ICE, Interoperability, and the future of ICON
On June 14th, 2021, the ICON Foundation Twitter account dropped one of the most significant announcements in the history of the project.
By now, you’ve probably read through the tweet-thread. If you haven’t, I encourage you to do so.
The community’s reaction was overwhelmingly positive — as it should be — but there were also a lot of questions on a range of topics.
This article will attempt to explain what ICON’s announcement means along with how it fits in the context of the project’s history and future.
“Hyperconnect the World”
If you’re a holder of ICX — especially if you originally bought in during the 2017 ICO — you’re firmly aware that the project’s goal has always been to “hyperconnect the world.”
Here’s a quote from the original whitepaper:
The ICON Project aims to build a decentralized network that allows independent blockchains with different governances to transact with one another without intermediaries. Anyone can create a new blockchain project and join the network. A new blockchain project is free to connect with existing projects and create new unique worlds, or blockchain multiverse. ICON itself can be viewed as both a living organism and an ecosystem.
In this original vision, the emphasis was placed on institutional blockchains. The core of the thesis from ICON’s beginning days was that ICON’s public chain would serve as a mechanism to allow institutional private chains to communicate and transact with each other in a seamless manner. That’s why the early partnership announcements with various companies were so exciting. They validated what ICON was pursuing.
Another quote from the whitepaper:
ICON is a vision with a proven track record and has progressed beyond the initial concept stage. ICON already boasts communities comprised of reputable institutions — banks, securities, insurance, hospitals, universities, and more. A future with faster money remittance and frictionless value exchange of securities, medical records, academic data, insurance fees is within our reach.
While the project itself continues to pursue this route — with aid from their technical partner, ICONLOOP — the blockchain world has changed quite a bit over the past four years since this original vision was established.
One of the tweets in the ICON Foundation’s thread cites an article from 2019 articulating the belief that blockchains weren’t just…blockchains. They were in fact becoming much more than that. They weren’t just distributed spreadsheets that allowed transactions. They were becoming “digital nations.”
Meetup after meetup, conference after conference, conversation after conversation, we hear the same thoughts on how to think about blockchain technology. Most people compare blockchains to the internet, large tech companies, or operating systems (iOS, Android, Linux, etc.).
While the temptation to make such comparisons is clear, it is an understatement to call a blockchain a tech company, an operating system, or even the internet. Blockchains have government, economics, rules & regulations, penalty structures & fines, bank accounts, infrastructure, and diehard supporters. Adding all this up begins to look familiar; it begins to look like a nation.
I encourage you to read the entire article (it’s not long). While it wasn’t overwhelmingly noticed by the community at the time, in retrospect it was a bit of a pivot toward a broader and more ambitious vision for the original “hyperconnect the world” vision.
In summary, blockchains are evolving toward actual digital nations in the fact they all have unique characteristics when it comes to governance, their economic structure, and their community. (Similar categories that make real-world nations unique and different).
Blockchains became much more than just blockchains. They offer tremendous room and resources for growth, development, and advancement. They’ve developed their own histories, experimented with varying governance and economic structures, and offer advantages and disadvantages relative to others.
And within these nations are sub-categories of organizations — the best analogy being businesses — that serve to add value to the nation’s citizens (aka, the community).
In the article, this is articulated generally as a decentralized autonomous organization (DAO):
The existence of digital nations enables the existence of Decentralized Autonomous Organizations (DAOs). In the same way that a blockchain is an evolution of a nation, a DAO is an evolution of a company. A DAO can provide interesting benefits for both creators and participants.
These organizations will benefit from the freedom offered by their digital nation; freedom of money, freedom to participate, and freedom to pursue one’s interests regardless of jurisdiction. They exist outside of the borders of any one country, solely existing on the immutable ledger of its respective digital nation.
Just as it benefits both Chinese citizens and the Coca-Cola corporation for Coca-Cola to operate in China, so should it benefit both a DAO and a separate blockchain for that DAO to have a presence on that blockchain.
Yet, at the time (and debately still today), blockchain infrastructure made that impossible. If you wanted to utilize Maker DAO in 2018, you had to do it on Ethereum. The analogy would be the only way to drink Coca-Cola is to live in America. For obvious reasons, this is bad for both Coca-Cola and anyone who doesn’t live in America. Similarly, Maker DAO existing only on Ethereum is bad for both Maker DAO and everyone who does not own Ethereum.
This is where the Blockchain Transmission Protocol (BTP) technology comes into play. Here’s a description of BTP back from 2020:
BTP (Blockchain Transmission Protocol) is a standard that renders heterogeneous blockchains interoperable, including blockchains that entail completely different consensus models and algorithms. Here, we define interoperability as the ability to facilitate value transfer, service invocation, and data exchange. These siloed operating blockchains can securely anchor transactions through a universal standard as a trustless settlement layer.
If you’ve been following ICON for a while now, you’re aware that BTP is ICON’s core, fundamental technology, and at this point is essentially unmatched in the blockchain industry.
Here’s Scott Smiley of ICX Station with a brief overview of what makes BTP unique:
BTP itself is actually quite exciting, and as ICON 2.0 gets closer to launch we’ll be sure to promote it more. Unlike every other interoperability protocol I have seen, BTP does not require any trust of the Relayer and there is no game theory necessary. Everything is verifiable and secured via the BTP smart contracts. Relayers can’t collude to steal money, and this is unique among decentralized interoperability solutions that I have seen.
As you can see, what BTP is trying to accomplish is certainly different — and evidently better — than what others are offering. That’s why the Foundation didn’t hesitate to predict ICON would “become the dominant aggregator chain” earlier this year.
