HNT token falls, towards the end of the IoT project?

Updated Sept 09. 2022 at 10:54 am

Helium crypto, also known as the “People’s Network” (“the network of people” in French), was in full swing for a while. However, the momentum gave way to pessimism about the project, which had all the makings of becoming a heavyweight in the IoT market, the Internet of Things. And despite a growing number of users at the beginning of 2022, it seems that the crash of the cryptocurrency sector and questionable decisions have taken over the project. But is this the end?

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Helium crypto, the decentralized internet network

Helium Network was launched in 2013 by Napster co-founder, Shawn Fanning, accompanied by Sean Carey and Amir Haleem. It is a blockchain network focused on the development of physical, wireless networks and decentralized.

The main goal of the project is based on accessing an internet network or connecting to the network from anywhere directly through a connected object, an IoT such as a smartphone or connected watch.

For this, Helium crypto has built a scalable network by means of “hotspots” that communicate via radio waves. These box-shaped hotspots each represent a network node. They are subject to Proof of Coverage (PoC) to prove their proper functioning and thus claim a reward in HNT crypto, the native token of the Helium network.

The Proof of Coverage is based on 3 stakeholders, each with a very specific role and testify to the quality of the Helium network. They follow a specific process called “Challenge”, performed over radio frequencies. These challenges are intended to confirm the geographic location of hotspots and identify faulty ones.

  • The Challengers launch the challenges by broadcasting a radio signal;
  • The beaconsalso called channels are targeted by the Challengers. They pass challenges to nodes close to their geographic location;
  • The To give evidence signal their presence and validate their operation.
Helium crypto HNT - Schematic on how Proof of Coverage works
Simplified diagram of proof of coverage used by Helium Network

To note

According to Helium Network, a challenge is handed out every 360 blocks. However, the network tends to increase the speed to 200 blocks.

To complete and strengthen the PoC, Helium crypto is implementing in its network the Honey Badger BFT Protocol (HBBFT). This protocol resists censorship and allows a number of validators to reach consensus even if the connection quality is unreliable. The encoding of operations can only be decoded by the group of validators chosen for an era, equal to 30 blocks.

Helium Network also includes a share of pos (Proof of Stake) to incentivize validators to secure the network through the 10,000 HNT stake at a reward of 6% of HNT of the 30 block reward.

All these processes are of course automated and hotspot holders only have to meet 2 obligations: provideelectrical energy to operate and provide the hotspot bandwidth of their internet network.

Helium wants to make crypto ultra-accessible crypto mining. There are indeed hotspots for sale and anyone with an internet network can install a Helium terminal at home.

HNT crypto: the network token

HNT is the original token of the Helium blockchain. The first token minting took place on July 29, 2019 in block 93 with the aim 60 million NHT/year.

However, with the approval of the HIP 20 community, this target is scaled back every two years. the adoption ofa halving mechanism the number of tokens minted per year is halved. The issuance rate is currently 30 million per year, or 2.5 million per month. By 2023, this figure should be further reduced to 15 million HNT per year.

The token issuance scheme is available in the Helium Network open source documents

The current supply reaches 125 million tokens, which is half of the maximum supply defined by the project.

The HNT crypto plays a central role in the development and use of the network.

Initially, the token plays a role of:incentive for hotspot hosts. The latter are rewarded in HNT and are required to maintain reliable network coverage.

On the other hand, it works as a way to pay to network users. After all, companies or individuals have to pay operating costs as soon as they connect connected objects such as smartphones or when they want to create an IoT application.

To be more precise, these operating companies do not pay in HNT but in DC (Data credit). These data credits are: utility tokens linked to $USD derived from HNT in a burn transaction where 1 DC equals $0.0001.

Due to a balance of Burn and Mint, DCs are obtained by burning HNT tokens. The number of DCs created obviously depends on the fiat value of the HNT token. These are also burned to: keep balance almost perfect based on network usage and issuance of new HNT tokens.

This mechanism gives a character deflationary to HNT crypto.

With the massive shift to 5G, a new token has emerged in the Helium crypto ecosystem. It is about MOBILE token which rewards operators of 5G hotspots on the existing Blockchain Helium. The maximum supply is 250 billion tokens.

Finally, a final token called IoT recently published. The latter serves as a reward for the operators of the original LoRaWAN network.

These last two tokens can be converted into HNT to give them real economic value, redeemable in the markets.

Why is Helium migrating to Solana?

Today, the Helium crypto network has nearly a million hotspots spread across 182 countries around the world. FYI, they were alone 550,000 early 2022. The network continues to grow rapidly.

Faced with this observation, Helium crypto had to adapt to become a appropriate level of scalability and stay competitive. For example, in the HIP 70 proposal of August 30, 2022, the concept migration to the Solana blockchain has been considered.

“With the shift to more “oracled” operations in the chain, we believe the simplification will allow us to select a more scalable Layer 1 for the Helium community, especially Solana.”
– Content of the HIP 70 proposal – Github Helium

The proposal provides for “the integration of HNT, DC, IOT and MOBILE tokens into the Solana ecosystem”. The goal is to unlock the field of possibilities. It would allow holders of these tokens to take advantage of a wider range in terms of decentralized applications.

In addition, this migration would enable the Helium network to:access to a more reliable structure. This will be able to support its growth without sacrificing its performance.

Receive this proposal a mixed receptionthat divides the Helium Network community.

When some see one growth opportunity safer and more efficient, others, on the other hand, see all the inconveniences caused by this hypothetical migration.

Not for nothing is it a partial redesign of the network’s DNA of helium being questioned. Several network services need to be removed or at least thoroughly redesigned.

This is the case, for example, in the case of strikes. Formerly possible on the Helium network by validators for a reward in HNT, staking must be transferred to a DAO and no longer to the main network.

However, the reluctance is not mainly aimed at: renewed or discontinued servicesbut more about Solana’s choice to make the biggest change to the Helium crypto network.

Indeed, the recurring failures observed on the Solana blockchain do not seem to appeal to Helium users for whom obtaining a regular, constant and efficient supply is essential criteria.

The vote on this proposal will take place on next September 12.

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Is the end of Helium crypto getting closer?

This skepticism towards the HIP70 proposal will have had an impact on the project’s original token. Indeed, HNT crypto registered a drop of almost 50% last week after announcing that the main developers of Helium. The token hit $3.21, its lowest level since late February 2021.

HNT trades on $4.89 currently, its price is being pushed up by the general excitement surrounding The Merge and its move from Proof of Work to Proof of Stake on the Ethereum network.

Fall in the price of HNT crypto
After the announcement, the HNT resumed its fall and lost 40% in a few days
TradeView chart

Admittedly, the fall of the HNT token has its roots in the bear market that has affected the entire cryptocurrency market. However, where some cryptos have managed to hold their own and even rise in value, HNT seems to be accelerating its course towards the lows since early August.

HNT is currently trading below the moving averages of 50 and 200 in Daily. The downward trend has been pronounced for several months. It was accentuated crossing of these two MM last February.

Does this mean the end is near? Probably not. Indeed, the token is in danger of being disrupted and the coming days will undoubtedly be decisive. the vote on the HIP 70 proposal should shed more light on the future of the Helium crypto ecosystem.

Especially since the project targets a niche that is still very under-exploited in the IoT. Add to this the more than remarkable growth in the number of users of its network and theincrease in the number of hotspots deployed.

Cryptocurrency has many use cases like Helium for IoT. Blockchain technologies are spreading in all areas as they provide transparency and security. To dive into the heart of these technologies and the economy of the future, you can join the Crypto Rider training.

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