Helium — the Network of Networks. Listing HNT in Tokenbase.
The Helium Network is the largest public low-power wide-area network (LPWAN) in the United States. The initial plan of the company was to route data for LoRaWAN-enabled devices. The aim is to enable IoT devices to connect to the Internet by providing publicly maintained P2P infrastructure (software and hardware). Helium maintains its own distributed ledger and sells pre-build hardware devices called Hotspots. Hotspots act as nodes in the network and have two main roles: (1) provide network coverage for IoT devices and (2) secure the Helium blockchain network (act as miners).
Authors: Valentin Kalinov, Christian Viehof
How it works?
Wireless network coverage is provided via purpose-built hardware called Hotspots. The devices are connected to power and to the Internet. Users can buy the certified hardware online and set up the Hotspot at their home or any location worldwide.
The Helium network is a decentralized wireless network that enables devices anywhere in the world to wirelessly connect to the Internet and geolocate themselves.
The Helium data network is managed by a distributed ledger network with a native protocol token incentivizing a two-sided marketplace between coverage providers and coverage consumers. Coverage providers are awarded for maintaining the distributed ledger network as well as providing bandwidth to IoT devices. Consumers (mostly machines in the form of IoT devices) pay for data consumption. The Helium distributed ledger manages all transactions. Powering the network is a purpose build blockchain with a unique consensus algorithm called Proof-of-Coverage. Miners are obliged to prove that they are providing wireless network coverage to devices by submitting proofs which are then audited and verified by miners.
In the Helium network Hotspots also act as miners in their blockchain network. The system introduces a native token called HNT. HNT is mined and distributed between three network stakeholders; (1) Hotspot Owners, (2) Helium Inc., and (3) Investors. The proportions are predefined by the Helium team. In the early stages, HNT tokes were used (and are still used) to facilitate the economy around the Hotspots since no devices were using the network.
The network uses a second token called Data Credits which are non-transferable and non-exchangeable. The price of Data Credits is fixed. This way, devices connecting to the network can use the Data Credits as a medium of exchange while not worrying about price fluctuations. Data Credits (DC) can be acquired with HNT tokens by the process of burning HNT for DC. You can think of Data Credits like mobile minutes someone might purchase for a prepaid phone plan.
After the successful start of the Helium network, the community decided to expand its services. Once proven, the model of incentivizing distributed wireless networks could be applied to any wireless protocol. In October 2021, Helium announced a 5G network coverage only available in the US. However, the 5G hotspots are not cheap. One can easily look at $1500 for a device, and the return on investment is not guaranteed. The first iteration of the 5G network will be launched in Q3 2022. People will be able to use the network with mobile carrier plans.
Helium Chapter 2
Helium uses a decentralized governance mechanism called Helium Improvement Proposal system known as the HIP process. Since the Helium incentive model could be applied to any network type, the community proposed to evolve Helium into a network of networks. The process will streamline the launch of any kind of network on top of the Helium protocol. HNT and Data Credits will become the economic engine for all network protocols. Each network protocol receives HNT based on the size and utility of that network.
“The first new network protocol to launch under this proposed system would be Helium 5G. 5G Hotspot owners would earn a new token, called MOBILE, for providing 5G coverage via a new Proof-of-Coverage system or by transferring data across the network via Data Credits. Existing LoRaWAN miners begin earning a new token, called IOT.”, https://blog.helium.com
Over the past two years, users have spent over $250M buying hotspot hardware. While early adopters have enjoyed sizable returns on investment, others have not been that lucky. In addition to that, the HNT token is still used to subsidize the network expansion. With more devices added to the network, many users saw their revenue streams drop. This is also very dependent on the location and density of hotspots. However, the LoRaWAN network hasn’t been enjoying the expected adoption numbers. Helium’s total revenue is $6.5k/month. Members of the r/helium subreddit have been increasingly vocal about seeing poor Helium returns. On average, they spent $400–800 to buy a hotspot. They were expecting $100/month, enough to recoup their costs and enjoy passive income. However, some earnings have dropped to $10 dollars a month which is mostly the HNT token subsidizing the hosting. Once the network rewards, disappear hotspot owners will be left with the earnings from data usage, which at the moment is almost non-existent.
The classification of HNT according to the ITC:
Economic Purpose (EEP): HNT is listed as a settlement token (EEP22TU01) similar to the other stablecoins in the industry.
Industry Type (EIN): The issuer of HNT (Helium Inc.) is active in the field of Internet of Things (IoT), Smart Infrastructures, and Connectivity (EIN05DA02).
Technological Setup (TTS): HNT is a Blockchain-Native Token(TTS41BC). The Class “Blockchain-Native Token” captures every token that is native to the underlying blockchain infrastructure. Helium has developed a purpose built blockchain.
Legal Clam (LLC): The HNT token does not entitle its holder to any legal claim or rights against the issuing organization, therefore it is listed as a No-Claim Token (LLC31).
Issuer Type (LIT): The dimension “Issuer Type” provides information on the nature of the issuer of the token. HNT is built by Helium Inc., its Issuer Type is a Private Sector Legal Entity (LIT61PV).
Regulatory Framework (EU) (REU): The dimension “Regulatory Status EU” provides information on the potential classification of a token according to the European Commission’s proposal for a Regulation on Markets in Crypto Assets (MiCA, Regulation Proposal COM/2020/593 final). The HNT token qualifies as a Utility Token(REU51UT) according to the definition provided in Article 3 (5) of Regulation Proposal COM/2020/593 final.
The International Token Standardization Association (ITSA) e.V.
The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.
- The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
- The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to the market capitalization of classified tokens.
- ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.
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Valentin Kalinov is an Executive Director at International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database, including a classification framework and unique token identifiers and locators. He has over five years of experience working at BlockchainHub Berlin in content creation and token analysis, as a project manager at the Research Institute for Cryptoeconomics at the Vienna University of Economics and token analyst at Token Kitchen. You can contact Valentin via email@example.com and connect on Linkedin if you would like to further discuss ITSA e.V. or have any other open questions.
Christian Viehof is an Executive Director at the International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database including a classification framework and unique token identifiers and locators. He completed his Bachelor in Economics at the University of Bonn, the Hong Kong University and the London School of Economics and Political Science with a focus on Behavioral Economics and Finance. Currently pursuing his Master of Finance at the Frankfurt School of Finance and Management, you can contact him via firstname.lastname@example.org and connect with him on Linkedin, if you would like to further discuss ITSA e.V. or have any open questions.