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What Is Helium (HNT)?
Helium is a blockchain-based network that connects IoT devices. Helium technology enables communication between the devices, while the system sends data across the network nodes. The nodes that compose the network are known as Hotspots in the Helium system. The Hotspots provide public network coverage and rely on LoRaWAN. LoRaWAN is a media access control layer protocol that has a cloud component to which platforms like Helium can connect.
Helium is one of the biggest LoRaWAN networks with over 25,000 Hotspots that act as nodes on the network. Hotspots combine the power of LoRaWAN and a mining device based on blockchain technology.
Helium is also dubbed “The People’s Network” and aims to prepare an efficient and functional IoT for the future while addressing all the issues and inadequate solutions. One of the biggest problems in the IoT sector is the privacy of popular Internet of Things hubs, such as Google or Amazon. Thanks to decentralization and the blockchain technology used for building Helium, privacy soon won’t be a concern when it comes to connecting devices to the Internet of Things.
How Does Helium Work?
Helium aims to create a reliable, decentralized, and global network for IoT devices that relies on the community of HNT holders. The network consists of nodes, i.e. Hotspots that are run by node operators who are actually HNT holders. By hosting Hotspots and managing nodes, users are incentivized for their participation in the network’s functionality.
WiFi already has support for IoT devices. However, supporting as many different devices as possible brings up privacy concerns. Helium solves this issue using a decentralized architecture and consensus mechanism that gives the network 200 times greater coverage compared with WiFi connection with the IoT.
The consensus mechanism that the network runs on is known as Proof of Coverage, and is also responsible for distributing rewards to HNT holders and node operators. Users need to purchase a mining device from the Helium website to set up Hotspots. Miners produce radio frequencies by connecting to the network, while the Proof of Coverage mechanism validates Hotspot locations.
Network participants can have one of the three roles crucial to the network’s functionality: Challenger, Transmitter, and Witness. The rewards distributed through the system also depend on the role in the Hotspot network.
Who Are The Founders Of Helium?
Helium’s three co-founders Amir Haleem, Shawn Fanning and Sean Carey started the company in 2013.
Haleem has an active eSports and game development background. Fanning, by contrast, is well known for developing Napster, the music sharing service which was one of the first mainstream peer-to-peer (P2P) internet services in the late 1990s.
Carey meanwhile held multiple development roles prior to Helium, which included advertising optimization firm Where, acquired by PayPal.
Helium’s team now consists of members which the company says have experience in “radio and hardware, manufacturing, distributed systems, peer-to-peer and blockchain technologies.”
Governance On Helium
As of June 2021, Helium does not have an on-chain governance system. However, HIP-31 is under discussion and may create a governance model via token burns. Any community member can submit a Helium Improvement Proposal (HIP) on Helium’s Github or Discord to make their voice heard on issues such as token economics, blockchain dynamics, upgrades, and more.
Why Run A Helium Node?
- Running a validator node helps the network function properly and remain secure. It is a critical step to maintaining the shared network state.
- Hotspots continue to earn the majority of rewards for relaying device data and providing the Helium network’s coverage, but now the activity of those hotspots will be verified and recorded to the chain by Helium blockchain validator nodes.
- There is an incentive to be an early participant in the network, as the HNT issued per annum will halve every two years. There is also an incentive to be a long-term participant in the network, which will experience a higher rate of burning HNT as it grows in popularity and more IoT devices require Data Credits to connect to it, lowering overall inflation.
How To Participate On Helium
There are three key players in the Helium blockchain:
- Hotspots provide network coverage for IoT devices in their vicinity
- Validators gather transactions, form blocks, and come to consensus on the state of the chain
- IoT devices use Helium’s hotspots for data transmission needs, paying in Data Credits to do so
Helium hotspot coverage
Hotspots operating on the Helium Network use a long‐range wireless protocol (Long‐Fi) and the operator’s internet connection to broadcast a radio signal to which low‐power devices can connect. Any LoRaWAN device (the standard for IoT) can then connect to the hotspots, making micropayments for the privilege of accessing the network.
Since genesis, Helium has been powered by a novel work algorithm called Proof of Coverage. Proof of Coverage is the method by which a device relays its physical location and ability to provide coverage to the blockchain without having to be trusted by the chain, allowing the network to operate securely across an array of independent, distributed operators. Hotspots on the Helium network are randomly assigned Proof of Coverage “challenges” requiring them to ping nearby hotspots and prove that they are located and successfully transmitting coverage from where they say they are; hotspots earn HNT for successfully completing the tests. Hotspots without neighbors aren’t able to verify coverage and therefore earn less HNT than those that are part of an interconnected network.