At this point, we have ICON’s thesis that blockchain is growing into a land of digital nations, along with their core piece of technology, BTP.
Accordingly, the obvious next step is to leverage both by connecting these nations.
Now, ICON’s original entry into blockchain was predicated on the idea that institutions and their private chains would need a mechanism to connect with one another. Institutions had come to ICON’s parent companies asking for such a feature — which is why they knew such a use case existed. It’s why the MyID Alliance has been able to accumulate nearly 100 partners.
But another use case for cross-chain technology has emerged over the past year or so: DeFi.
If there’s one thing that the recent history of blockchain has shown, it’s that DeFi users are always more than willing to move money around in order to maximize their yield, hedge risk, or generally try out different ways to earn passive income. Being able to move seamlessly from one Ethereum DeFi protocol to another has been exceedingly valuable, and the growth of layer 2 solutions such as Polygon to allow even more options shows there’s a market for this.
That’s ultimately what ICON is hoping to capitalize on — the clear desire by blockchain users to be able to move their assets to the applications (or chains) that are the most advantageous for a certain activity.
As a result, it appears the core ICON network will dedicate most, if not all, of its efforts moving forward toward growing the BTP ecosystem and “specializing” in interoperability.
We’ve already seen some of this start to come to fruition with the announcement of a Polkadot integration. We’ve received a number of hints (including the Tweet above) that many more integrations were to come. Building out BTP isn’t like flipping a switch — there are contracts to be written and implemented on other chains. But once that work is done, the actual use of BTP is essentially frictionless for users.
Meanwhile, over the years, there are other aspects of ICON that don’t necessarily directly relate to interopability. Namely, the development of decentralized applications and DeFi protocols such as Balanced, OMM, Equality, Optimus, EPICX, ICONbet, and others. Of course, they stand to benefit from interoperability. But these applications fall more in the category of populating our “digital nation” and creating a thriving ICON economy.
One of the most difficult challenges any blockchain faces is recruiting developers to build on it. Due to Ethereum’s “first mover” advantage in the smart contract space, it has plenty of developers who know how to utilize its language, architecture, and resources.
ICON, due to its different language and SCORE architecture, requires additional learning prior to development. As a result, there’s a bit of an obstacle to getting developers on board. They have to really want to build on ICON in order to get over that educational hump. This hasn’t made it impossible of course — our ecosystem has plenty of talented developers — but it has made it harder.
That’s where ICE comes into play.
Now, you may have seen the phrase “EVM-compatible” before, but haven’t been sure what it means. It stands for “Ethereum virtual machine”. Chains that are EVM-compatible have contracts written in Solidity — the same code Ethereum runs on, meaning if you know how to develop on Ethereum, you’ll know how to code on ICE.
It can also utilize a number of tools that are Ethereum based. For example, MetaMask is probably one of the more recognizable and commonly used Ethereum tools. EVM-compatible chains are able to use Metamask as a wallet if they choose, and have access to a number of other Ethereum tools as well.
In other words, EVM-compatible means that building on ICE will essentially be the same as building on Ethereum.
Even better is the fact that it’s possible to copy existing Ethereum DApp code and deploy it in minutes. This doesn’t mean developers will simply copy and paste existing protocols. What is more important is that it makes it easier to build upon what’s already proven successful (and secure).
For example, with an EVM-compatible chain, the Balanced team could have copied the code of Maker and re-written portions of it in their vision. Instead, under our current architecture, they had to start from scratch, taking nearly a year and a half to securely launch the protocol.
As an added bonus, ICE will also be in a position to accommodate upcoming upgrades via Ethereum 2.0:
I don’t need to get too technical here, but all you need to know is “eWASM” will be the upgraded equivalent of EVM on Ethereum 2.0 when it launches.
So now we’ll have two blockchains. The original ICON, and ICE.
Why the split?
At a certain point, “trying to do everything” becomes a burden. Evidently, that’s the point ICON has hit. Rather than a network that tries to serve as both an epicenter for interopability AND an ecosystem for DApps, it ultimately made more sense to just separate the two. In addition, while ICON 2.0’s ecosystem and architecture carry a clear number of benefits — especially as it relates to accommodating BTP — it would be difficult to make it EVM compatible (for example, ICON 2.0 is written in Go, not Solidity), as it would require months of time and resources.
It ultimately made more sense to just create a sidechain that was EVM-compatible but still retained the umbrella of the ICON ecosystem. And of course, with BTP implementation, moving from one to the other will be as seamless as if they were never divided to begin with.
Of course, you can’t have a blockchain without a token used to pay transaction fees. That’s where ICE comes in. And the ICON team has (correctly, in my opinion) decided the best way to distribute this token is through an airdrop.
Meanwhile, ICX will still serve as the governance token for both ICON and ICE:
It sounds as though ICONists (and ICEists(?)) will have a chance to use their ICX to validate on either ICE or ICON, and potentially move their tokens based on which network is currently offering more lucrative rewards (staking ICX on ICE will earn voters ICE, just as staking on ICON earns ICX).
So now we have two blockchains. One is ICON core, focused on BTP. By dedicating efforts solely on BTP, we give the team a clear vision to focus on BTP implementation and to gear the chain’s infrastructure toward optimizing BTP.
The other is ICE, built for developers and dedicated to continuing to foster DApp growth and expansion.
Hopefully by now you can see why this is such a big deal for ICONists. The Foundation believes BTP will be so significant and utilized it will require its own chain, and in doing so has created an opportunity for the ecosystem as a whole to tap into the widespread resources of the Ethereum community.
There are still a number of details on how this will all be implemented, and certainly the Foundation will be putting them forth in the coming days and weeks. These are exciting times for ICON!