As blockchain technology and decentralized finance (DeFi) expand, popular blockchains like Ethereum are growing at breakneck speed. This growth has given rise to many new DApps and validation nodes, but network speed and efficiency remain an issue. The increase in nodes has brought increased security, but blockchains are still relatively slow and expensive, as each node must validate the same information.
This is where SKALE comes in.
In this article, we will discuss:
What is SKALE?
SKALE is a network of blockchain elastic platform that works interoperably with the Ethereum ecosystem. Developed in 2020 by SKALE Labs, this layer 2 solution is designed to improve Ethereum's scalability, speed, efficiency, and user experience by creating flexible sidechains that function as independent blockchains for individual DApps. Each DApp will have its own blockchain with its own Ethereum pool validator nodes. This improves the Ethereum security level with faster speed and no gas fees. Companies can rent a sidechain that uses validator nodes from the Ethereum network, but instead of the nodes validating all the information on the blockchain, a portion of its resources are dedicated to that DApp or business alone. All of this can be achieved while maintaining decentralization and security.
SKALE relies on decentralized governance, with representation from all of its key stakeholder groups to vote on its roles, rewards system and development. If an interested party decides not to vote, it doesn't have to. They can participate in governance directly by voting with their stake or by delegating their voting power to other stakeholders.
Who is behind SKALE?
The team behind SKALE has some impressive credentials. Co-founder Jack O'Holleran has worked and founded several Silicon Valley companies in machine learning, AI, security and blockchain technology. Meanwhile, co-founder Stan Klakdo has nearly 20 years of experience in enterprise infrastructure technology and encryption. He was an early member of the Java Virtual Machine (JVM) team and founder of a US government-certified cryptography lab.
How is SKALE structured?
The SKALE network exists as flexible sidechains. These small, independent blockchains use Ethereum network nodes to act as validators through a proof-of-stake (PoS) consensus algorithm. To avoid compromising security, these nodes are randomly selected, and developers can enable virtualized subnode shuffling to continuously rotate nodes working for their DApp.
The SKALE network has two components:
The SKALE Manager exists on the Ethereum mainnet and controls the SKALE ecosystem. This includes everything from creating and destroying sidechains, managing nodes, to withdrawing SKALE tokens (SKL) and rewards.
the SKALE Knots without permission are created or rejected by the Manager based on certain prerequisites and an SKL deposit. If accepted, they are assigned to peer nodes to regularly review their activities, which are also sent to the Manager to determine their rewards. Nodes are added as a “full node” or “fractional node”. Full nodes have all 4 of their resources used for a single Elastic Sidechain, while Fractional nodes participate in multiple Elastic Sidechains (multi-tenancy).
When a company wants to invest in an elastic side chain, it applies and sends a payment to the SKALE manager. The capacity of your sidechain varies depending on your business needs, budget and duration of service. To ensure efficiency, security and speed, a sidechain always has a minimum of 16 virtualized subnodes. It is then decided how much of the node resources are allocated to this side chain:
What is SKALE Denali Network Upgrade?
Denali is the latest update for the SKALE network and was implemented in April 2021. It comes on the heels of previous updates including Mount Tam, Fuji and Kilimanjaro.
The Denali update includes the next phase of SKALE’s modular framework, with an application-specific architecture for developers to enhance the configurability and modularity of their DApps. To do this, it uses a system that simplifies the supporting blockchain functions of DApps without any additional coding. This allows developers to mint NFTs on their blockchains at no cost with a high level of security. The Denali update also enables the flexible and modular inclusion of native and third-party on-chain services such as file storage, cross-chain messaging, oracles, rollups, and more.
Through these improvements, DApps on the SKALE network have increased speed. They can operate in block times of less than half a second at high throughput, with newly audited smart contracts and advanced chain functionality. Most importantly, the Denali update means that DApps can be started with transactions without gas.
What is the SKALE Token?
The SKALE token (SKL) is a work and use token for the SKALE ecosystem. At the time of its release in December 2020, its total supply was 4.140.000.000, with a maximum supply of 7.000.000.000 tokens. As an ERC-777 token, it is efficient with many key functions, including:
Network u pkeep and development: Skale goals develop and grow by allocating a large percentage of their tokens to breeders and builders. Investors should agree to longer vesting periods and locks on their tokens to get bigger rewards. A small percentage of tokens are dedicated to supporting protocol development in the form of operations and contracts.
We reward validators: Without incentives, it would be impossible to run a decentralized blockchain. Thus, a large percentage of SKL tokens are allocated to the validator community to encourage their transaction validation work and keep the network secure.
Ecosystem and lean-up: There are many side chains in the SKALE ecosystem. When one expires, it must be removed to efficiently organize the network and redistribute nodes. To keep this process running quickly and smoothly, the expiry report from the sidechain to the SKALE manager is rewarded with SKL.
SKL price analysis
Like bitcoin (BTC) and most other cryptocurrencies, the SKL appears to have followed the cryptocurrency run of March and April 2021. Since then, it has gone through several ups and downs. There was only a difference of around $0,96 USD between its high of around $1,13 USD in March to its low of around $0,17 USD in July.
These continuous spikes to recover value could easily have been driven by the new Denali update, implemented in April 2021. This update brought promising solutions to DeFi, including high gas rate resolution and delay functionality. As SKL's price history shows, its value continued to gradually increase in the summer. Today, SKL is valued at around $0,35, with a market value of $423.766.694.
SKALE's future
With its ability to increase transaction throughput, complete transactions faster and remove gas fees, SKALE's prospects look bright. The technology offers solutions to many problems faced by new companies that want to venture into DApps but lack immense technical know-how. The community's belief in the SKALE Network is perhaps best demonstrated by the fact that the new Denali update has been secured with $2 billion USD in Total Blocked Value (TVL). Major partners include Boot.finance, Covey, CurioDAO, HUMAN Protocol, Ivy and Minds (all of which are launching their DApps with SKALE this summer).
In addition, SKL is now available on 23 exchanges. With the rise of DeFi and increased traffic to the Ethereum blockchain, the demand for a scalable solution that is fast and cost-effective is on the rise. If SKALE Network proves to be such a solution, then we can expect its value to continue to grow steadily.