As the Helium network has grown in use and popularity, its operators’ consumer‐grade hotspot hardware and internet connections have become less able to simultaneously provide coverage, complete proof of coverage tests, and conduct consensus for the Helium blockchain. With the transition to proof of stake, validator nodes will be randomly selected to perform the work of Helium’s consensus group instead of a randomly selected group of miner hotspots.
Proof of stake validators will verify hotspots’ transactions, perform consensus, and add new blocks to the Helium blockchain, earning rewards in HNT for contributing to the network’s stability. Each Helium validator must have 10,000 HNT staked to it in order to participate. A minimum of 100 validators has been proposed for the active set; once that threshold has been reached, the protocol will begin electing validators from the pool to perform the work of the consensus group. There is no maximum to the active set, incentivizing joining the network as a validator early while the pool to be selected to perform work is lower.
Helium uses HoneyBadgerBFT as its consensus method, a PoS consensus protocol considered robust in less‐than‐ideal network environments. It allows a known group of nodes to reach consensus, even over unreliable connections, by not relying on network timing assumptions and instead acting asynchronously by using a group threshold to achieve censorship‐resistance. This is in contrast to synchronous consensus methods which rely on all messages being passed around the network within the same time period; synchronous consensus is reliant on internet connectivity operating as expected as nodes use network timing assumptions to gauge when all messages have been received.
Validators on Helium are elected to a consensus group, receive encrypted transactions from hotspots, pass them around to the other validators in the group, work together to decrypt them, and reach a common agreement on the ordering of the transactions before forming a block.
Helium’s consensus group
Each epoch (≈30 blocks), the protocol uses a probabilistic beacon to select a number of validators (estimated from a few dozen to the low hundreds) from the total validator pool to form the Consensus Group. Unlike most PoS networks, validators are selected to participate semi-randomly rather than based on the amount of HNT staked. As such, operators optimize their participation in the network by operating as many validator nodes as possible.
Rewards On Helium
Initial token supply
Maximum token supply
Active set of validators
Target staking rate
Expected validator reward rate
Stake per validator
250,000 blocks, ~174 days
Rewards do not compound; once an operator accrues 10k HNT in rewards they may choose to launch another validator
Reward payout frequency
Per epoch, ~30 minutes
Rewards are automatically distributed to the operator’s account
The effective reward rate for validators on Helium is based on the staking rate of the total supply of HNT in circulation; as the percentage of total tokens staked increases, the reward rate decreases. All reward rate estimates are based on the assumption of 10k HNT staked per validator node. At launch there will be no over-staking; a node operator who wants to stake more than 10k HNT must spin up multiple validator nodes in increments of 10k HNT. This per node cap incentivizes participants to distribute their stake across multiple validators, helping increase security and decentralization.
To connect to the internet via Helium’s hotspots, IoT devices make micropayments with Helium Data Credits. Helium Data Credits (DCs) are non‐transferrable USD‐pegged work tokens created by burning HNT; IoT operators can purchase DCs by paying with a credit card or HNT, but the DCs can only be created by burning HNT. The more devices that connect to the Helium network by paying with DCs, the more HNT is burned, making HNT more scarce as the network grows by decreasing the overall inflation rate.
At Genesis in 2019, the Helium network’s issuance target was 5,000,000 HNT per month. This rate will last until August 2021, when the Helium network will experience its first halvening, meaning only 2,500,000 HNT will be issued each month moving forward.
Halvenings will continue to occur every 2 years for the first 50 years of network operation, until the network has reached its maximum supply of 223,000,000 HNT around 2070. No new HNT will be minted from then on. (Note: Originally the maximum supply of HNT was to be 240M. It was reduced by 17M following network complications. All future-looking issuance is projected). There is currently a circulating supply of 91M HNT.
Though Helium has a longer unbonding period than many protocols, the protocol does support transferring stake to a new validator in any wallet. This means that a Helium validator could move their operations to managed infrastructure such as Bison Trails’ without needing to go through the unbonding period.
Key Features And Takeaways Of Helium
Helium is a unique and innovative cryptocurrency project and network that has the following key features and takeaways:
LoRaWAN is a networking protocol which is point-to-multipoint and which uses Semtech’s LoRa modulation scheme to function. Apart from relying on radio waves, how they communicate with the various LoRaWAN gateways is crucial for them to conduct encryption and identification.
