Graphite Network has launched its proprietary layer-1 (L1) blockchain, introducing an alternative designed to handle high transaction volumes with faster speeds and lower costs.
Graphite aims to tackle the limitations of Ethereum’s mainnet, which currently handles 15-20 tps. The team behind the project claims that it can process up to 1,400 transactions per second (tps) and achieve confirmation times under 10 seconds.
Ethereum Scalability Issues
As of December 2024, Ethereum (ETH) had risen over 80% year-to-date, underperforming compared to other top cryptocurrencies like Bitcoin (BTC) and Solana (SOL), which gained 154% and 206%, respectively.
Ethereum performance in 2024 | Source: CoingeckoBTC continued to attract investor attention due to its stronger deflationary model and efficient store-of-value narrative. Solana’s performance advantages made SOL a preferred asset among DeFi and NFT developers.
While Bitcoin’s fixed supply and meticulously regulated inflation controls positioned it as a beacon of security, stability, and predictability, Ethereum’s net issuance was curtailed by a decline in gas fee burns. CoinShares’ latest analysis revealed that the proliferation of layer-2 networks like Arbitrum and Optimism had siphoned activity away from Ethereum’s primary layer-1 chain, reducing ETH supply burns to almost zero and diminishing the efficacy of Ethereum’s once-celebrated deflationary framework.
Moreover, competing L1 blockchains with faster transaction processing and lower fees, such as Solana, saw exponential growth in their user bases. The number of monthly active addresses on the Solana network reached 138 million in October, marking a 245% increase since August. Simultaneously, Solana’s total value locked (TVL) surged, with year-to-date inflows capturing 2.7% of Ethereum’s TVL. Overall, the Ethereum network has experienced $6 billion in net outflows in 2024.
Graphite Network Aims to Address ETH Scalability Issues
Graphite employs the Proof-of-Authority (PoA) consensus mechanism bolstered by the Polymer 2.0 algorithm. It leverages a network of authorized nodes for block validation. This method is believed to enhance efficiency by reducing the computational and energy demands characteristic of conventional Proof-of-Work systems.
Marko Ratkovic, the CTO at Graphite Network, told Cryptonews that their blockchain addresses common challenges to crypto adoption, including a lack of trust, fears of financial loss, and concerns about scams, ultimately increasing user confidence.
“Graphite marks a step forward by merging blockchain technology with a trust-based, inclusive financial model that enables both TradFi and Web3 users to participate securely,” he said.
Entry Node Rewards
Moreover, income generation is limited to validator nodes with substantial resources in other blockchains. Graphite’s transaction architecture introduces a passive income opportunity for entry-point (transport) nodes. Graphite will reward transport node operators with 50% of fees passing through their nodes while allocating the remaining 50% to block sealers.
Reputation-Based Blockchain
Another goal of Graphite is to bridge traditional finance (TradFi) with the core mechanics of Web3. They’ve introduced the following features:
Account activation: Before starting with Graphite, each user activates their account with a small fee, enforcing the blockchain’s “One user, one account” policy to prevent multiple disposable wallets often associated with fraudulent activity. Multi-layered KYC verification: Graphite implements a tiered KYC system, starting with basic social media verification and expanding to higher levels in future releases. It gives users and businesses flexibility in managing their privacy without compromising transparency. KYC transaction filters: With Graphite, users can establish KYC transaction filters to block interactions with accounts that don’t meet their verification standards. Meanwhile, businesses can create custom, reputation-driven smart contracts tailored to specific user profiles. Trust Score: Similar to a credit rating in TradFi, a Trust Score metric underpins all reputation-based interactions on Graphite. It shows each account’s credibility, which relies on factors like KYC level, transaction history, etc.In addition to that, Graphite upholds privacy by using Zero Knowledge Proof technology for data verification and conducting all KYC processes off-chain. This approach ensures that a user’s sensitive data is never published on the blockchain, with only the final KYC level of a given wallet shared with Graphite.
Moreover, the Graphite network has tagged addresses, which allow users to label wallets linked to specific entities. This functionality ensures proper fund usage while detecting any misuse on the blockchain. Graphite’s smart contracts can automatically block transactions from that source when the address is flagged as suspicious.
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