The history of the Lisk crypto coin began in 2014 with the development of the Crypti project. Lisk is technically a fork of Crypti, however it has some key differences. Firstly, Lisk is an open-source project whereas Crypti is source-closed. Secondly, Lisk’s developers have made some technical innovations. The project database was changed from SQLite to PostgreSQL, and the BIP39 standard is used to generate seed phrases.
The founders of the project are Max Kordek and Oliver Beddows, who had both left Crypti to create their own project. The Lisk team numbers over 30, including developers, designers, and marketers. The project is headquartered in Zug, Switzerland, with offices in China, the USA, Russia, Australia, and Italy.
In 2016, the Lisk team launched an ICO which took place from 22/02 to 21/03, raising about 14 thousand BTC and more than 80 million XCR (Crypti), i.e. approximately $6 million. At the time, this was considered one of the most successful ICOs.
How does Lisk work?
The main purpose of Lisk is to provide a platform for creating dApps. Thus a very important network requirement is high scalability. The developers achieved this by building an entire system based on sidechains.
A sidechain is an independent blockchain located outside of the main network, but all transactions and other data recorded in the sidechains are synchronized with it. This technology allows unlimited scalability of the network, enabling developers to create an infinite number of sidechains. It also provides additional protection to the main network because any bugs in one or several sidechains will have no effect on the operational stability of the main network. Innovation is very flexible, as each dApp is created in a separate, independent sidechain, so developers have the opportunity of full customization. This sidechains solution makes the Lisk network a light-weight, green alternative with high reliability, speed, and throughput. Like Ethereum, the Lisk cryptocurrency supports the deployment of smart contracts. However, they are not as functional as in the Ethereum network.
- Consensus algorithm - all transactions and smart contracts are verified through the DPoS algorithm (Delegated Proof-of-Stake)
- The sidechain system allows the creation of autonomous blockchains that are connected to the main network
Lisk offers a variety of tools for developers. The most popular are:
- Lisk Nano - a basic tool used to configure the main functions of sending and receiving transactions, voting for forging candidates (see next section), and registering a second seed phrase. There is no need to synchronize Lisk Nano with the “parent” blockchain because it connects to the official Lisk nodes
- Lisk Core - a tool for advanced users, designed to perform several tasks including synchronizing the sidechains with the main blockchain, deploying a full-fledged API, and delegating shares during the forging process
- Lisky - a command-line tool that enables interaction with a remote or local Lisk host
In addition, the Lisk team created a directory of decentralized applications where developers can upload their products.
LSK is a utility token used to pay for transaction fees on the Lisk network. The initial issue amount was 100,000,000 LSK. Since the launch of the Lisk blockchain, people have been encouraged to secure it. LSK is a part of every new block and cannot be changed. The LSK token supply is disinflationary. You can buy LSK on an exchange of your choice and store it in Guarda Wallet.
On the Lisk network, all transactions are confirmed through the forging (or minting) process using the Delegated Proof-of-Stake (DPoS) consensus algorithm, instead of mining. The 101 selected nodes who received the most votes from the network users take part in forging. Each user earns a reward of 1 LSK for participation in the voting, and the user must go through a special registration process costing 25 LSK in order to vote as a delegate. DPoS in the Lisk network operates on the principle of rounds: every 17 minutes a new round begins. In a round, each of the 101 nodes is allocated a single block. If one of these nodes cannot 'close' the block, the verifying process is transferred for the next round. New blocks are generated every 10 seconds.
Delegated nodes receive rewards for network maintenance, initially set at 5 LSK per 1 generated block. Every 3,000,000 blocks (~1 year), this reward decreases by 1 LSK, until after approximately five years it reaches the base reward level of 1 LSK. At the time of writing, the reward is at 2 LSK and will change to the final reward of 1 LSK in October this year (2020), where it will remain unchanged. The nodes also receive fee payments in the amount of 0.1 LSK for each transaction on the network.
A more complex system is used to confirm the smart contracts for the launching of dApps since this is a more difficult task. Sidechains associated with the "parent" blockchain must be additionally protected. Any additional “participants”, such as delegates of the main network, are involved in the validation process, and verification is also used through the Bitcoin and Ethereum blockchains.