For those who want to understand Hacash, a huge problem lies in front of them: Hacash is too big and too complicated. From the most basic Money Theory, to the structure and connection of the three PoW coins, to the second-layer payment and settlement network of the channel chain, to the payment contract and mortgage lending, to the prevention of 51% attacks and privacy, etc., every section can be isolated out and build an entire separate project. It is too exhausting to sink into these theories and technologies. The purpose of this article is to detach from these details, use a higher and more abstract judgment method as a breakthrough, cut into the complex context of Hacash, and try to overlook its essence from another perspective. The article will analyze three impossible Trilemmas of the decentralized world as the core of the statement to examine Hacash's choices, to understand the underlying logic of Hacash from the side, and see its overall vision clearly.
As we all know, decentralization is the cornerstone of the entire encryption industry and "Decentralization" are included as their indispensable key corner, the three impossible Trilemmas are:
The Trilemma of Scalability: (By Vitalik)
- Decentralization
- Double-spending security
- Scalability
The Trilemma of Stablecoin: (Derived from Mundellian Trilemma)
- Decentralization (Monetary Independence)
- Financial Openness
- Stable currency value (Exchange rate flexibility)
The Trilemma of Project’s Development: (By Hacash Community)
- Decentralization
- Long-term Value
- Rapid Growth
The first trilemma of scaling is best known, this article will refute the numerous projects that have claimed to have broken or are about to break this trilemma. Although the second trilemma of stablecoin is not as well-known as the first one, it has also gained some discussion because of the sudden collapse of Luna/UST. As for the third trilemma of project’s development, no one knows about it at present. It is initiated from this article.
Briefly speaking, Hacash has chosen to never make any sacrifices or compromises in the first two dimensions in the above three trilemmas (especially the Decentralization), while in the third dimension of each trilemma (scalable performance, stable currency value and rapid project development), Hacash gives its own solution, or makes a trade-off.
The Trilemma of Scaling:
There recently pop out new public chains such as ‘Aptos’ and ‘Sui’ in the market, but they no longer focus on high performance as the biggest highlight, instead, they emphasize the security of the contract language ‘Move’ and aim at new visions.
As an example, Solona, a representative project in the latest batch of high-performance public chains, generally claims to have invented some kinds of innovative PoS consensus protocol, and also guarantees decentralization. In their words, the performance of the blockchain has been squeezed to the upper limit that a single node can bear. Transactions are processed quickly by nodes with extremely high throughput rate. You probably don’t even feel that this is some kind of blockchain. The experience is similar to that of Web2 Service.
It seems that the attempts or technical breakthroughs in the direction of blockchain performance are almost exhausted. It seems that the scalability of blockchain is already a solved problem in the past. But is that really the case?
Fundamentally speaking, decentralization must be the decentralization of ledgers or full nodes. That is to say, regardless of all the complicated technical details, the most decentralized form must be that every ordinary personal computer has or has the ability to keep a blockchain ledger and run a full node. The least decentralized form, in comparison, is there only exist one computer or one server room in the world to keep the only ledger. Once the unique ledger is lost or offline, the entire public chain will also disappear.
For those "server-room chains" or "super node chains", no matter how they use newly invented buzzwords to advertise, they are not inherently decentralized.
From the three dimensions of decentralization, double-spending security, and scalability, we can responsibly conclude that except for some minor technical optimizations, the impossible trilemma of blockchain scaling cannot be broken. All public chain projects that declare themselves to have broken the impossible trilemma have in fact given up on decentralization. In other words, they are all deceiving, using various vague words and technical vocabulary to confuse the public, and dressing up the essence of centralization as the appearance of decentralization. From EOS to Solona, they are essentially some kinds of centralized project, a "company chain", but to different extent.
Because these projects all choose to expand on-chain at the layer 1, which is the core layer of the main network, with the intention of publishing and saving all transactions in the world to the entire network. In fact, the essence is the large block route. Leaving aside the irrelevant difference between consensus mechanisms (PoS or PoW), the failure of BCH and BSV, the two bitcoin large-block fork projects, actually previewed the ending of these "high-performance public chains". There are also some atypical blockchain projects using DAG and other technologies that claim to be both decentralized and scalable with high performance. But they all come at the cost of double-spending security. This technology can only be used in non-financial application scenarios that do not require high security, such as Internet of Things data chaining, and cannot undertake the important functions of encrypted economic infrastructure at all.
