Dear Family and Friends
I invested in the cryptocurrency named Zenon ($ZNN), described below, in November of 2019. I do not intend to convince you to buy any Zenon and whether or not you do will not change my position. I am not a trader. I do not have a price target. I will not consider selling any of my Zenon until they achieve all of the technical goals they have set out to accomplish. I am aware, as you should be, that the odds of them achieving these goals are near zero. It is more likely, as with most new cryptocurrency projects, that the value of Zenon will go to $0.
I write this letter for selfish reasons. In the unlikely event that Zenon does achieve its goals, I never want to face the question of “Why didn’t you tell me about Zenon?” to only respond with “I didn’t think you cared to know.” In the more likely event that Zenon goes to $0, I am comfortable answering “What ever happened to that cryptocurrency you wrote us the letter about?” with “It went to $0.”
With that being the case, I’ve decided to take a few hours out of my Sunday to put together this letter. This is not meant to be a technical analysis or a well thought out explanation of my investment. These are the basics that got me interested as well as a brief description of the hoops I jumped through to purchase the Zenon that I did. Relevant sources and links to additional information are listed at the end.
Lastly, I have decided to keep my name off of this letter in order to allow it to be shared freely. To those this letter was originally intended for, please don’t hesitate to reach out with any questions.
ldw
The Conspiracy
As with most conspiracies, the “evidence” below never moves past unlikely coincidence, but was enough to get a small community interested in the project.
The Zenon project, as far as I understand it, gained its initial following through a couple of tweets from the two cryptocurrency enthusiasts behind the twitter accounts of @galaxyBTC (Galaxy) and @Coin_Shark (Mr. Backwards) in late March of 2019. The Zenon team tweeted for the first time a week or so earlier on March 20th, 2019. Galaxy and Mr. Backwards had ~50k followers each at the time and both named $ZNN (Zenon) as one of a few new early-stage projects to watch (a common practice for both of them). From there, people began to look into Zenon and noticed the first connection to the also recently launched “Square Crypto” project. Square Crypto is funded by Square and Jack Dorsey (Founder/CEO of Twitter and Square) who is an outspoken advocate for cryptocurrency and Bitcoin specifically. This is the first, piece of “evidence” in the Zenon conspiracy.
From there many other pieces of “evidence” have been presented in support of a connection between Zenon and the Square Crypto project as well as the Cash App (another business owned by Square and Jack Dorsey). At this point it should be mentioned that the Zenon team remains anonymous to this day. Additionally, the Square Crypto project has never responded to, confirmed, or denied public requests for them to address any potential connection between the two projects. As an example of this type of behavior, the Square Crypto team was recently asked directly about their connection to Zenon in an impromptu Twitter AMA (“ask-me-anything”) session, but the tweet was quickly deleted from the thread by the Square Crypto team and was never responded to. Here are some of the most notable pieces of “evidence” in no particular order:
Project Organization and Leadership
As mentioned previously, the team has remained anonymous to this day. No one knows who is building Zenon or where they came across their initial funding. The team communicates in a very limited fashion through the previously mentioned Twitter account, a Discord group, and a Telegram group. When the Zenon team does communicate, it’s most often through an account named “Mr. Kaine” (@mrkaine) in the Telegram group.
The first Zenon was issued in exchange for Bitcoin directly through a Zenon team controlled portal. They did not run an advertised ICO (“Initial Coin Offering”) nor did they make any sort of public effort to distribute Zenon widely. Additionally, the rewards for holding Zenon (a paid interest of sorts) was such that many of the early holders were able to completely recoup their initial investment by selling their rewards.
The number of participants in these different online groups has grown slowly and hovers at just over 1,000 members today. These informal online communities are moderated by an account named “Sigli” (@SigliZNN) who claims to not be an official member of the Zenon team. Sigli helps answer basic questions from newcomers as well as more technical questions regarding software updates to the digital wallet used to hold Zenon locally on your computer.
The two main sources of official information from the Zenon team have been their Twitter account (@Zenon_Network) and their website (www.Zenon.Network). Their Twitter account is most often used to announce updates while the website is home to more detailed information in regards to their technology and future plans.
