NKB Group Review: Ethereum, VeChain, Waves, NEO Ongoing Development Examined

Omar Faridi
  • Full-service investment bank NKB Group, has documented the ongoing development of Ethereum, EOS, and other major DApp/Smart Contract supporting platforms.
  • Scalabiliy, security, governance models, decentralization versus centralization for blockchains are noted.

NKB Group, a full-service investment bank focused on crypto assets and blockchain technology, recently published its review of Distributed Ledger Technology (DLT) platforms. NKB’s newly released market report noted that factors “restraining” enterprise-level use cases and “mass adoption” of blockchain include their governance models, “economic characteristics”, and the type of technological framework they use.

The crypto industry review criticized the Ethereum platform for not having a “regulatory layer” which “makes it easy to create scam schemes.” In order to comply with regulatory guidelines, blockchain-based platforms such as NEO and VeChain use “centralized validation”, an approach which is often criticized by proponents of peer-to-peer (P2P) networks.

Second/Third Generation Blockchains

NKB’s review further noted that newer, or so-called second-generation, cryptocurrency platforms such as EOS, IOTA, and Hedera Hashgraph (a “less technically constrained” DLT-based crypto network) may be able to scale effectively. However, they may be prone to centralization and compromise on security.

One of the main factors that determine a platform’s success is whether it has an active and “supportive” community, according to NKB. Their write-up mentions that the Waves platform, which recently reported that over 1 million of its multi-currency wallets had been created, has a good community that actively contributes to its ongoing development.

"Sustainable" 1 GB Internet Connection For Validators

According to NKB, a blockchain-based network’s scalability, specifically the number of transactions it can process during a given time period, is determined by the consensus protocol, hardware technology, and internet connection used by its full-node validators.

The investment bank’s research document explains that a “sustainable connection of a gigabyte” (1 GB) would be required to process 400,000 transactions per second (TPS) - provided all the other operational requirements are met. Notably, an internet connection of this strength is only available in a few OECD countries, which include the UK, United States, Luxembourg, among other highly developed nations.

NKB’s report also notes that the Ethereum blockchain may potentially process over 50,000 TPS while the EOS and Cardano networks may potentially handle over 1000 TPS. At present, the Ethereum blockchain is settling only 14 TPS, and Cardano (testnet) and EOS are processing less than 100 and less than 199 respectively.

Tezos, Recursive SNARKs

In order to help existing blockchains scale, the developers of the Tezos project (a platform designed to resolve governance issues with DLT networks) - particularly Arthur Breitman - has recommended that chain validation be performed via recursive SNARKs.

Currently, the Zcash platform uses zk-SNARKs technology to “protect the privacy of transactions”- which is something Ethereum co-founder Vitalik Buterin recently examined as he believes it may help the Ethereum blockchain scale to 500 TPS.

Other ongoing blockchain scalability approaches being worked on include the Lightning Network (LN), Ethereum’s Sharding and Plasma, and Ethereum Raiden, NKB’s report noted.

As mentioned, security issues and vulnerabilities such as 51% attacks, implementing proper governance systems, roadmap, and the level of community involvement, or participations, are all documented for the following projects: Ethereum, EOS, Cardano, Waves, NEO, NXT, VeChain, and Lisk.