The Helium blockchain uses a new consensus algorithm known as Proof of Coverage (PoC) and the mainnet for the Helium blockchain was launched in 2019.
Since its launch, the Helium blockchain has grown especially in parts of North America and Western Europe.
PoC was created specifically for use by the Helium network, and it works to verify hotspots in the network and ensures that they are physically located where they claim to be. In addition, it also ensures that they are honestly representing wireless coverage created by the Hotspot for its specific location.
The success of the Helium network is dependent on it being able to provide reliable wireless network coverage for devices which are connected and actively using the network, which is the motivation behind the creation of the consensus mechanism PoC.
Proof of Coverage relies on three distinct characteristics namely that radio frequencies have limited physical propagation, and therefore distance, the strength of a received radio frequency signal is proportional to the square of the distance from the transmitter, and radio frequency travels at the speed of light with no latency.
Helium is based on a variety of principles namely that it is permissionless, if a hotspot is operating according to the consensus rules of Helium and the network specifications, it is truly decentralised by design, and the protocol is tolerant of the Byzantine failures so that consensus can be achieved.
HNT cannot be mined as result of the unique consensus mechanism that it uses. However, this does not mean that users cannot earn HNT.
The idea of helping the network by running a Hotspot is a welcome idea, albeit altruistic, and Helium has set itself up to offer HNT as an incentive. This means that most people will not simply help the network without expecting something in return.
However, the presence of incentive rewards makes it possible to earn HNT tokens while running a Hotspot. Helium only rewards Hotspots who have earned them once each epoch ends.
Each epoch in Helium is 30 blocks, and the network aims to create a new block every minute. This means that the total theoretical time for an epoch is equal to 30 minutes.
As of April, 65% of the mining rewards are distributed to Hotspots and the remaining 35% is distributed to Helium, Inc. along with some other earlier investors.
Users, and subsequent Hotspots, can be rewarded for all the following activities:
By submitting valid proof of coverage challenges, as a “Challenger”.
The successful participation in PoC as a Target, or “Challengee”.
By witnessing a PoC challenge.
Transferring device data over the network.
Serving as a consensus group member.
The distribution of 65% of rewards for Hotspots can be broken down as follows:
Challengers – 0.95% – Hotspots are chosen by the network to issue challenges, which are encrypted messages, to a target group of Hotspots.
Proof of Coverage – 5.31% – Hotspots can earn a share of HNT when they participate in the consensus mechanism and validate the wireless coverage of their peers.
Witness – 21.24% – These are Hotspots that monitor and report PoC activity, or beacons, of others. They receive a portion of HNT based on the activity that they have witness and the reward scaling of the Challengee.
Network Data Transfer – 32.5% – HNT is distributed to Hotspots who transfer data from devices in the network. The amount of HNT allocated is proportional to the amount of data that a Hotspot transferred.
Consensus Group – 6% – There are Hotspots that are selected, at random, to the Consensus Group to perform a variety of tasks, including the validation of transactions and publishing new blocks onto the blockchain.
Pros And Cons
Is Helium Crypto A Good Investment?
It might be. Although the HNT price predictions are mixed, there is a consensus that the coin will increase in value over the longer term.
Remember, however, that predictions are often wrong, so you should always do your own research before purchasing cryptocurrency and never invest more than you can afford to lose. No matter what the forecasts say, prices can go down as well as up.
The Helium coin price prediction varies depending on who you ask. The cryptocurrency exchange aggregator SwapSpace expects a long-term price increase and considers it a profitable investment. Its HNT price prediction said: “Overall, Helium cryptocurrency has a positive outlook and potentially will continue growing in the future.”
The HNT crypto price prediction from DigitalCoinPrice forecasts Helium to reach $29.12 by the end of the year. Its HNT price prediction for 2025 is for the coin to reach an impressive average value of $40.17.
Gov.capital has an even more optimistic long-term outlook – its HNT price prediction for 2022 is for the coin to break the $70 mark in November this year. It then expects the price to climb steeply, giving a staggering HNT price prediction of $860.40 in five years’ time.
PricePrediction.net also has optimistic projections, suggesting an average price for Helium of $33.91 in 2022, an average of $105.03 in 2025, and a maximum of $767.78 for its HNT price prediction for 2030.