The Seven Major Challenges of Public Chains and their Solutions

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Larry’s presentation: starts at 4:00:54

Panel discussion: starts at 5:14:00

Hello everyone! I am Larry, founder of the Genaro network. Thanks for the invitation from Huobi — it’s my honour to share my experience in the blockchain industry with you here. Today I’m going to talk about the 7 major challenges around public chains and their potential solutions.

The future as we know it will be purely sharing economy community in smart cities, where there is no middle man in business and people could trust each other. Machines like auto cars could communicate with each other efficiently and operate securely. Now we have amazing technology such as blockchain to make it happen. Though they are challenges ahead, which I will go over in this talk, I’m very excited to be in this terrain as the future looks more interconnected, amazing as ever.

I am happy to see that so many hardworking projects are along the way to add to this ecosystem, and ultimately we hope technology could penetrate the market in a scaling manner.

I want us to keep in mind that the best tech innovations must meet market demands and have vehicles of use. For instance, Bitcoin now run into some bottle neck issues such as the tps is too slow. But when it came out created the peer to peer financial system for us, this was extremely valuable, met the market needs in 2009 and worked pretty well in following years. Now we have more market demands, and Developers also need to continuously hacked away at the tech to try to speedup or solve these issues.

So, what are some of the main challenges around the public chain technologies we see today…as we are working on Genaro Network, we face these current issues and potential solutions also we have proposed our own solutions.

Let’s start with the first challenge: “how to design a sustainable consensus mechanism”. The most popular consensus is proof of work. Because in a Nakamoto consensus blockchain system, the longest chain is the only correct chain, to avoid attackers forking and extending the forked chain too easily, miners have to contribute enough computing power by solving math puzzles to put the blocks they have discovered onto the chain. But this causes serious energy waste: in 2017, the electricity used in bitcoin mining cost is over that of 159 countries. Additionally, the cost is not going toward useful computation — it’s not computation of genetic engineering nor artificial intelligence, which would be useful in the real world, it’s just using computation for solving random math puzzles.

To avoid this issue, people start to support PoS: proof of stake. It allows miners to extend the blockchain by staking their token without any computation power. However, pure PoS will introduce security issues, such as the “long range attack” and “nothing at stake”; this is because anyone can extend the blockchain only if he has enough tokens, so the chain is easier to be forked.

So we need to design a sustainable consensus mechanism, to find some useful computation to secure the PoS

The second challenge is how to establish a peer to peer sharing network.

Bitcoin was invented to create a pure peer to peer system, and so were most public chains. In such a system, all nodes have to have the right or ability to share something to earn rewards. Otherwise they would only become consumers. It’s like in any community, anyone has to earn resources in order to survive here.

Personally I haven’t mined bitcoin, because back in 2015 when I first started working on blockchain, my laptop could hardly mine any bitcoin. I have mined Ethereum, but only for about half a year. Then it became impossible as well. This is because computation power has a monopoly effect — if you are a big mining factory and I am a laptop, I am not going to earn any reward because the task takes you 1 minute to finish and takes me 1 hour, you take away the reward while I am just getting started. This also happens more thanks to the revving up of the “arms race”in mining industry, whereby people are always busy with creating more advanced mining machines.

To solve this problem, people start to think of sharing more things instead of computation power, such as storage. There are certain products that work well, such as Storj, ipfs, sia, and Genaro sharer, launched by the Genaro team. However, purely sharing storage and getting the reward from whoever uses the storage without any system-based reward, this cannot satisfy the sharers — they expect much more. For example, bitcoin mining also comes from system rewards, instead of purely from transaction fees. This cannot last forever. We need to find out a fair business model — this means we need to think about what else users could share to earn reward.

The third challenge is: how to increase blockchain transactions per second, as is known as TPS. This was one of the hottest topics over the past year and still is. Many projects are working on it in different ways.


TPS = concurrency divided by average response time.

So naturally,projects such as Zilliqa, Ethereum apply sharding techniques to blockchain to increase the concurrency.

In a blockchain system,TPS also equals to the amount of transactions in one block divided by the time of generating one block. So bitcoin could increase TPS by increasing block size, so there could be more transactions in one block. On the other hand, EOS uses DPoS techniques to decrease the time of generating one block. Only 21 master nodes reaching consensus takes a much shorter time than reaching consensus by all nodes. Some projects try to jump out the box — they put certain transactions outside blockchain. This is called an“off-chain” solution, examples being the Raiden network or lightning network. It’s like, if you run a coffee shop, all transactions happen inside your coffee shop, buy a cup of cappuccino, or something, only comes to you, then you clearing with the global financial system at last.

