Crypto

Helium Cryptocurrency: HNT Token Drops Near End of IoT Project?

Updated 09 Sep. 2022 at 10:54

Cryptocurrency Helium, also called the “People’s Network” (“network of people” in French), has been blowing its sails for some time. However, the momentum gave way to pessimism about the project, which had all the assets to become a heavyweight in the IoT market, the Internet of things. And despite the growth in the number of users in early 2022, the collapse of the cryptocurrency sector and questionable decisions seem to have taken over the project. But is this the end?

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Helium crypto, decentralized internet network

Helium Network was launched in 2013 by Napster co-founder Sean Fanning along with Sean Carey and Amir Halim. It is a blockchain network focused on the development of physical, wireless and decentralized networks.

The main goal of the project is based on accessing or connecting to the Internet network from anywhere directly through a connected object, IoT, such as a smartphone or a connected watch.

To do this, Helium crypto built a scalable network using “hot spots” that exchange data over radio waves. Each of these rectangular hotspots represents a network node. They are subject to Proof of Coverage (PoC) to prove their proper functioning and thus be rewarded in HNT crypto, the native token of the Helium network.

The proof of coverage is based on 3 stakeholders, each of which plays a very specific role and testifies to the quality of the Helium network. They follow a specific process called “Challenge” which is carried out with the help of radio frequencies. These tasks are aimed at confirming the geographic location of access points and identifying faulty ones.

  • Applicants initiate a call by emitting a radio signal;
  • Beacons, also called transmitters, are the target of contenders. They forward calls to nodes close to their geographic location;
  • Cookies indicate their presence and confirm their operation.
Helium crypto HNT — Proof of Coverage schemeSimplified Proof of Coverage scheme used by Helium Network

Mark

According to the Helium Network, a challenge is issued every 360 blocks. However, the network tends to increase the speed up to 200 blocks.

To complement and enhance PoC, Helium crypto implements the Honey Badger BFT (HBBFT) protocol on its network. Resistant to censorship, this protocol allows a set of validators to reach consensus even if the quality of the connection is unreliable. Encrypted transactions can only be decrypted by a group of validators elected for an epoch equivalent to 30 blocks.

Helium Network also includes a PoS (Proof of Stake) share to incentivize validators to secure the network by staking 10,000 HNT for a reward of 6% HNT of the 30 block reward.

All these processes are obviously automated, and the owners of access points have only 2 obligations to fulfill: to supply electricity for the operation of the access point and to ensure the bandwidth of their Internet network.

Helium Crypto aims to make crypto mining super accessible. Indeed, hotspots are available for sale and anyone with an internet network can install a Helium terminal at home.

Cryptocurrency HNT: network token

HNT is Helium’s native blockchain token. The first token minting took place on July 29, 2019 in block 93 with a target of 60 million HNT per year.

However, with the approval of the HIP 20 community, this target is being reduced every two years. The adoption of the halving mechanism halves the number of tokens minted per year. The emission level is currently 30 million per year or 2.5 million per month. In 2023, this figure should be further reduced to 15 million HNT created per year.

The token release schedule is available in the Helium Network open source documents.

The current supply reaches 125 million tokens, which is half of the maximum supply defined by the project.

The HNT cryptocurrency plays a central role in the development and use of the network.

Initially, the token acts as an incentive for the access point hosts. The latter are rewarded in HNT and are required to maintain reliable network coverage.

On the other hand, it acts as a means of payment for network users. Companies or individuals do have to pay operational costs as soon as they connect connected objects such as smartphones or when they want to build an IoT application.

To be more precise, these operating organizations do not make payments in HNT, but in DC (data credit). These data credits are USD-pegged utility tokens received from HNT in a burn transaction where 1 DC equals USD 0.0001.

Through the Burn-and-Mint equilibrium, DCs are obtained by burning HNT tokens. Obviously, the number of DCs created depends on the fiat value of the HNT token. They are also burned to maintain a near-perfect balance depending on network usage and the issuance of new HNT tokens.

This mechanism gives HNT cryptography a deflationary character.

With the massive transition to 5G, a new token has appeared in the Helium crypto ecosystem. This is a MOBILE token that rewards operators of 5G hotspots on the existing Helium Blockchain. Its maximum supply is 250 billion tokens.

Finally, the latest token called IOT has recently appeared. The latter serves as a reward for the original LoRaWAN network operators.

These last two tokens can be converted into HNT to give them real economic value that can be traded on the markets.

Why does helium migrate to Solana?

Today, the Helium crypto network has about a million access points in 182 countries around the world. For information, at the beginning of 2022 there were only 550,000 of them. Thus, the network continues to grow rapidly.

Faced with this observation, Helium crypto had to adapt in order to maintain an appropriate level of scalability and remain competitive. So, in the HIP 70 proposal dated August 30, 2022, a migration project to the Solana blockchain was considered.

“With the move to more oracled activity on the network, we believe the simplification allows us to choose a more scalable Tier 1 for the Helium community, especially Solana. »
– Contents of the HIP 70 proposal – Github Helium

The proposal provides for “the integration of HNT, DC, IOT and MOBILE tokens into the Solana ecosystem.” The goal is to open up a field of opportunity. This will allow holders of these tokens to take advantage of a wider offering in terms of decentralized applications.

In addition, this migration will allow the Helium network to access a more robust structure. This will support its growth without compromising performance.

This proposal was met with mixed reception, dividing the Helium Network community.

While some see an opportunity for safer and more efficient growth, others on the other hand see all the inconvenience caused by this hypothetical migration.

For good reason, this is a partial DNA rebuild of the Helium network that is being questioned. Some network services should be removed or at least deeply reworked.

This applies, for example, to rates. This was previously possible on the Helium network by validators for HNT rewards, staking must be transferred to the DAO and not to the mainnet.

However, the reluctance is overwhelmingly focused not on upgraded or removed services, but more on Solana’s decision to make the biggest changes to the Helium crypto network.

Indeed, the recurring failures seen on the Solana blockchain do not seem to be to the taste of Helium users, for whom getting a regular, consistent, and efficient supply is an important criterion.

The vote on this proposal will take place on 12 September.

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Is the Helium cryptocurrency coming to an end?

This skepticism about the HIP70 proposal will affect the project’s native token. Indeed, the HNT cryptocurrency recorded a drop of almost 50% last week after the announcement that the main developers of Helium. The token touched $3.21, the lowest level since the end of February 2021.

HNT is currently trading at $4.89 and its price has risen due to the general hype surrounding The Merge and the move from Proof of Work to Proof of Stake on the Ethereum mainnet.

Falling price of HNT cryptocurrencyAfter the announcement, HNT resumed its decline and lost 40% in a few days.
TradingView Chart

It should be recognized that the fall of the HNT token is due to the bear market that has affected the entire cryptocurrency market. However, where some cryptocurrencies manage to hold their ground and even see value rise, HNT appears to be accelerating its decline to lows since early August.

HNT is currently trading below its daily moving averages of 50 and 200. The downtrend has continued for several months now. He focused on the junction of these two MMs in February last year.

Does this mean the end is near? Probably no. Indeed, the token is in danger of being overrun, and the next few days will no doubt be decisive. The vote on the HIP 70 proposal should clarify the future of the Helium crypto ecosystem.

Moreover, the project is focused on a niche that is still very little used in IoT. Add to that the more than remarkable evolution in the number of users on your network and the increase in the number of access points deployed.

Cryptocurrency has many use cases such as Helium for IoT. Blockchain technologies are spreading in all areas as they provide transparency and security. To dive into the essence of these technologies and the economy of the future, join the Crypto Rider training.

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