Fundamental Analysis – DERO Project

Preliminary Note:

I have to disclose that I am not unbiased when it comes to my view/my evaluation of the DERO project and so the DERO coin –  I am working as an Online Marketing expert together with the DERO team to build sustainable awareness for the project. This said, I am holding DERO as well.

  1. Coin Details

Key Figures:

Circulating Supply: 5,569,895 DERO

Maximal Supply:  18,400,000 DERO

Premine: 2,000,000 DERO

Marketcap: 8,781,368 EUR

Volume 24h: 7.64 BTC

Exchanges: Tradeogre, STEX, SouthXchange, Crex24

Available Wallets: Windows, Linux, Mac, Web Wallet

Algorithm (PoW): CryptoNight

Blocktime: 12 sec

Block Size: 1.25 MB

Confirmation Time: 2 min

Features: Ring Signatures, written from scratch in Golang

 

URL’s:

 

Website: https://dero.io

Web Wallet: https://derowallet.io

GitHub: https://github.com/deroproject/dero

Discord: https://discord.gg/H95TJDp

Bitcointalk Announcement: https://bitcointalk.org/index.php?topic=2525508.0

Twitter: https://twitter.com/deroproject

  1. Project Overview

2.1. The DERO project

The DERO project was launched in December 2017 with a team of three full-time developers. Each of the core devs have enormous experience in the fields of cryptography and blockchain development. Over the next months the development of this new blockchain technology never stopped for a single day as the team is still dedicated and working hard to achieve the goals.

As the first cryptocurrency project which combines a PoW (Proof-of-Work) blockchain with a DAG (Directed Acyclic Graph) block structure, DERO is setting their own goals very high. At the end it will be possible to send wholly anonymous transactions through the network. Transactions are processed within 12 seconds in average and the distributed ledger is secured against majority hashrate attacks.

This said, DERO is more than just another privacy coin. Besides the fact it is written from scratch in “Golang”, using newest technology like “Bulletproofs”, and much more, one key component of DERO is the so called “DERO Virtual Machine”.

On this virtual machine the private smart contracts will be deployed; the important word being “private” as it’s one of the problems of Ethereum e.g. that all transactions are not anonymous; this excludes a lot of companies/use cases where privacy is really needed.

2.2. What problems is DERO trying to solve?

  • Slow Transactions: DERO aims for creating and maintaining a privacy focused cryptocurrency with transactions which are as fast as possible
  • Non-private smart contracts: When smart contracts hit the tech scene it built up a hype over the years; but still there are issues, e.g. when certain companies want to use a smart contract network but not reveal every transaction on the blockchain. DERO plans to solve this issue through private smart contracts on the DERO Virtual Machine

2.3. DERO Project Target Groups & Use Cases

  • Retail Customers: Using DERO as payment currency; anticipating in projects built on the DERO blockchain/the DERO virtual machine
  • Enterprises: Using DERO as a service; building/deploying of smart contracts through the DERO Virtual Machine → thinkable for every business sector there is; useful for access authorization (IoT), asset management, trading, etc.
  • Escrow Services: Those services would have a big advantage to build their stuff on top of the DERO blockchain as a trusted third party; any currency, any other asset, everything could be safe on DERO blockchain

3. Technology

3.1. PoW/DAG Consensus Hybrid

Proof-of-Work (PoW) is the original consensus algorithm in a blockchain network. By this algorithm transactions can be confirmed and new blocks can be created on the chain. The latter is basically “mining” where miners compete against each other to complete transactions on the network and receive the reward. Imagine this process as kind of a puzzle; a mathematical problem/issue which is solved by computational power (“hash power”); the hash of each block contains the hash of the previous block so there is a given security and a prevention of block violations.

A directed acyclic graph (DAG) is more than just a new buzzword. It is a data structure with topological ordering, this means the sequence can only go in one direction (earlier → later). With this structure it is possible to solve problems in the area of data processing, compression or simply to find the best navigational route for a data set:

Concept of a DAG:

  • Nodes connected through edges with specific direction
  • Impossible to change it into other direction
  • Acyclic: not possible that two nodes are meeting each other again while moving in the DAG structure (non-circular)

When it comes to DERO, it is practically a hybrid of PoW blockchain and a DAG. The DERO-DAG is mineable, PoW based and fully linear with same level of security as a usual blockchain; no orphans, the scalability limits are defined by resources (compute, network, storage, etc.)

