Helium Investment Research Report on Decentralized Wireless Network

Project name: Helium

Preface

In the crypto market, we have witnessed the rise and formation of public chains, cross-chains, NFTs, DeFi, storage, etc. However, the "Internet of Things" in the crypto market has never exploded, and few people mention it in the market.

The explosion of a sector is often accompanied by the emergence of some phenomenal projects to lead the sector, such as Ethereum, the leader of the public chain, UniSwap in DeFi, CryptoPunk in NFT, etc. The explosion of the Internet of Things sector also requires the emergence of such projects.

Traditional IoT devices based on mobile cellular communication technology have disadvantages such as high power consumption and high cost, which has been a major factor restricting the development of IoT. This has led to the demand for low-power, wide-coverage wireless networks.

As the only product in the blockchain ecosystem that currently provides low-power, wide-coverage wireless network access, Helium is building the world's largest Internet of Things.

Helium Project Overview

Helium is a decentralized wireless network designed to provide open, large-scale global wireless network coverage for IoT devices that support the LoRaWAN standard.

Currently, there are more than 890,000 gateway hotspots on the Helium blockchain, which together form the world's largest LoRaWAN network, providing services for various IoT devices.

Helium's vision is to build a global decentralized wireless network where everyone can participate and receive corresponding rewards. Currently, FreedomFi has begun to deploy 5G wireless networks in cooperation with the Helium network.

Official website: https://www.helium.com/

Twitter: https://twitter.com/helium

DC：https://discord.com/invite/helium

DOC：https://docs.helium.com/

Team Information

Helium was founded in 2013 by three co-founders: Amir Haleem, Shawn Fanning and Sean Carey.

Amir Haleem has a background in esports and game development, having served as CTO for a gaming startup, worked on Battlefield 1942 (the series was acquired by Electronics Arts), and was a world esports champion for Quake.

Fanning is best known for developing Napster, a music-sharing platform that was one of the first mainstream peer-to-peer (P2P) Internet services in the late 1990s.

Carey held a number of development roles prior to Helium, including at Where, an ad optimization company acquired by PayPal.

Overall, Helium’s team is comprised of experts in radio and hardware, manufacturing, distributed systems, peer-to-peer, and blockchain technologies.

Financing Overview

Financing Date

category

investor

Funding Amount (USD)

year 2013

Seed round

/

2.8 million

December 2014

Series A

Khosla Ventures led the round

16 million

April 2016

Round B

Google Ventures led the round

20000000

June 2019

Round C

Multicoin Capital and Union Square Ventures jointly led the investment

1500 dollars

August 2021

ICO

a16z, 10T, FTX's quantitative crypto exchange Alameda Research, and other top institutions in the crypto world.

110 million

February 2022

Round D

Tiger Global and FTX Ventures participated in the investment

200000000

Helium received investment from a number of Silicon Valley star VCs at the beginning of its establishment (2013), with an initial financing of US$2.8 million, including Google Ventures, Khosla Ventures, FirstMark Capital, SV Angel, etc. Salesforce co-founder Marc Benioff also invested in his personal name;

In December 2014, Khosla Ventures led Helium's Series A round of financing, raising $16 million.

In April 2016, Google Ventures led Helium's Series B funding, raising $20 million.

In June 2019, Multicoin Capital and Union Square Ventures jointly led Helium's Series C round, raising $15 million. Multicoin investor Tushar Jain helped Helium build a beautiful token economic model;

In August 2021, top institutions in the crypto world, such as a16z, 10T, and FTX’s quantitative crypto exchange Alameda Research, also joined Helium’s $110 million ICO;

In February 2022, it completed a US$200 million Series D financing round with a valuation of US$1.2 billion, with Tiger Global and FTX Ventures participating in the investment.

Helium Token Economy

Helium adopts a dual-currency model, namely $HNT tokens and Data Credits.

$HNT is the native token of Helium

The total number of tokens is 223 million. $HNT is mined through Hotspots mining machines, without pre-mining.