All these projects are great innovations, but most of them try to increase efficiency by sacrificing security and decentralization too much. There is no way to break the trilemma. But we also need to think about the how to maintain security and decentralization level to meet market need, or how to establish secure and trusted system in other ways.

The fourth challenge is “how to store DAPPs’ data securely in a decentralized way”. Most DAPPs today are still using cloud servers such as amazon cloud. Blockchain is not designed to store data because no node could store all data comes from all Dapps. That’s why Ethereum swarm is so limited. There are some projects working on decentralized storage, such as ipfs, Storj and of course Genaro Eden. Unfortunately, most the decentralized storage is isolated from the public chain. It’s like your CPU and hard drive are separated.

The fifth is “how to establish data channels between blockchains and the real world”. Currently the blockchain and the real world are isolated because of the trickiness of pulling data from outside. When miners run smart contracts on virtual machine, it is not possible to grab the exact same data at the same time. Let’s say there is a Dapp arranging my travel to Vietnam here, when help me book the flight, the ticket price varies on different website, some miner may go to expedia while some may go to skyscanner.

Current solution is to make a prediction market work as an oracle machine, and push data to the blockchain, this includes projects like Augur, Gnosis etc. however, the way this market works is whichever data has the highest stake, is regarded as correct. The logic is that those who bet more will try harder to get the right data. Obviously, they are all good Dapps, but is not enough to work as oracle machine.

The sixth hard problem is how to design a sustainable token model. For instance, the transaction fees are too high. If you buy a coffee with bitcoin, the transaction fee might be higher than the coffee itself. This leads to the bitcoin’s value becoming negative if we apply purchasing power parity to estimate bitcoin. Also most public chains are relying on the mining or forging model too much. But think about where the system reward comes from? It actually from who join the system later. Finally, a utility token could be used for a product or service. This may be the most promising innovation in the fintech area, however this also cause the service price fluctuates too much.

People are thinking other kind of solutions such as DAG, which has no transaction fee. Also there are stable token like Dai and Tether. Just note that token model is still at very early stage that most problems are open problems that there is not a single solution could solve all those problems.

Lastly, how to specify blockchain governance?

Reaching consensus for a single block is easy, but for the whole project’s direction it is extremely hard. In traditional structures such as a company, we organize individuals by department and reward by salary. management groups discuss important things, and the board of directors has the most power to decide things. However, blockchain is governed in a decentralized way, we need to organize each kind of community member well by fair incentive.

For instance, bitcoin uses BIP signal system; when someone wants something, he or she just writes the information in block and there is no guarantee this suggestion is listened and adapted or not — the bitcoin core team still needs lot of off line discussion and can hardly reach other miners and token holders.

EOS tries to solve this problem by voting. Setting aside the whole problem of bribery during elections, its logic is “whoever has the power to attract most votes has the ability to guard the chain “ We think there might be a better logic to solve this problem.

Blockchain technology has been developing for decades and all the mentioned projects are great innovations. However, this industry develops so fast that technology iterates fast as well. When everyone tries to add padding to current blockchains such as Ethereum, we think, why not make a new thing and try to solve the issues at the first time designing the system? like it is said “the best way to improve a carriage is to make a car.”

So, what is Genaro?

In one sentence, The Genaro Network is the first Turing-complete public blockchain combining peer-to-peer storage with a sustainable consensus mechanism. Genaro’s mixed consensus uses SPoR (Sentinel Proof of Retrievability) and PoS (Proof of Stake), ensuring stronger performance and security.

Genaro provides developers with a one-stop platform to deploy smart contracts and store the data needed by Dapps at the same time. This will provide everyone with a trusted Internet that connects the real world to the blockchain securely.

Then… why it is a car? Why combine storage and a public chain can solve these problems? How to combine them?

Ok…let’s go deeper and figure out all the whys.

First, a sustainable consensus mechanism: SPoR +PoS

SPoR is short for sentinel proof of retrievability — it is a calculation to tell you your file could be retrieved from servers if you want. Sentinel is the hash of a random piece of your data, and stored on the blockchain. It is low energy consumption, and will not increase over time like bitcoin. More importantly, it is a useful type of computation, used in cloud storage for years. Lastly, the Genaro network uses SPoR to secure PoS to prevent attack — nobody can easily fork and extend the forked chain because you did not run SPoR algorithm and do not have previous sentinels.

Second, Genaro Sharer, is a peer to peer sharing network with more incentives. As for the basic level, increase in computing power or large node storage space cannot have a ‘monopoly-effect‘. As for deep level, we think the most precious resource nowadays is data. Genaro sharer’s ultimate goal was to allow both individuals and company to share data based on the storage network. For instance, a Company could run machine learning on the encrypted data on Genaro Eden, and data sharer could get rewards through smart contract on Genaro network.

