PegNet Interview With David Johnston
In today’s PegNet interview you will learn about this well-known project in the low cap community. Mainnet was successfully launched in August 2019 after a long development. It was quickly recognized and listed by qTrade. Miners will want to know that PegNet has a CPU friendly mining algorithm called LXRHash. Check out Orax pool if you’re going to start mining right away.
You have probably noticed that we are tracking PegNet developments in MyAltcoins Recaps every month. As a part of the April 2020 recap, PegNet reached the top 3 most active altcoins of the month, and we featured it on Twitter. We decided to go a step further and sit down with David A. Johnston to give our readers an overview of PegNet and explain its unique decentralized take on stablecoins. We asked him a bunch of questions which turned out into a fully-fledged PegNet interview. Enjoy the read.
Can you tell us a bit about yourself and the role you have in the PegNet team?
I’ve been in crypto since 2012. Most people know me for coining the term “Dapps” in 2013 and helping with many of the early protocols in the crypto space. As for roles, there is no formal PegNet team. I act as a miner in the PegNet ecosystem, and I use the system as a trader.
Briefly explain the main PegNet use case and the long term vision that will differentiate it from competing stable coin projects.
PegNet is a collection of pegged assets that include the top 20 fiat currencies, top 20 cryptocurrencies, and Gold + Silver. The pAssets in the system can be swapped between each other for only $0.001 no matter the amount. As for reasons to use PegNet, it is truly decentralized. No foundation, no ICO, no pre-mine and so forth. When regulations come down on stablecoins, PegNet will be one of the few that can stand the test of time.
What were the main reasons for choosing Factom as a PegNet base layer? Are the recent Factom Inc. insolvency issues affecting PegNet in any way?
The Factom protocol is used globally by many companies and governments. Its cost of only 1/10th of a penny for a transaction is very compelling and the tech is built for securing data such as PegNet’s oracle prices. The Factom blockchain has 50+ Federated Servers, that way the status of any one of the companies involved has no effect on the blockchain as a whole (even Factom Inc.) which was the first of the Federated Server operators.
PegNet interview wouldn’t be complete if we didn’t touch upon funding. Since PegNet doesn’t have a premine or dev block reward, how is development funded?
Development is funded in PegNet by users pledging rewards toward the features they want to see built. Already 21 million PEG has been awarded to devs around the world for their work on PegNet by the community.
PegNet miners play a different role than in other blockchains, what is the main difference? At the same time, can you go over PegNet supply economics, why was the unlimited supply model chosen?
PegNet miners report oracle prices to the network. This was done so that PegNet would be fully decentralized. PegNet rewards miners 5,000 PEG per block and stakers 5,000 PEG per block. This model was selected to avoid the block reward ever running out. Which consequently ensures that incentives are constant.
How do pAssets achieve stability or a PEG to the underlying assets? Pun intended. We also noticed that for example, pUSD price on exchanges is much lower than $1, what is the underlying cause?
In the case of pAsset on the PegNet network, the prices are set by the globally distributed miners that submit the prices for all 40+ pAssets every 10 minutes. Though in the case of pUSD the software literally hard codes it as $1 USD as that is the base pricing of all assets in PegNet.
Miners are pulling prices from various sources: ChainLink, Coincap.io, CoinMarketCap.com, PegNetMarketCap.com ForEx API, and so forth. It depends on the pAsset. If an API is not available, the miner automatically selects a different one that has the data they need.
Bootstrapping the liquidity for the pAssets on external exchanges is the next big hurdle for PegNet now that mining and conversions are well established. There are several proposals that will help with this, including PIP 10 to open PEG conversions and PIP 12 to enable Staking of pAssets.
How does PegNet achieve practically free asset conversions without a spread? What are the limits on the number of conversions (per second) that the PegNet network can handle?
PegNet uses the Factom blockchain cost of an entry credit of $0.001 as the basis for its conversion cost. The Factom blockchain can handle a large number of conversions in every block – blocks are 10 minutes in length. Thousands of entries in a block have been seen already and handled without issue.
Do you think that the lack of privacy features could deter some users from using PegNet for conversions as it reveals their transaction history to the public? We know that many reading this PegNet interview are big on privacy.
The privacy model of PegNet is the same as Bitcoin. There is no connection between a person and an address, but certainly, there are different ways to improve privacy. pAssets are also available as ERC-20 style tokens on Ethereum, so any privacy feature of Ethereum will be available to PegNet. Factom address type pAssets perform conversions in a PegNet wallet, and the resulting ERC-20 versions of pAssets can be sent and received from any Ethereum address.
Let’s touch upon the 51% attack that happened on PegNet in late April-2020. What are the key takeaways and which protections does PegNet have in place to protect its users? Was the Chainlink integration arranged as a response?
The 51% attack was unable to take any user funds because PegNet has no central reserve – that is the key. The Chainlink integration is excellent but making it a source of data for miners won’t by itself prevent future attacks. You can see my article here about how PegNet will improve to avoid bad miners, API errors, and front running attacks going forward.
Lastly, what is the next major milestone in PegNet development?
The next major milestone for PegNet will be closing all these attack vectors that have been identified and opening up PEG liquidity and staking which is the key to increase the speed that prices on PegNet and external exchanges come back together. Along these lines, the tools introduced by pTrader and pWallet the last few weeks are making it much easier for the average user to use PegNet and run the arbitrage cycle.
That concludes the PegNet interview. Thanks to David Johnson for sitting with us and patiently answering all of our questions. We covered a fair share of PegNet related topics and gave a good overview of its ecosystem. Thanks for reading.
Petar & Ana