At the beginning of the release of the Hacash white paper in 2018, it was clear that the main net cannot be scaled. It is impossible and unnecessary for the whole world to repeat and consume a lot of resources to verify and record the consumptions of a cup of coffee.
Hacash’s choice in the first impossible trilemma is to strictly ensure decentralization and avoid double spending, the core layer of the main chain is used as the creation, distribution and settlement of money, and more micropayments or applications are placed on the Layer 2: channel chain Payment and settlement network and Layer 3: multi-chain & multi-application systems are solved to achieve unlimited scaling (adding more machines can have higher level of transaction throughput rate, and TPS is linearly increasing in the same proportion as hardware investments). The price is the sacrifice of some composability and interoperability.
The Trilemma of Stablecoin:
According to Mundellian Trilemma, when making fundamental decisions about managing international monetary policy, it is impossible to achieve independence of the country's monetary policy, free capital flow and exchange rate stability at the same time. Abandoning one dimension and pursuing the other two dimensions is the most common action.
At present, the stablecoins in the crypto market are basically anchored to the US dollar, which is essentially a non-sovereign foreign exchange asset. Then stablecoins fundamentally face the same constraints as the national fiat system.
Explanation of the Mundellian trilemma and its correspondence with the stablecoin:
- Independence of the country’s monetary policy: the country can independently increase or decrease the currency supply;
Corresponding to the decentralization of the stablecoin, the more decentralized the higher the independence of the monetary policy - Free flow of capital: can be freely exchanged for domestic and foreign currencies;
Corresponding to the large-scale circulation and application of stablecoin, that is, financial openness - Exchange rate stability: keep the currency exchange rate between the country and other countries unchanged;
Corresponding to the stability of currency value
No matter from the perspective of theoretical discussion or practice, the correctness of Mundellian trilemma cannot be challenged. For stablecoins, decentralization (that is, no artificial monetary policy controlled by the project party) is its original nature that cannot be abandoned (at least publicly), so the abandoning choice can only be selected between free flow of capitals or currency value stability. Furthermore, since the stablecoin is issued on an open source blockchain, it is not mandatory as a legal tender. It is impossible to maintain its value by restricting exchange and circulation when the currency value is unstable. Once the price breaks the anchor, it will immediately fall in the abyss, the positive feedback effect brought by the market's confidence will quickly push its value to collapse, as evidenced by the Luna/UST.
Therefore, the stability of currency value is the most important dimension of stablecoins trilemma, and the lack of this dimension is tantamount to immediate death. Then what can be sacrificed is one of the freely circulation of capitals and the decentralization. And if a stablecoin abandons large-scale circulation, it will not be widely adopted in the market, and it is basically equivalent to slow death.
Obviously, the only thing that can be sacrificed in the end is decentralization. Because the risks brought about by insufficient decentralization are tail risks, which will only be concentrated and manifested at the last moment. Fiat-anchored stablecoins, such as USDT and USDC, were purely centralized from the start. However, MakerDAO has added more official emergency management authority due to the baptism of the risk of collapse, and added USDC, a centralized stable currency, to the asset pool. The Fei Protocol algorithmic stablecoin has completely become a "governance stablecoin" in the later period, driven by a rigid algorithm into a human governance decision. Some people may say that it seems okay to give up part of decentralization in exchange for more stability? Coin holders affected by the recent event of Tribe DAO’s official protocol shutdown may hold differed opinions.
Hacash is not an algorithmic stablecoin, but a PoW coin. However, due to the same underlying reasons, it is impossible to achieve decentralization, large-scale free circulation of capitals and absolute stability of currency value at the same time. For the goal of Hacash, decentralization must not be sacrificed or compromised, and it must also ensure capital efficiency and achieve mass adoption. Therefore, Hacash cannot be anchored 1:1 with fiat.
In the second impossible trilemma, Hacash chose absolute decentralization and large-scale circulation applications, and was not linked to any fiat. But this does not mean that Hacash cannot become an everyday currency for mass circulation payments in the future. Although Hacash does not anchor any fiat, it has invented a revolutionary three-PoW-asset structure, involved Bitcoin through one-way transfer technology, and used HACD, another original PoW NFT on the chain, to act as an automatic on-demand adjustment of the HAC supply. Hacash uses mechanisms such as transfer issuance, bidding system, mortgage lending and other mechanisms to balance the supply of HAC, so that the market purchasing power of HAC can maintain relatively low volatility. The details of these mechanisms are limited by space and cannot be introduced in details here. Please visit hacash for more information.
