Helium crypto: HNT token falls, towards the end of the IoT project?

Updated 09 Sep. 2022 at 10:54 am

Helium crypto, also called “People’s Network” (“the network of people” in French), had the wind in its sails for a while. However, the momentum gave way to pessimism about the project, which had all the assets to become a heavyweight in the IoT market, the Internet of Things. And despite a growing number of users at the beginning of 2022, the crash of the cryptocurrency sector and questionable decisions have, it seems, got the better of the project. But is this the end?

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Helium crypto, the decentralized internet network

Helium Network was launched in 2013 by the co-founder of Napster, 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 objective of the project is based on access to an internet network or a connection to its network from anywhere directly via a connected object, an IoT such as a smartphone or connected watch.

For this, Helium crypto has built a scalable network through “hotspots” communicating through radio waves. These hotspots in the form of boxes each represent a network node. They are subject to Proof of Coverage (PoC) in order to prove their proper functioning and thus claim a reward in HNT crypto, the native token of the Helium network.

Helium crypto HNT token falls towards the end of the

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

  • The Challengers launch the challenges by emitting a radio signal;
  • The Beaconersalso called Transmitters are targeted by the Challengers. They relay challenges to nodes close to their geographic location;
  • The Witnesses signal their presence and validate their operation.
Helium crypto HNT - Diagram 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 issued every 360 blocks. However, the network tends to increase the rate to 200 blocks.

To complete and strengthen the PoC, Helium crypto implements in its network the Honey Badger BFT protocol (HBBFT). Resistant to censorship, this protocol allows a set of validators to reach consensus even when the connection quality is unreliable. The encryption of operations can only be decoded by the group of validators elected for an epoch, equivalent to 30 blocks.

Helium Network also includes a share of PoS (Proof of Stake) in order to incentivize validators to secure the network via the staking of 10,000 HNT against a reward of 6% of HNT from the reward of 30 blocks.

All these processes are obviously automated and hotspot holders have only 2 obligations to fulfill: to provideelectric energy in order to operate the hotspot and provide bandwidth of their internet network.

Helium crypto aims to make ultra-accessible crypto mining. Indeed, hotspots are available for sale and anyone with an internet network can install a Helium terminal at home.

1662879586 114 Helium crypto HNT token falls towards the end of the

HNT crypto: the network token

HNT is the native token of the Helium blockchain. The first token minting took place on July 29, 2019 at block 93 with a target of 60 million NHT/year.

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

The token issuance calendar is available in open source docs by Helium Network

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 ofincentive for hotspot hosts. The latter being rewarded in HNT, they are required to maintain reliable network coverage.

On the other hand, it acts as a way topay to network users. Companies or individuals must indeed pay operating costs as soon as they connect connected objects such as smartphones or when they wish to create an IoT application.

To be more precise, these operating entities do not make payment in HNT but in DC (Data Credit). These data credits are utility tokens pegged to $USD derived from HNT in an burn transaction where 1 DC equals $0.0001.

Through 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 so as to keep a balance almost perfect based on network usage and new HNT token issuance.

This mechanism gives a character deflationary to HNT crypto.

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

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

These last two tokens are convertible into HNT in order to give them a real economic value, exchangeable on the markets.

Why is Helium migrating to Solana?

Today, the Helium crypto network has nearly one million hotspots spread across 182 countries around the world. For your information, they were only 550,000 at the start of 2022. The network therefore continues to grow rapidly.

Faced with this observation, Helium crypto had to adapt in order to maintain a suitable level of scalability and stay competitive. So in the proposition HIP 70 of August 30, 2022, the draft migration to the Solana blockchain was considered.

“With the shift to more “oracled” activity on-chain, we believe the simplification allows us to select a more scalable Layer 1 for the Helium community, especially Solana. »
– Content of the HIP 70 proposal – Github Helium

The proposal foresees “the integration of HNT, DC, IOT and MOBILE tokens into the Solana ecosystem”. The objective is to open up the field of possibilities. It would allow holders of these tokens to benefit from a wider offer in terms of decentralized applications.

In addition, this migration would allow the Helium network toaccess a more reliable structure. This will be able to support its growth without cutting back on its performance.

This proposal received a mixed receptiondividing the Helium Network community.

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

For good reason, it is a partial redesign of the network’s DNA of Helium which is called into question. Several network services should be removed or at least deeply redesigned.

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

However, the reluctance does not mainly focus on remodeled or discontinued servicesbut more on Solana’s choice to make the biggest change to the Helium crypto network.

Indeed, the recurring breakdowns observed on the Solana blockchain do not seem to the taste of Helium users for whom obtaining a regular, constant and efficient offer are essential criteria.

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

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Is Helium crypto nearing the end?

This skepticism towards the HIP70 proposal will have had an impact on the project’s native token. Indeed, HNT crypto recorded a fall of nearly 50% last week after the announcement that the main developers of Helium. The token touched $3.21, its lowest since the end of February 2021.

HNT is trading at $4.89 currently, its price being boosted by the general excitement around The Merge and the switch from Proof of Work to Proof of Stake on the Ethereum network.

Fall in the price of HNT crypto
Following the announcement, the HNT resumed its fall and lost 40% in a few days
Chart TradingView

Admittedly, the fall of the HNT token is rooted in the bear market that has affected the entire cryptocurrency market. However, where some cryptos manage to hold their own and even see a rise in value, HNT seems to be accelerating its run to the lows since early August.

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

Does this mean that the end is near? Probably not. Indeed, the token risks being heckled and the next few 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 is focused on a niche that is still very little 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.

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

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Helium crypto: HNT token falls, towards the end of the IoT project?

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