What Is Alephium, the Rhône Upgrade, and the Alephium Ecosystem

What Is Alephium?

Alephium is a Layer 1 blockchain scaling through sharding, offering developers an expressive protocol and users a secure and decentralized experience. 

Key Takeaways

• Alephium is a sharded Layer 1 blockchain delivering a high throughput, proof-of-work, fully smart-contract capable blockchain with a secure, scalable, and decentralized network.

• It operates an innovative POW consensus algorithm that consumes less energy. It also adopts a unique blend of  accounting/Transaction model that combines the UTXO model of Bitcoin and account model of Ethereum.

• Alephium’s Rhône upgrade went live on testnet on May 15, 2024, and promises improved network performance with reduced block time, gasless transactions, and enhanced security.

• Alephium’s decentralized apps ecosystem is growing fast, building around the essential primitives that are DEX, NFT, bridges & current documentation.

• This article discusses how the Alephium blockchain works, key features, and applications in its ecosystem.

Since the beginning, blockchains have balanced the three key aspects of blockchain technology: security, scalability, and decentralization. What sets Bitcoin apart from newer blockchain networks is its reputation as the most decentralized (and secure) blockchain. Newer blockchains score high in performance, but are comparatively lower in security and decentralization. 

Alephium is working on a novel blockchain network that meets the performance and security expectations of the crypto community.  While still at an early stage, the Alephium blockchain is the second PoW blockchain by TVL (with a peak of 60M$ in April across many dapps of its ecosystem and bridge according to data from DefiLlama), has already recorded over 150,000 unique addresses creation, and about 24 million transactions have been executed on the network.

Alephium blockchain’s latest upgrade – Rhône – will bring even more improvements to the network as it continues to work on achieving a sovereign and efficient blockchain network. In this article, we take a closer look at the Alephium blockchain and ecosystem.

What Is Alephium?

Alephium combines novel technologies with improved variants of existing blockchain technology, creating a unique scalable, secure, programmable and decentralized blockchain. 

Developers are enabled to build decentralized applications with ease and allow users to leverage these applications simply and cost-effectively. Currently, Alephium Mainnet can support over 400 TPS with 16 shards (with the potential to scale up to well over 10K TPS by increasing the number of shards). Blocktime is currently at 64 seconds & will drop to 16 seconds with the release of the Rhône upgrade.Transaction fees are comparable to some of the cheapest blockchain networks, while scoring high in security.

Thanks to Alephium’s support for decentralized applications and optimized developer experience, the network’s ecosystem is growing fast with a lot of projects building applications that interact with the Alephium blockchain. The ALPH coin is the native token of the Alephium blockchain, it is issued through Proof-of-Work (POW) mining. As the native token, ALPH is also the gas token of the network.

How Does Alephium Work?

Alephium refines older technologies to develop new and optimized variants that work in synergy with novel technologies to deliver a dynamic decentralized network. The core aspects of Alephium include;

• Sharding and the Blockflow technology

• The ‘Proof of Less Work’ (PoLW) consensus mechanism

• The sUTXO (stateful UTXO) transaction model

• Alephium Virtual Machine – Alphred

• Alephium Asset Permission System (APS)

• The Ralph programming language

Sharding and the Blockflow Technology

Sharding is an approach to scalability in data management that can also be applied to blockchains. Alephium is one of the several blockchain implementing sharding to improve network performance. Sharding splits the blockchain into multiple pieces known as shards where each shard handles a portion of the general network data to allow for parallelized scaling. 

Alephium’s implementation of the Sharding technology is called Blockflow. Leveraging a  distinctive combination with a DAG data structure, BlockFlow delivers a lightweight and efficient sharding process, completely eliminating the need for cross-chain transactions & the complexities that come with it. This approach contrasts with traditional sharding methods in account-based chains, where cross-chain transactions are necessary and result in a significant degradation of the user experience, as well as increased complexities and security considerations.

Proof-of-Less-Work (PoLW) Consensus Mechanism

The classic POW is a resource-intensive consensus mechanism. It requires miners to set up advanced computing facilities and solve mathematical problems to hash new blocks into the chain. While Alephium uses this strategy as it has been proven to be a more secure and pro-decentralization consensus mechanism, it adjusts traditional Proof-of-Work to achieve similar levels of security with a less energy-intensive consensus mechanism. 

This is termed ‘Proof-of-Less-Work’ to reflect the reduced external resources and energy required to mine blocks using the PoLW consensus mechanism. In PoLW, miners on the Alephium blockchain will be required to burn ALPH tokens to confirm a block alongside solving hashing problems. For example, assuming BTC and ALPH have the same value:

• Miners earn 1.25 BTC of mining rewards by spending 1 BTC in equipment + energy costs

• Miners earn 1.25 ALPH of mining rewards by spending 0.15 ALPH in equipment + energy costs and burning 0.85 ALPH. 

While the cost is the same, the energy spent is significantly lowered. To mine ALPH, users will need equipment, energy, and coins. However, at time of writing, PoLW is not activated yet, and will only get activated when the total hashrate exceeds 1 Eh/s.

