaking, the five goals have all been achieved. We are currently working on a commercial implementation. Previously, we have launched Cypherium Enterprise edition, mainly for enterprises. Of course, our current focus is still on the public chain, we have plenty of cash flow.

The short-term goal is to launch the main network of the public chain, after the launch of the main network, will create more enterprise applications. To restore them, we have followed a path similar to that of Ethereum, which led first to the creation of public links and then to the Establishment of the EEA and Talsys. Our future development will also follow the ethereum route.

BlockBeats: Cypherium opened its register on September 9 and started public offering on September 16. Tokens are expected to be released when the main website goes live at the end of September. Is there any plan for Cypherium's scrip to be traded online in the future? Could you please tell us the incentive plan for the scrip in the future?

Sky Guo: The team is studying the incentive plan, but it is not convenient to disclose the specific incentive plan before getting legal advice from the lawyer.

We have always positioned ourselves as a technology-based company, and the development of distributed system itself has certain difficulties. The PBFT is a decade-old algorithm that has only developed qualitatively in recent years. The development of technology is subject to objective conditions. Compared to other projects, Cypherium's development speed is very reasonable. When we got to HotStuff it was just a paper, but now we've made it a reality.

DeFi is hot right now, but after that the market may calm down. Our team still hopes that there will be more investors who truly believe in technology, so that blockchain can become more popular.

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