“Traditional Blockchains process blocks as single unit of computation (if a double-spend tx occurs within the block, entire block is rejected). However DERO network accepts such blocks since DERO blockchain considers transaction as a single unit of computation. DERO blocks may

contain duplicate or double-spend transactions which are filtered by client protocol and ignored by the network. DERO DAG processes transactions atomically one transaction at a time.”

 

3.2. CryptoNote

“CryptoNote” itself is a technology aiming to improve cryptocurrencies. While it is quite similar to current cryptocurrency projects there are important differences as well which should be mentioned.

A problem with e.g. Bitcoin is that transactions are recorded and the fact that everyone with access to the Bitcoin blockchain data can trace back transactions to a certain wallet. CryptoNote uses an open-source ledger too. But it is not possible to trace any transaction back to a wallet where it came from/went to. Only thing one could see is the amount of transferred funds but nothing else. Another feature is the protection against double spending. CryptoNote is in many eyes essential to create a true privacy coin.

The DERO project was the first one which released a complete re-write of the CryptoNote protocol in “Golang”. Golang is an open source programming language which is pretty simple to learn, reliable and very efficient. A lot of people compare it to a mix of C++ (when it comes to performance and security benefits) and Python (speed) with a syntax that is easy to learn.

With Golang you can easily create web/network server applications, for command line scripting, robotic, IoT and even front-end development. Golang has been around since 2009, it just started a few years ago, and continues to grow bigger interest in the tech and development community:

 

3.3. Fully TLS/SSL Encrypted Network

SSL and TSL are both encryption protocols which deliver authentication and data encryption between servers, computers and applications which are running in a network; e.g. a client who connects with a webserver. The SSL protocol is directly implemented on top of TCP; third party observers can identify endpoints of connections but not read the real data

SSL is the precursor of TLS, originally developed by Netscape. The first version of the protocol was released 1995. TLS is established since 1999 and is based on a newer SSL version, SSL 3.0. Technically, the differences are not that big at all. But big enough that TLS 1.0 and SSL 3.0 are not working together.

When it comes to DERO there is complete implemented SSL in the P2P layer and complete TSL across the network, so all traffic is fully encrypted. This reduces a.) the probability of attacks against the networks and b.) nobody can analyze the DERO blockchain as it is possible with the Bitcoin blockchain for example.

3.4. DERO Rocket Bulletproofs

The “Bulletproofs” technology was announced back in December 2017 and it was able to gain a quite high interest within a short time frame in the developer community. Originally created by Jonathan Bootle (University College London) and Benedikt Bunz (Stanford) for Bitcoin it got adapted by other cryptocurrencies like DERO.

Those bulletproofs are a space efficient form of zero-knowledge proof. Bulletproofs have the great advantage that they reduce the needed memory for a transaction on the blockchain 80% and even more, with keeping the same level of privacy. Using bulletproofs, it is impossible for third-parties to know the amount of funds sent in a transaction through the specific network.

When it comes to DERO there were at first bare bone bulletproofs implemented in early 2018. In the second step other implementations of bulletproofs around the decentralized world were studied to improve their own solution; for example the Double-Base and Double-Scalar multiplicator.

 

DERO Bulletproof Transaction; tx size 2kB

4. Roadmap

Historical:

December 2017 → Launch of DERO Project

March 2018 → Implementation of the CryptoNote Protocol in Golang completed

April 2018 → DERO mainnet migrates to the Golang implementation

June 2018 → DERO Atlantis development completed and testnet launched

July 2018 → Mainnet migrates to Atlantis code base 12 secs block time and Rocket Bulletproofs

August 2018 → Application for listings on various exchanges, Marketing and expansion starts in parallel

Upcoming in Q4 2018 → DERO Smart Contracts first on test- then on mainnet; Partnerships, Marketing and further enhancements

Everything for the past roadmap points were delivered on point and without any delays.

 

5. Team & Advisors

Core Team: 3 full-time developers who are deeply experienced with blockchain and cryptography development lead by “Captain”. Core team stays anonymous for a certain time. Around those full-time developers there are a lot of helping hands like Joshy & Kryptoid who are taking care of the community, as well as myself as I accompany them in terms of online marketing.