Third, why does Genaro have higher tps? Also how does SPoR + PoS work?

To reach a consensus, step one, all nodes need to stake token and get the right to share storage. Then the SPoR filters out the governance nodes from the storage nodes. That is to say, less than 200 trusted nodes reach a consensus, which is faster than all nodes consensus, and the blocks are continuously produced to reduce verification time.

Fourth, Genaro Eden is a peer-to-peer storage network deeply coupled with public chain. All data is stored in a decentralized way on Genaro Eden, and the sentinels’ related info will be stored on chain and synced. Then the Genaro virtual machine operates from the instruction level on this network, therefore to provide a one-stop solution for deploying smart contract and store data at the same time.

Fifth, we have designed a protocol called “GSIOP“ to establish data channels between blockchains and the real world. Gsiop is short for Genaro streaming IO protocol. Data is initiated in GSIOP and stored in Genaro Eden. The keys for encrypted KV pairs are stored on chain as “pointer” to the decentralized data. Also the Dapp’s owner has to define the rules of data operation. when someone wants to update the data, he or she has to follow the rules in an encrypted way through Gsiop as well. The updated data is stored in the Genaro storage network and this updated transaction is recorded on blockchain, it’s like a handle to help developer to find the data on storage network in this way, the blockchain will always know where to grab the correct data for applications.

As for the sixth challenge, Genaro uses two layers of gas to make the token model more sustainable. Storage gas is more expensive than normal transaction gas because it uses more resources in the system. We are also designing a new payment gateway uses fiat money to use all produce features in the Genaro ecosystem, to provide users an additional option.

The last challenge is blockchain governance. First we think on-chain governance is absolutely needed to create the decentralized community. We kindly support the idea of a“master node”– however, the master nodes should not come from voting, otherwise it’s like “whoever has the ability to attract more votes, is most trusted and helpful to the entire system”, this logic is not perfect. So we use ranking instead of voting to select the “master nodes”. As for the ranking function, we use two factors: the GNX the node is staking and the amount of sentinels the node contains. Staking is easy to understand, it is there to make sure the master node has common interest with the system. As for sentinel, it’s like when others store data on your node, that’s your sentinel amount plus one, so the more sentinel you have, more contribution you have made to the entire storage network. So Genaro’s logic is “whoever has the most significant contribution to the system, is most trusted and helpful to the entire system”. We believe data is the most valuable thing in the Genaro network, and sentinel refers to data value as well, so we call it “data governance”.

That’s all! To sum up, Genaro is the first Turing- complete public chain with a Peer-to-peer storage network. Hope you guys enjoyed that! Do let me know if you have any questions!

Genaro’s latest versions, Genaro Eden and Genaro Eden Sharer, will allow you to store your files in a more secure way and share your unused storage to earn GNX. To download Genaro Eden and begin storing and sharing, follow this link:

Get your Genaro Eden/Sharer for Linux, Windows and MAC OS right now from the official website:

Git source repository is on GitHub>>


Warm reminder to our community members, please download Genaro Eden ONLY from our official website/GitHub and DO NOT trust any referral links and reposts from anyone, otherwise, we won’t be able to guarantee privacy and security of your data and protect you from scammers.

Genaro Eden — The first decentralized application on the Genaro Network, providing everyone with a trustworthy Internet and a sharing community:

Recent Publications:

Genaro’s Core Product Concept

Genaro Eden: Five Core Features

How Does Genaro’s Technology Stand Out?

Genaro Eden Application Scenarios and User Experience

The Genaro Ecosystem

- About Genaro Network -

The Genaro Network, the creator of the Blockchain 3.0 Ecosystem, is the first Turing-complete public chain that incorporates a decentralized storage network. Genaro’s original SPoR (Sentinel Proof of Retrievability) with PoS (Proof of Stake) mixed consensus mechanism aims to create a blockchain platform with a processing speed of tens of thousands of transactions per second, which opens the way for the technological shift to move data from centralized clouds to blockchain with decentralized storage. Genaro offers developers a one-stop combined platform for deploying smart contracts and storing the data needed for DAPPs, while also providing everyone with a more trustworthy Internet and a sharing community.

Official Website:


Telegram Community:




First smart data ecosystem with a Dual-Strata Architecture. See full blog at Smart Data Ecosystem Publication or

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First smart data ecosystem with a Dual-Strata Architecture. See full blog at Smart Data Ecosystem Publication or

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