4 ms·

Helium has built the largest contiguous wireless network using a crypto incentive model. They have started with LoRaWAN and are moving into 5G neutral hosting u

Helium has built the largest contiguous wireless network using a crypto incentive model. They have started with LoRaWAN and are moving into 5G neutral hosting using CBRS spectrum. Helium effectively solves the chicken and egg problem in wireless network infra. The protocol pays users for providing provably useful wireless coverage, allowing time for demand to catch up and eventually fund the operation of nodes.

adam_arthur 5y ago
Interesting, I'll have to read more into it. So what role does the crypto play in this model... Is it just a payment method? If so, where is the tangible value add of crypto, versus paying in currency? Or is the idea that the public finances the project by assigning some value to the token? Thus creators need no capital to start, public finances project by determining a free market value for the token. If so, that's just following the pyramid scheme-esque pattern described before.
- delabay 5y ago
  The crypto value add is early adopter rewards as well as settlement when using the network. So, you basically captured it in your post. If the initial conditions are structured properly it becomes a virtuous cycle. You can call it a pyramid scheme, but you should also acknowledge it solved a real world problem. Many old school players have failed to do literally the same thing with Lorawan...raise money...hire a team...find installers...make agreement with vertical asset owners...find customers... etc. Helium is a team of a few dozen accomplishing success 100x bigger than teams of 1000 doing it the old way.
  - adam_arthur 5y ago
    I just spent a few minutes reading into it, will have to explore more. Certainly the tech/presentation is pretty slick. So somebody can buy a miner/access point of sorts to publish a hotspot. They get rewarded with these HNT tokens for providing this service. But what gives the HNT token value... is the value purely driven by speculators? That's where it starts to fall apart for me. How can that be a sustainable model in the long run? I guess for this project, the cost to run the miner is relatively low, so even if the value of the tokens are purely speculative, you'll still get people setting up access points for a chance at the lottery ticket. In that sense, this seems like a good application. I can see crypto having tangible value for these kind of cases, where you need many people to participate in a network, and the cost of entering is somewhat low. Having that small additional incentive/lottery ticket motivates people to take the small effort to set it up. But I don't know how stable this model will be in the long run. If crypto crashes, will the network stay maintained, or fall into disrepair? I just looked at some of the miners, and the cost goes up to 1k USD, which is kinda nuts. The token price would have to support the unit economics of that... which I doubt will continue in perpetuity. These kind of projects would work better in the long run as charities where people really understand the intent of participating, rather than strictly speculating, which is likely not going to be long lasting. Having a crypto/token kind of obfuscates what the long run reward will be, which does incentivize participation, for sure.
    - delabay 5y ago
      I'm happy you looked into. But I adamantly refute your point that these networks function better as charities, because the charity approach has been tried with an identical LoRaWAN network with something called The Things Network. Coverage is abysmal but its free to use and you can participate in a community of nerds who like to do this in their free time. The charity case doesn't solve the problem of ubiquitous coverage. Where does Helium token derive value? Their economic policy resembles a utility token, where transacting on the network costs a fixed dollar value per packet, and these 'credits' are derived from burning the native network token HNT. There are a few other burning mechanisms as well. The credits get paid out to the node which routes traffic. Helium nodes costs less than $2/month to operate (5-10W electricity). The longevity is uncertain, for sure. Its easy to call this growth model a resounding success but people are hesitant to build entire products on top of it because of the questions you raise. For now the Helium team is having good success convincing disparate Lorawan networks to roam onto Helium as a sort of extended coverage product, where range is high but may not be super reliable. All things considered this is a very new way of bootstrapping network infrastructure and appears very promising, and tokens are priced accordingly. It doesn't stop with Lorawan, 5G and wifi offload are launching this month and next year respectively. As with most things in crypto, they will either swallow the competition or fade into obscurity. I believe Helium is a strong asymmetric bet on disruption of network operator, neutral hosts and vertical asset industries.
      - adam_arthur 5y ago
        Can you elaborate on this point? "Where does Helium token derive value? Their economic policy resembles a utility token, where transacting on the network costs a fixed dollar value per packet, and these 'credits' are derived from burning the native network token HNT. There are a few other burning mechanisms as well. The credits get paid out to the node which routes traffic. Helium nodes costs less than $2/month to operate (5-10W electricity)." You say transacting on the network costs a fixed dollar amount. Does that mean people are paying USD to use this network? Who is paying these fees in USD? Trying to disentangle the financial/incentive aspect.
rcxdude 5y ago
Helium isn't really a cryptocurrency by most definitions: it relies on hardware blessed by a central authority doing the 'mining': there's no way to participate in the consensus of the network without getting the permission of this authority. Secondarily the incentives are pure speculation: miners make money by minting tokens, they do not make any significant amount of money from users of the network (given fees are fixed and the token is pegged to the dollar there is little reason this should change even if demand on the network increases substantially). Arguably this is a 'crypto incentive model' (as in most crypto purchases are incentivised by speculation, not utility), but it does not bode well for the long term life of the network. If it does manage to stay around it will be because speculators essentially paid for the installation costs with no return, which represents savvy or lucky positioning by those who set it up but no intrinsic value to the 'cryptocurrency' part itself.
- delabay 5y ago
  Nitpick: validation is the consensus process and resembles proof of stake, you don't need to buy any mining hardware to do this. Proof of coverage rewards require the approved hardware. You can make your own packet forwarder and get paid for data transmission, but not proof of coverage. Pure DIY with no central body blessing. There are around 70 different manufacturers in some stage of blessing. Its really not a meaningful hurdle. The approval process is there to insure manufacturers incorporate adequate security protection of chain access keys. Network buildout is called a chicken and egg problem for a reason. Speculation is just another tool and is used to phenomenal effect by Helium. The proof is in the pudding because a majority of Americans and Europeans have coverage now, where once was nothing.

