What is ICON (ICX)?
Last Updated: 1st November 2018
At a high level, the ICON protocol aims to build a decentralized network comprised of individual blockchains that can communicate and transact with one another through use of its ERC-20 token, ICX.
At a fundamental level, the ICX protocol can be divided into the following:
- Components of the ICON network
- Methods of Connection
- Nexus, Portal & Blockchain Transmission Protocol (BTP)
- ICON Decentralized Exchange (DEX)
- Nexus Public Channel
Components of the ICON network
The ICON network is made up of the following five key participants:
- Community – Independent blockchains that can operate with their own consensus algorithms and governance practices. Examples of communities given in the ICON whitepaper include: Financial institutions, governments, and even the Bitcoin and Ethereum protocols. Each community has its own blockchain, with no limitations placed on how different each community can be from another.
- Community Node (C-Node) – C-Nodes make up the communities described above. Anyone from individuals to institution can run a C-Node within their chosen community.
- Community Representative (C-Rep) – C-Reps are selected nodes/individuals who have been chosen by their community to represent them. To qualify as a C-Rep, a node’s contribution to the ICON network is first assessed via its IISS (ICON Incentives Scoring System) score. A minimum score must be achieved to be considered for a C-Rep position.
- ICON Republic – Is the centre of all the different communities. It is comprised of the C-Reps chosen by their respective communities to represent them. Governance decisions are determined by the voting of C-Reps. ICON Republic operates on the Loop Fault Tolerance (LFT) consensus algorithm.
- Citizen Node – Citizens nodes are also part of the ICON Republic, but they are devoid of any voting rights. Participating of Citizen nodes occurs through the decentralized applications (DAPPS) created on Loopchain, more on this later.
Methods of Connection
There are four methods of connections that can be made on the ICON network:
- Connections between nodes in a single community – Communities are free to operate using their own self-determined consensus algorithms.
- Connection between nodes within ICON Republic – As previously mentioned, the consensus algorithm that governs the connection between nodes in ICON Republic is LFP.
- Connection between community and ICON Republic – ICON’s DEX facilitates for the transfer of value between communities and ICON Republic.
- Connection between different communities – C-Nodes in one community, are connected to C-Nodes in another community through the representation of their respective C-Reps in ICON Republic.
Nexus, Portal & Blockchain Transmission Protocol (BTP)
From a high level, Nexus is simply the centre point of any blockchain-based technology. On the ICON network, the Nexus would be ICON Republic. Similarly, the C-Reps are the Portals that facilitate value transfers between any blockchain that is connected to the Nexus.
The BTP allows for communication, e.g. transactions, between any blockchains that are connected to the Nexus. Through use of Notary Channels located in the Nexus, a transaction can be made from one blockchain in one community, to another blockchain in a separate community.
ICON Decentralized Exchange (DEX)
As previously mentioned, ICON’s DEX is what facilitates for the transfer of value between independent blockchains/communities and ICON Republic.
This concept is illustrated in the ICON whitepaper:
“For example, if there is a blockchain for financial institutions connected to Nexus and a cryptocurrency called Fcoin used only among the concerned financial institutions, Fcoin DEX service is provided based on the Reserve made up of Fcoin and ICX, in which Fcoin and ICX can be traded in real time.”
Such a system consequently allows for the trading of other cryptocurrencies operating on their blockchain, so long as they are on the ICON network.
Nexus Public Channel
Located in the Nexus/ICON Republic, there also exists what is known as, the Nexus Public Channel. This channel is open it all, and primarily exists for users to participate in ICX transactions, or to create decentralized applications (DAPPs). Created DAPPs must be registered in the “DAPP store”, with nodes being required to download the DAPP if they wish to use it.
Each blockchain operating on the ICON network preserves and dictates its own governance. C-Reps of each of the communities are allocated voting rights. Through the use of Representation Channels, it is at the Nexus where C-Reps can propose and vote on changes to different aspects of the ICON network. Policy proposals, and vote casting, are done through representation channels.
Loopchain is at the core of the ICON network and is the blockchain on which the Nexus is built on. Functions that the Loopchain are responsible for include: Management of nodes based on the Loopchain grouping function, Public and Notary Channels due to the Loopchain Multi-Channel function, and lastly, DAPPs are created on the Loopchain.
Core elements of the Loopchain and be divided in four distinct characteristics:
- Consensus – Loopchain utilizes the Loop Fault Tolerance (LFT) consensus algorithm.
- Smart Contract on Reliable Environment (SCORE) – A smart contract feature on Loopchain executes directly in a node’s operation environment.
- Multi-Channel – This function allows for the creation of channels within the same network of blockchains, as well as for the execution of requests, consensus and smart contracts.
- Tiered-System – This grants nodes different levels of access depending on the function of that node.
To conclude, with Loopchain at its core, ICON is a protocol that aims to establish a decentralized network of blockchains to allow for the frictionless exchange of value.