In short, you can think of Hacash as a "purchasing power stablecoin" rather than a "fiat anchored stablecoin".
The Trilemma of Project’s Development:
This impossible trilemma has not been discussed much elsewhere, and people may still have doubts about whether it is true. We will further explanations.
Among three dimensions, decentralization is needless to emphasize. The dimension of rapid project’s growth means that in a short period of time, such as three months or even a week or two, the entire market can be aware of or even participate in the project, which is the so-called explosive growth. However, the dimension of long-term value of the project (non-FOMO, non-gaming speculative) is more difficult to understand.
In the market, there are indeed many projects that are completely decentralized (the contract code determines everything), and they detonated the market in a very short period of time, and even reached the level of popularity that everyone knows. But without exception, they all reveal very strong FOMO attributes, and their mechanisms are designed so that those who participate earlier can expect huge returns. There seems nothing wrong with being attractive.
The defect of this kind of project is that the more FOMO-enhancing the project and the project that can provide a huge expected return, the more it is essentially at the expense of the interests of those who will participate in the later stage. To put it bluntly, it is the Ponzi mechanism, which means money from those who came later is transferred to the pockets of those who participated earlier. Looking back at history, no Ponzi scheme can continue to operate stably forever, and there will be a day when it collapses. And there are always new scams in the market, because everyone's herd, speculation, greed and luck are at work.
Due to the serious fairness problem of initial distribution of tokens or coins, the sustainability of strong FOMO projects is generally low. Especially after a large number of imitated projects, the time from birth to death for some projects can even be calculated in hours. In other words, such a project is purely for wealth transfer and secondary distribution, and it is impossible to have any long-term creative value.
In the third impossible trilemma, Hacash still chose decentralization and long-term value, which greatly took care of the interests of those who participated later. For example, the block reward for mining in the first 6 years is increased according to the Fibonacci sequence, starting from 1 coin per block, increasing once a year, 1 coin in the second year, 2 coins in the third year, and 3 coins in the fourth year (current stage), 5 coins in the fifth year and 8 coins in the sixth year. Then reduce once every ten years, taking 60 years to reduce from 8 coins rewards to 1 coin reward, and then keep constant 1 coin reward per block forever. This kind of currency that latecomers can mine is eight times that of the earliest participants. It is unique in the market, and it will not reach the peak of currency production until 6 years after the main net works. This mechanism of rapidly increasing production first, then slowly reducing production, and finally consistent mining is actually to satisfy the paramount foundation of money which could be circulated globally: Fairness, in other words, long-term value. More systematic explanations have been summarized by the Hacash community as a complete ‘’Monetary Theory’’.
It is necessary to maintain true decentralization and to take into account the fairness of latecomers. The consequences of Hacash's choice are obvious, which is at the cost of greatly sacrificing the growth cycle. In the early days, the project did not have the leadership and publicity of any teams, and could only rely on community members to mine and buy coins to drive word-of-mouth spontaneously. Today, three years later, finally several community teams are willing to invest more resources to support the development of Hacash after receiving good benefits. Among them, Hacash.Diamonds, the trading platform of HACD, is the representative.
Conclusion
No matter which trilemmas, Hacash first ensures absolute and true decentralization. This is completely contrary to the fact that the market always chooses to sacrifice decentralization. The most direct manifestation is that there is no "official team" responsible for project development, and it is completely in the extreme slow growth mode. Some people conclude that the nature of Hacash is rigorously based on the "First principle of Digital money" as the core essence.
In the first Impossible Trilemma, Hacash solves the problem of performance scalability through the Layer 2 and the Layer 3 networks. The route is best validated if we noticed how popular the RollUp Layer 2 solution on Ethereum is. In the second Impossible Trilemma, although Hacash cannot be 100% value-anchored to fiat (think about it, if it is linked to fiat, but the fiat has been depreciating rapidly or even suddenly collapsed, is this linkage still meaningful?), but It uses a variety of creative mechanisms to adjust the monetary supply according to market demand, which can be inflationary, deflationary, or remain unchanged, bringing relatively stable purchasing power, which can be regarded as solving most of the problems. In the third impossible trilemma, the speed of development will be a huge issue. Hacash itself has not proposed any good breakthrough solutions. The key to this problem may rely more on the wisdom of community supporters.