Starting from August 1, 2021, the monthly issuance of $HNT will be halved for the first time, from the original 5 million HNT/month to the current 2.5 million HNT/month. It will be halved every two years thereafter, for a total of 50 years.

$HNT Long-term Distribution Plan

Data Credits

There is no upper limit on the supply of Data Credits. Data Credits are used to pay for the use of the Helium network. For example, transfers between Helium wallets, data transmissions from IoT devices, adding new Hotspots nodes, declaring Hotspot locations, etc.

Unlike $HNT, the price of Data Credits is stable, and the price of each Data Credit is $0.00001. Users obtain Data Credits by destroying $HNT, and the number of Data Credits obtained depends on the price of HNT at the time of destruction.

"Net Release" in the Helium Network

In order to permanently reward hot spots and consensus groups and ensure that the network has enough HNT, HIP20 also introduces a "net release mechanism".

Through the net release mechanism, the blockchain will monitor the amount of HNT burned to generate DC in each Epoch and add them back to the amount of HNT that will be minted in that Epoch. For example, if 10 HNT are burned to generate DC in an Epoch, the network will mint an additional 10 HNT in that Epoch.

The HNT generated through net release will not increase the total circulation of HNT, and the maximum supply of HNT will not be affected. And there will be an upper limit on the amount of additional HNT that can be generated through the net release mechanism in each Epoch. When the amount of HNT burned to generate DC exceeds this upper limit, the total supply of HNT will decrease.

Token Economics Summary

In Helium's token economy, only $HNT can be circulated and traded, and DC is used as an internal fee consumption scenario. $HNT is obtained through mining, and users holding $HNT can also pledge to obtain rewards. Consuming $HNT can obtain DC, and DC achieves a virtuous cycle of token mining through the "net release mechanism". It is a more reasonable token economic model mechanism.

Helium Network Technology Introduction

Data transmission on the Helium network

The core of the Helium network is the LoRaWAN communication network, for which an incentive layer is built through blockchain. Helium provides public wireless network coverage for IoT devices that support the LoRaWAN protocol through Hotspots (hotspots in the Helium ecosystem), making it easier for IoT devices to access the Internet and transmit data. Helium provides network services for future application operators, such as bicycles, temperature and humidity detection, and pet tracking, through hotspots.

To join a hotspot, you only need to choose to install these officially supported devices according to the frequency band in your area. Users can earn HNT tokens by contributing to the hotspot.

(Data transmission flow chart of Helium network)

1) Users/miners connect to the Helium network through Hotspots.

2) IoT devices (user terminals) on Helium will use the WHIP protocol to securely connect to multiple local gateways within the transmission range.

3) Once a device joins the network, Hotspots sends encrypted data to all gateways, and each gateway adds the data to the Helium block.

4) The gateway sends the specified data to the specified router. After the router obtains the data transmission service, it will pay the gateway.

5) The router decrypts the data and the process ends.

Helium Network Consensus Protocol

The Helium blockchain uses a consensus protocol based on HoneyBadgerBFT (HBBFT) to achieve an efficient and secure consensus system based on decentralization.

Consensus Group Election

The current consensus group is composed of verification nodes. To become a verification node, you need to stake 10,000 HNT and operate a verification node terminal in a suitable network environment.

In each Epoch, a certain number of verification nodes will be elected into the consensus group to perform consensus duties including transaction verification and block generation, and receive corresponding consensus rewards (6% of the total HNT) at the end of the Epoch.

However, with the rapid growth of the number of hotspots and blocks on the network, the original model has affected the block generation speed and operating efficiency of the blockchain, and has also put great pressure on the hardware in the network. Therefore, in January 2021, the HIP-25 proposal on the verification node mechanism was released and passed. The proposal redesigned the consensus group generation mechanism and introduced the role of "verification node".

Under the newly designed consensus group generation mechanism, at the end of each Epoch, 25% of the verification nodes will be removed from the existing consensus group, and an equal number of nodes will be selected from the verification nodes that have not entered the consensus group to replace them.