Personally I can say that I trust “Captain” in the way that I believe he and his colleagues really having the skills to reach all their high ambitious goals. He is also responsive most times when it comes to (technical) questions from the community.

Overall, the community is very dedicated, this is shown by the fact that there is the DCAB, the Dero Community Advisory Board.

DCAB members have been a part of the Dero community for at least 6 months and collectively have:

  • 128+ years experience working in a professional capacity
  • 56+ years business leadership experience
  • 23+ years experience with crypto
  • 1 PhD, 2 Masters Degrees, 1 MBA
  • Specialists in the fields of Distributed Systems, Networking, Consensus Algorithms, Marketing and Early-Stage Growth, to name a few

Over the next months the “DERO Foundation” fill be founded.

6. Media and Community

In this chapter we will take a closer look at the media coverage for DERO as well as the community activity in certain social media channels.

At first we will look at the current situation when it comes to the different social media channels which are already used. For that I screened and observed every channel for the last weeks. We will not just look at basic key-figures like the membercount.

It is more about the communication within the community; are there active moderators/admins, is the team giving updates on a regular base, how are those presented, how active are the community members, are questions from them answered, etc. Based on this I can a give specific advice for improvements for each social media channel.

DERO Discord

Discord Key-Figures

Member Count: ~700

Avg Online: ~200

User Activity: High

Admin/Mod Activity: High

Channel Structure: Topic SubChannels, International Channels; relative slim

 

Discord Details

The DERO Discord channel is the biggest/most active one we have. We not just have the highest member count here but the community members are very dedicated to DERO and interested in the fundamentals; other than in groups from other projects, where there is a lot more price-talk from speculators/traders.

Thanks to Joshy the communication DERO ⇔ Community is very good. Nobody has to wait for a long time to get an answer from him or even Captain himself. This should stay at this level for the future to build up trust.

DERO Twitter

Twitter Key-Figures

Follower Count: 2678

Following Count: 68

Tweets: 129

Twitter Details

Twitter is in the crypto scene one of the most important channels when it comes to a.) attract awareness for new cryptocurrency/blockchain related projects and products and b.) to interact with the own community. Through Twitter you can use your reach for spreading the word; discussions with the crypto twitter and DERO community, sharing of news, development updates, organisation of prize games etc.

Currently the Twitter Feed of “@DEROproject” is/has on the + side:

  • Very active in terms of you will find everything new related to DERO pretty quick
  • Okish follower count with 2,700 followers, started in March this year
  • Good interaction with users through Joshy

DERO Telegram

Telegram Key-Figures

Member Count: 779

Avg Online: n.a.

User Activity: High, but depending on market situation

Admin/Mod Activity: High

 

Telegram Details

The Telegram DERO channel is with 779 users as big as the Discord channel. The activity level is quite the same, from both, community and DERO official side.

 

Telegram Crypto groups are kind of a first gathering place for (low cap) crypto traders and speculators. Discussions are most times about the price and in most times there will be established a “When Moon, when Lambo”-culture. For serious potential investors this can be deterrent, but that is the same with mostly all other cryptocurrency projects as well.

 

DERO Bitcointalk

Bitcointalk Key-Figures:

Started in: December 2017

Thread Pages Count: 214

Dev/Mod Activity: Medium; on request

Bitcointalk Details/Improvements:

The Bitcointalk Thread of DERO has the potential to attract more investors when DERO project is taking even more care of it. There were questions answered by Captain, this is very, very good as it creates more trust in the project. But moreover there should be a more regular activity. Even small updates would be a good move; as well as posting future infographics, videos there (e.g. I did not find the latest YouTube Video.

For a lot of people who are doing their fundamental research Bitcointalk.org is one of the first places where they look for information; Page 1, the announcement itself should always have the updated data in it. If there is old data, most people will lose interest pretty quick.

7. Conclusion

I am into the DERO project long before they reached out to me to help them with marketing purposes. They have everything a successful cryptocurrency project needs: a dedicated and hard working team, ambitious goals and a very supportive community. It makes fun to watch the steady progress and to think about the project reach when the long-term goals like the DERO virtual machine are finally live.

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