Last November, the Whiteblock research team in collaboration with Consensys sent shockwaves through the blockchain space by releasing a thoroughgoing analysis of the EOS platform. In it, Whiteblock asserted, among others, that EOS was not even a blockchain and that it did not deliver the scalability it had promised if tested in realistic conditions.

So far, EOS has not been able to provide convincing refutations of Whiteblock’s claims, and the reputation of the company has been established.

On May 22nd, Whiteblock is set to release the test results on a somewhat little-known but long-standing blockchain project called Syscoin. From the tone of some Twitter commentators (for instance, this one), it would seem that they expect the results to be positive for Syscoin.   


Brief overview of Syscoin


Syscoin is a blockchain platform project that appears to be primarily based in Canada. Unlike EOS, it has existed since 2014 but its market cap is fairly low, indicating a lack of widespread recognition thus far.

Syscoin is also a project whose evolution is not easy to follow. It has already undergone three iterations since its founding in 2014, and recently, the fourth iteration has been announced.  

Originally, Syscoin appears to have been a fork of Litecoin, and hence, Bitcoin, and until 2017, it seems to have mostly stuck to that mode of functioning, despite introducing some unique features such as certificates, aliases and escrow.

However, with the release of the latest mainnet version Syscoin 3 in May 2018, the project structure underwent significant changes. Among the newly introduced elements were masternodes, tokens, and a protocol for zero-confirmation transactions called Z-DAG.

The latest major development around Syscoin has been the announcement of its fourth iteration that is set to launch on June 4. The key innovation that this milestone is supposed to introduce is integration between Syscoin and Ethereum. It also has to be noted that although the Z-DAG protocol had already included in the third iteration of Syscoin, the latest version of the platform is accompanied by a brand-new Z-DAG whitepaper. However, the differences between the two, if any, are beyond the scope of this article.

According to the description in the announcement of Syscoin 4, the resulting platform will have three layers:

  1. The base layer where the Syscoin currency will be used as an analogue of Ethereum’s gas
  2. The asset layer secured by a combination of Z-DAG and proof of work (PoW)
  3. Ethereum ecosystem connected to the Syscoin platform via a special bridge.

The latter implies that each asset on Syscoin can have a counterpart ERC20 token on the Ethereum network with exactly the same number of units and distribution among addresses. According to the Syscoin team, this will allow the Syscoin users to benefit from both the smart-contract platform advantages of Ethereum and higher token transfer speeds offered by Syscoin.  


The core Syscoin functionality tested by Whiteblock and

the Z-DAG-PoW approach

It is not wholly clear it this point which exact aspect(s) of Syscoin Whiteblock has been testing. However, presumably, we are talking at least about the Syscoin asset layer involving Z-DAG as described in the latest Syscoin whitepaper.

It seems that Syscoin attempts to achieve a high degree of scalability by combining simultaneously two approaches to transaction validation: Z-DAG and proof of work (PoW). According to the whitepaper, the purpose of Z-DAG is to ensure the complete ordering of transactions in time to avoid double spends.

What this approach supposedly allows to achieve in practice is to confirm most transfers almost immediately because there is only a very low probability of double spends. For value transfers involving significant amounts, their receivers may wait for the inclusion of the transfer into a block mined through the PoW algorithm that runs in parallel with Z-DAG but more slowly.


Potential issues with Syscoin

A post by BD Ratings from last October contains a detailed analysis of the potential issues with the Syscoin protocol. The most important of those seem to be the fact that the platform has already been restarted several times, and that it appears to resemble a Swiss-army knife of diverse blockchain tools rather than a coherent set of technologies.

It also has to be noted that the currently available descriptions of both Syscoin’s hybrid consensus mechanism and the way its bridge to Ethereum are supposed to function are rather difficult to follow and understand. Hopefully, the Whiteblock study will provide us with a better understanding of the latter.   


The Syscoin-Whiteblock collaboration and its potential significance

If the test results to be reported by Whiteblock, indeed, turn out to be positive for Syscoin, this would make it the first blockchain platform whose scalability claims would be independently verified by an esteemed research team. This may boost the profile of the project in the blockchain space and, presumably, its market capitalization.

One could, of course, ask here why not just let blockchain platforms release their mainnets and see if they can deliver in the wild. Why do we need Whiteblock when we have blockchain explorers?

The main response is that there is not enough transaction activity ready to make use of several purportedly scalable blockchains at the same time. In addition to this, a lot of potential users, especially corporate ones, could be waiting for a public blockchain to establish its safety and scalability credentials before jumping upon it. This may create a sort of prisoner’s dilemma where everyone will wait for someone else to try out scalable blockchains. Whiteblock’s and the potential others’ similar efforts may provide a way out of this stalemate.

Much will probably depend on whether Syscoin’s prospects will be significantly boosted should Whiteblock validate its purported features. If this is the case, other projects may flock to Whiteblock and may spur the creation of copycat services. What is already clear is that we are in for some interesting developments here.     


  1. Good article. A few things should be made clear. 1) Syscoin has been SHA256 merge mined since 2017. It left off being based on Litecoin and adopted Bitcoin code base. 2) The “swiss army knife” perception is understandable. However, know that Syscoin 4 is greatly streamlined with many features normally associated with Syscoin being moved offchain. Syscoin through the years has thoroughly explored various uses for blockchain technology, and has now greatly narrowed its focus in regard to how a blockchain is best used – meanwhile, some other prominent projects are trying to develop some of those same features onchain (e.g. aliases) which Syscoin has determined are best handled offchain – and Syscoin might just be ahead of the curve. Syscoin 4 design is based on real enterprise use case requirements gathered from enterprises themselves by Blockchain Foundry.

  2. I have to correct one thing I said above. It was 2016 (not 2017) in which Syscoin switched to Bitcoin code base and became SHA256 merge mined. My apologies.


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