The Technology
Zenon has presented itself as a potential solution in the evolution towards a decentralized internet. I am not a technical person and I do not claim to understand the intricacies of the following information. The details below were originally communicated by the Zenon team through a draft of their white-paper which was then summarized into the following format:
Zenon architecture is based on a “dual-ledger” approach.
- The term “architecture” refers to how all the information within the Zenon network is digitally organized.
- What’s the point? Scalability.
- Example in practice = IOTA ($400m mkt cap)
- This is a non-linear consensus structure (blockchains are linear). What this means is that each block can be confirmed by and can confirm multiple blocks which creates a more scalable solution. DAG = 1 block can confirm 3 blocks. Those 3 blocks can confirm 9 blocks etc. Blockchain = 1 block can confirm 1 block. That 1 block can confirm 1 block etc.
- What’s the point? Account independence and increased throughput capabilities.
- Example in practice = Nano ($70m mkt cap)
- This allows each user to have “their own autonomous auto-chain that can be updated independently from the rest” and increases the overall networks throughput capabilities. “Throughput” refers to how fast transactions can go through the system.
Zenon consensus will use “a virtual voting scheme based on a hybridization between proof of stake and proof of work.”
- Consensus refers to how nodes within the architecture communicate about and ultimately agree on state of the network (what’s valid, what’s not, etc.).
- What’s the point? Reach consensus efficiently.
- Example in practice = Hedera ($130m mkt cap)
- Virtual voting allows for efficient agreement between nodes who independently “execute a consensus algorithm to derive a total ordering of events” and then share that information with other nodes (the vote) in order to agree on the correct order as a group. What makes this efficient is the ability for nodes to infer the correct vote based on the information they receive from other nodes rather than having all the nodes report their votes back to a central source, have them tallied, have what’s correct agreed on, and have the results returned to each node individually from the central source.
- What’s the point? Align economic incentives.
- Example in practice = Cardano ($800m mkt cap)
- PoS requires nodes to show proof they own “a certain number of coins” in order to participate in consensus and nodes are then typically rewarded for contributing to the consensus. This is meant to economically motivate node owners to not only contribute to finding consensus, but to adhere to protocol specifications. The “certain number of coins” acts as their “stake” or “collateral” which can then be lost if found in violation of protocol specifications.
- What’s the point? Decentralization.
- Example in practice = Bitcoin ($120b mkt cap)
- PoW is what is referred to when coins are being “mined”. Nodes compete to solve cryptographic hash puzzles which when solved create a new block to be linked to the blockchain. The rate at which the puzzles are solved thus determines the new supply of blocks. The ability for anyone with computing power to “mine” new blocks promotes early decentralization, but can lead to scalability issues such as high energy consumption as puzzles increase in difficulty and incentives to centralize mining capabilities.
Zenon introduces two novel approaches.
- What’s the point? Reach consensus efficiently and align economic incentives.
- As transactions move from node to node each node will add “a small PoW computation and other additional data (e.g. digital signature, metadata) to the transaction” and the nodes will be rewarded for that PoW through a “transaction fee paid by the user.” These PoW additions add “weight” to the transactions which is then “an additional objective in the consensus algorithm” This “weight” strengthens the overall ledger, provides an efficient means of “selecting between two conflicting transactions in case of a double spend”, further incentives nodes to participate in the network, and introduces a “transaction fee” to dissuade certain types of volume based attacks.
- What’s the point? “Expand the limit of smart contracts and enable complex computational tasks” to be run on “untrusted hardware” with “consistent results.”
- “The idea is similar to a decentralized infrastructure-as-a-service model where users can have access to an instant computing infrastructure, managed and provisioned within the NoM network.” Unikernels are “minimal stand-alone virtual machines” that are “completely isolated from the host.” When unikernels are combined with a smart contract layer it can create a decentralized and secure environment to perform complex workloads.
How I bought Zenon
- Buy Bitcoin if you don’t own any already (I used Coinbase)
- Create a Stex account (a cryptocurrency exchange that lists Zenon)
- Send Bitcoin to your Stex account
- Use the Bitcoin in your Stex account to buy Zenon ($ZNN)
- Download the local Zenon wallet through the Zenon website
- Send Zenon from your Stex account to your local Zenon wallet
