Dfinity are striving to enable the next generation of cloud computing services via a high performance distributed virtual computer with no theoretical limit on scalability. The team have included compatibility with Ethereum as a design constraint. Dfinity also designed what they consider to be a novel governance structure, the Blockchain Nervous System (BNS). The ambitions of the project extend to the future scenario of effectively offering an alternative to traditional commercial banking— which account for the vast majority of currency issuance—by offering loans in a crypto-fiat currency that is backed indirectly by loan collateral. Founder Dominic Williams has experience building web applications that scale to millions of users having developed a hugely popular online game earlier in his career. The total funding for the Dfinity project sits at approximately $163 million. A full testnet is expected in Q2 2019.
In addition to novel validation and sharding mechanisms designed to facilitate Dfinity’s scaling to millions of consensus participants, Dfinity features a decentralized random beacon, which is used in leader selection for block production. This beacon acts as a Verifiable Random Function (VRF) to mitigate the risk of individual participants in the consensus mechanism being targeted by nefarious or dishonest participants; since anyone observing the beacon can discern that the output is random it is regarded as a poor allocation of (attacker) resources to attempt a prediction of whom will generate the next block. The candidates for block production are drawn from a set of registered clients whose consistent, pseudonymous identities are associated with staked tokens. This mechanism is intended to encourage good behaviour by allowing nefarious nodes to be penalized financially.
Dfinity’s governance structure essentially aims to be more flexible than a Code is Law approach, whilst avoiding conflict resolution by means of hard forking the network. The Blockchain Nervous System (BNS) is comprised of a system of user controlled Neurons and some non-deterministic algorithms. Users can either direct neurons or instruct them to follow those of other users in a liquid democracy type system. Since the direction of the neurons is administered locally on users’ machines, the governance system obscures individual decision making, which is designed to afford the Dfinity network a form of autonomy. The Dfinity constitution aims to ensure the legitimacy of the network by advising users against supporting certain types of initiatives - such as those involving or encouraging violence. The constitution also aims to align stakeholders towards a shared view of when which software updates ought occur.
The Dfinity team plan to attempt moving the commercial bank currency issuance mechanism onto the blockchain, via their PHI model. The PHI protocol will essentially algorithmically issue currency, in the absence of a single central administrator, against a set of collateral such as assets and cash-flows. A network of validators will decide whether or not to offer customers loans, in a ‘mirror currency’ to the geographical region in which the loan is being issued, based on information submitted.
The Dfinity network token, DFN, serves several purposes, including providing funding for smart contracts’ execution, in addition to acting as deposits for the following permissions: enabling miners to establish an identity and participate in the network’s consensus mechanism; establishing neurons in the BNS; facilitating the connection of other cloud networks to the main public Dfinity network. A neurons influence in the BNS will be proportional to the amount of tokens deposited. Those users choosing to participate in the BNS stand to earn rewards based on how actively they participate in the collective decision making process. Rewards are expected in Dfinities at first and might be switched to PHI tokens in the future depending on both the performance of crypto-Fiat currency as a stable means of exchange and the decisions of the BNS.