The Stateful UTXO Transaction Model

Alephium’s sUTXO transaction model combines the security of Bitcoin’s UTXO (Unspent Transaction Output) model with the flexibility of Ethereum’s Account model. It supports mutable states, like those found in Ethereum, for smart contracts while leveraging the security benefits of the UTXO model for assets. This is significant for developers and users, as the ability to have an upgraded account model with a dedicated model for token handling (UTXO) makes it easier to build smart contracts with the assurance of secure asset management.

Alephium Virtual Machine – Alphred

Alphred is Alephium’s custom virtual machine. Like Ethereum’s EVM, it is designed to handle smart contract applications. Alphred understands the Ralph programming language and leverages the smart contract capabilities of the sUTXO transaction to automate transactions as specified by the underlying smart contract code. 

According to the project, Alphred has several distinctions over other virtual machines. Some of these key advantages include increased resilience against MEV (thanks to its MEV-aware design), flash loan resistance, reentrancy & unlimited authorization attacks protection, better user experience for developers, improved bytecode readability, and an overall more secure and agile design.

Smart Contract Technology and the Alephium Asset Permission System (APS)

Alephium introduces the APS, a unique feature that governs asset flow on the network to improve performance and asset security. With the APS, Alephium blockchain users do not need to run multiple approval transactions when interacting with smart contracts as on other smart contract blockchains. According to the project, this gives developers more confidence while developing applications for the network and also reduces the asset approval risks for users.

The Ralph Programming Language

Like Solidity for Ethereum, Ralph is the programming language used to develop smart contract applications on the Alephium network. Ralph comes equipped with numerous checks and built-in controls, to allow devs to focus on what matters. These features act as safeguards, helping them avoid common mistakes and bugs that could compromise the integrity of smart contracts while preserving expressiveness and ease of use for developers.

Now, let’s look at the upcoming Rhône upgrade and how it’ll further improve Alephium.

What Is the Alephium Rhône Upgrade?

On May 15, 2024, the project team announced the deployment of Rhône – the network’s latest upgrade – on testnet. With the Rhône upgrade, the Alephium development team is optimizing core network infrastructures to improve performance, security, and user experience. 

Block Time Reduction

Alephium blockchain currently has a blocktime of around 64 seconds. This initial 64-seconds block time was designed to maintain a balance between fast transaction times and keeping a lightweight and efficient network. 

However, based on the team’s observations of live network behavior and community feedback,  the Rhône network upgrade will introduce a faster blocktime, lowering the interval to just 16 seconds. To achieve this, it will implement a GHOST-like algorithm. The Greedy Heaviest Observed SubTree (GHOST), allows a blockchain network to resolve the network’s state by selecting the state with the most approval by active miners. This reduces the waiting time for adding new blocks and therefore a faster block time.

And 16 seconds is not the end game for Alephium, the project is targeting to further reduce block time.

And 16 seconds is not the endgame!

We've successfully tested block times as low as 4, 2, and even 1 second in a local test env.

In future upgrades, we plan to further reduce the block time following full node optimization.

However, we must carefully assess the overheads. pic.twitter.com/ELLS5LlaEZ

— Cheng Wang (ℵ) (@wachmc) March 28, 2024

Gasless Transactions

With the Rhône upgrade, Alephium blockchain users will be able to carry out smart contract transactions without paying a fee. This is due to the new gasless transaction feature that allows smart contracts to handle the gas payment for transactions they are involved in. The gasless transaction feature is thanks to ‘PayForGas’, a function that triggers smart contracts to make the payment for a transaction. 

Smart contracts will have a defined gas allowance to the tune of which transaction fees they can cover. Alephium developers believe that the gasless transaction feature will also improve the developer experience as it introduces new possibilities while building decentralized applications on the network. 

Reduction of Storage Rent Fee

When deploying a smart contract, developers are currently required to lock 1 ALPH in order to prevent state bloating. Once the developer destroys the smart contract, the ALPH is returned. While 1 ALPH doesn’t seem like a lot, in a case where there are 5,000 NFTs in a collection and  each NFT is a subcontract of a collection, 5,000 ALPHs would need to be locked to deploy the collection. 

With the Rhône upgrade, the new contract deployment storage fee will be 0.1 ALPH. This is to keep in line with the project’s goal of having a good balance between cost and functionality, having room for many contracts, and giving developers an incentive for destroying out-of-use contracts. 

Other Improvements

The Rhône upgrade will also bring other improvements, such as mapping. Mapping offers developers a convenient way to store and retrieve data, where each map entry is implemented as a subcontract, which requires a small deposit that will be returned when the map entry is removed. Alephium will also be upgrading reentrancy protection from a global contract-level lock to a function-level read-write lock. Also, to prepare for PoLW, Rhône will introduce a new address type for PoLW mining to allow miners to use cold wallets for PoLW mining rewards.

In addition, Rhône has also boosted full node performance, improving block execution speed from 1200 BPS to 2200 BPS.

🚀Excited to share we've taken $ALPH's Rhone upgrade a step further with a massive boost in full node performance!