adam_arthur 5y ago

Interesting, I'll have to read more into it. So what role does the crypto play in this model... Is it just a payment method? If so, where is the tangible value add of crypto, versus paying in currency? Or is the idea that the public finances the project by assigning some value to the token? Thus creators need no capital to start, public finances project by determining a free market value for the token. If so, that's just following the pyramid scheme-esque pattern described before.

delabay 5y ago
The crypto value add is early adopter rewards as well as settlement when using the network. So, you basically captured it in your post. If the initial conditions are structured properly it becomes a virtuous cycle. You can call it a pyramid scheme, but you should also acknowledge it solved a real world problem. Many old school players have failed to do literally the same thing with Lorawan...raise money...hire a team...find installers...make agreement with vertical asset owners...find customers... etc. Helium is a team of a few dozen accomplishing success 100x bigger than teams of 1000 doing it the old way.
- adam_arthur 5y ago
  I just spent a few minutes reading into it, will have to explore more. Certainly the tech/presentation is pretty slick. So somebody can buy a miner/access point of sorts to publish a hotspot. They get rewarded with these HNT tokens for providing this service. But what gives the HNT token value... is the value purely driven by speculators? That's where it starts to fall apart for me. How can that be a sustainable model in the long run? I guess for this project, the cost to run the miner is relatively low, so even if the value of the tokens are purely speculative, you'll still get people setting up access points for a chance at the lottery ticket. In that sense, this seems like a good application. I can see crypto having tangible value for these kind of cases, where you need many people to participate in a network, and the cost of entering is somewhat low. Having that small additional incentive/lottery ticket motivates people to take the small effort to set it up. But I don't know how stable this model will be in the long run. If crypto crashes, will the network stay maintained, or fall into disrepair? I just looked at some of the miners, and the cost goes up to 1k USD, which is kinda nuts. The token price would have to support the unit economics of that... which I doubt will continue in perpetuity. These kind of projects would work better in the long run as charities where people really understand the intent of participating, rather than strictly speculating, which is likely not going to be long lasting. Having a crypto/token kind of obfuscates what the long run reward will be, which does incentivize participation, for sure.
  - delabay 5y ago
    I'm happy you looked into. But I adamantly refute your point that these networks function better as charities, because the charity approach has been tried with an identical LoRaWAN network with something called The Things Network. Coverage is abysmal but its free to use and you can participate in a community of nerds who like to do this in their free time. The charity case doesn't solve the problem of ubiquitous coverage. Where does Helium token derive value? Their economic policy resembles a utility token, where transacting on the network costs a fixed dollar value per packet, and these 'credits' are derived from burning the native network token HNT. There are a few other burning mechanisms as well. The credits get paid out to the node which routes traffic. Helium nodes costs less than $2/month to operate (5-10W electricity). The longevity is uncertain, for sure. Its easy to call this growth model a resounding success but people are hesitant to build entire products on top of it because of the questions you raise. For now the Helium team is having good success convincing disparate Lorawan networks to roam onto Helium as a sort of extended coverage product, where range is high but may not be super reliable. All things considered this is a very new way of bootstrapping network infrastructure and appears very promising, and tokens are priced accordingly. It doesn't stop with Lorawan, 5G and wifi offload are launching this month and next year respectively. As with most things in crypto, they will either swallow the competition or fade into obscurity. I believe Helium is a strong asymmetric bet on disruption of network operator, neutral hosts and vertical asset industries.
    - adam_arthur 5y ago
      Can you elaborate on this point? "Where does Helium token derive value? Their economic policy resembles a utility token, where transacting on the network costs a fixed dollar value per packet, and these 'credits' are derived from burning the native network token HNT. There are a few other burning mechanisms as well. The credits get paid out to the node which routes traffic. Helium nodes costs less than $2/month to operate (5-10W electricity)." You say transacting on the network costs a fixed dollar amount. Does that mean people are paying USD to use this network? Who is paying these fees in USD? Trying to disentangle the financial/incentive aspect.

rcxdude 5y ago

Helium isn't really a cryptocurrency by most definitions: it relies on hardware blessed by a central authority doing the 'mining': there's no way to participate in the consensus of the network without getting the permission of this authority. Secondarily the incentives are pure speculation: miners make money by minting tokens, they do not make any significant amount of money from users of the network (given fees are fixed and the token is pegged to the dollar there is little reason this should change even if demand on the network increases substantially). Arguably this is a 'crypto incentive model' (as in most crypto purchases are incentivised by speculation, not utility), but it does not bode well for the long term life of the network. If it does manage to stay around it will be because speculators essentially paid for the installation costs with no return, which represents savvy or lucky positioning by those who set it up but no intrinsic value to the 'cryptocurrency' part itself.

delabay 5y ago
Nitpick: validation is the consensus process and resembles proof of stake, you don't need to buy any mining hardware to do this. Proof of coverage rewards require the approved hardware. You can make your own packet forwarder and get paid for data transmission, but not proof of coverage. Pure DIY with no central body blessing. There are around 70 different manufacturers in some stage of blessing. Its really not a meaningful hurdle. The approval process is there to insure manufacturers incorporate adequate security protection of chain access keys. Network buildout is called a chicken and egg problem for a reason. Speculation is just another tool and is used to phenomenal effect by Helium. The proof is in the pudding because a majority of Americans and Europeans have coverage now, where once was nothing.