Historical block benchmarks show an 80+% increase in block execution speed, jumping from 1200 BPS to 2200 BPS.

Note: These results are from single-thread tests.… pic.twitter.com/0OMLgRGuuY

— Cheng Wang (ℵ) (@wachmc) May 19, 2024

The Alephium Ecosystem

Alephium houses a lively & growing ecosystem of tools & decentralized applications, ranging from wallets to DEXs and launchpads. 

Alephium Wallets

Alephium has developed a wallet that allows users to connect to decentralized applications in the ecosystem and manage their assets. The Alephium wallet is available for desktop and mobile devices as well as a browser extension. The mobile version is available for iOS and Android devices and can be downloaded from the respective application stores. The desktop wallet (for Mac, Windows, Linux) can be installed directly and the browser extension is available for Chrome and Firefox. 

Alphland and the Alephium Gazette

Alph.land is a database of every dApp on Alephium, allowing users to explore the options available across DeFi, games, NFTs, and more. Users can also filter by the projects’ reputation, such as whether they have a public team and are audited. 

The Alephium Gazette is also a great way for users to keep tabs on upcoming Alephium projects, featuring community articles such as weekly ecosystem updates, AMAs, and more.

Ayin DEX

Ayin DEX is the first decentralized exchange on the Alephium blockchain. It is an AMM DEX, created to build sufficient liquidity for the Alephium ecosystem. At the time of writing, Ayin Swap has already garnered a TVL of over $10 million. Users can swap ALPH coins and other tokens in the Alephium ecosystem, including AYIN, its native token. 

The AYIN token is used for platform incentives for stakers and liquidity providers. Extra user rewards are also distributed in the AYIN token.

DeadRare

DeadRare is the first NFT marketplace to build on the Alephium blockchain. Users can list their NFTs, mint new NFTs, and purchase desired NFTs on the DeadRare platform. According to the project, it doesn’t charge any fee for NFT listing but charges only 2% of the traded amount for successful NFT sales. 

DeadRare hopes to make Alephium blockchain NFTs accessible to every network user. For traders, it offers direct pricing and bidding sale options. Data from the platform claims that over 2,700 NFTs have been sold on the DeadRare marketplace to date in over 144,000 ALPH token worth of trades. DeadRare also offers promotional services for upcoming NFT drops and new collections on the Alephium blockchain.

LinxOTC

LinxOTC is a peer to peer (P2P) platform on Alephium, which makes use of the chain’s atomic swap feature to enable P2P trading and lending. On the trading front, there is no contract or pool involved, and is handled as a ‘regular’ transfer, where both the sender and counterparty must sign the contract, and both parties must have sufficient balance of the selected tokens in the trade. On the lending front, lenders can set out the terms for their loans, while buyers can potentially negotiate the terms with the lenders. As in the case of most loans, there is the risk of liquidation if the collateral value decreases to protect the lender against losses. 

However, as LinxOTC is a P2P platform, borrowing and lending, as well as trades, can only be completed once a suitable counterparty is found. 

AlphBanX

AlphBanX is developing a money market on the Alephium blockchain. Upon launch, it will provide a platform where investors can obtain overcollateralized loans against their assets. The platform will support several tokens like ALPH and wrapped tokens (SOL, ETH, and BTC will be available). Lenders can also commit their assets to the lending pool and enjoy benefits from the interest paid by the borrowers. There will also be auctions that enables liquidators to bid on undercollateralized assets, potentially acquiring ALPH at up to 20% discounts.

AlphBanX plans to launch in 2024 and will also operate a stablecoin backed by a wide range of assets in addition to its native token. The AlphBank native token will be used to reward users and empower them to influence protocol decisions.

AlphPad

AlphPad is the premium launch platform for new projects looking to get started on the Alephium network. It offers a platform for public and private IDOs with extra services for new projects. Alphpad hopes to be the leading launchpad in the Alephium ecosystem, renowned for transforming project launches through advanced, adaptable, and accessible technology. 

For investors on the network, it allows easy access to new projects and provides a fair and comprehensive platform for investments, offering equal opportunity to every investor. For projects launching via AlphPad, it offers facilities for investor whitelisting, management of raised funds, promotional services, and compliance with regulations. APAD is AlphPad’s native token, it is used in platform incentives and grant programs for new projects launching on the Alephium blockchain.

Final Thoughts

Alephium is building a path for a thriving ecosystem, one that takes clues from existing solutions and refines them to retain the key benefits and fix the most pressing issues. The transaction design controlled by the modified UTXO model and APS is a combination of the best features of the Bitcoin economy and an efficiency-focused modification of the smart contract technology on the Ethereum blockchain. The sharding technique has shown tangible effectiveness in the few cases where it is put into operation. Alephium carves a space for itself with the novel technologies that power the key operations of the network.

If you want to know more about Alephium, you can find more info via their website, docs, Twitter, Discord or Telegram.

This article is only meant to educate readers about the Alephium blockchain, its upcoming Rhône upgrade, and its ecosystem, and should not be taken as investment or financial advice. Always do your own research before investing in any protocols and projects.