Helium Network Mechanism

The consensus algorithm used by the Helium network is called Poc (Proof of Coverage), which is a variant of the HoneyBadger BFT algorithm.

The PoC mechanism uses the characteristics of Radio Frequency (RF) to provide meaningful and relevant proof of the Helium network and its participants. Specifically, the PoC mechanism relies on the following RF characteristics:

1) RF physical propagation is limited by distance;

2) The strength of the RF signal is inversely proportional to the square of the transmission distance;

3) Radio frequency propagates at the speed of light, so there is no delay in network transmission.

Using these features, the Helium blockchain uses a mechanism called "PoC Challenges" to continuously issue queries to hotspots. The power of PoC is that these proofs of wireless coverage are continuously generated and permanently stored on the chain. Each "challenge" represents an independent PoC verification.

Roles in the PoC Challenge

The community will adjust the distribution of PoC rewards through new HIP proposals to encourage each hotspot to optimize its deployment strategy, thereby promoting the healthy deployment and development of the entire network infrastructure.

In short, the PoC mechanism prevents dishonest hotspots from falsely locating by having the challenged hotspot send a beacon that marks a fixed location device. The surrounding hotspots (witnesses) that receive the beacon determine its physical location based on a series of logic such as the continuous pulse circuit sent by the challenged hotspot.

Helium Products

Currently Helium has 4 main products:

1）Helium Hotspot

Helium Hotspot is a LoRaWAN long-range wireless router, which can be thought of as a Wi-Fi router. Users only need to plug the Hotspot into a power source and connect it to Wi-Fi, or connect it to an Ethernet port, and after deploying and synchronizing it through the Helium wallet, it can provide wireless network coverage and obtain corresponding HNT tokens.

2) Helium Console 2.0

Helium Console 2.0 is a web-based device management tool that allows developers and users to register, authenticate, and manage their devices on the Helium network through a visual view.

3）LongFi

LongFi combines the LoRaWAN wireless protocol with the Helium blockchain, so any LoRaWAN device can transmit data in the Helium network. These devices are usually GPS trackers, environmental sensors, weather meters, etc. LongFi allows device owners to earn corresponding HNT tokens when they help the network transmit data.

4）Helium Tabs

Helium Tabs is a terminal positioning device that runs on the Helium network. Users can use mobile device applications to track tag trackers to view previously visited locations and current locations (only EU and US frequencies are supported).

How to get Helium rewards

There are three ways to get $HNT rewards in the Helium blockchain. One is to provide wireless network coverage through your HotSpot (purchase equipment); one is to be a validator in the Helium network (stake 10,000 $HNT), and the other is to join the consensus group (fixed 6%).

Hotspots mining yield

Each block time of the Helium network is 60 seconds, and every 30 blocks is an Epoch. Currently, Helium releases 2.5 million HNT per month, of which nearly 27% of the tokens are allocated to hotspot infrastructure, which is specifically divided into three parts: participation, witnessing, and creating coverage proof challenges. That is, 675,000 HNT are used to reward Hotspots every month. There are currently about 900,000 hotspot mining machines, so on average each Hotspot can get 1.3 $HNT per month (for the convenience of calculation, the calculation here is based on the average, and the actual reward is not the case.).

Based on the current minimum cost of Hotspots equipment of $330 (online mining machine prices range from $330 to $660), and the price of $9/HNT (ignoring electricity costs), the payback period for purchasing a Hotspot is about 28 months.

The above is only a rough estimate, because the tokens allocated to hotspot infrastructure each month are floating. If a user only purchases one hotspot mining machine to participate in mining, the yield will be much lower than the above estimated average of 1.3 tokens/month.

Helium Network Staking Revenue

According to the Helium network data, the current staked $HNT is 36.57M, the number of validators is 3657, and the annualized rate is 5.24%. In the Helium network, if a user stakes more than 10,000 HNT, there will be no extra rewards.

Helium Ecosystem Data

Current status of network deployment

Currently, the number of Helium network hotspots has reached 900,640, mainly concentrated in the United States, Europe and China. The number of hotspots is increasing at a rate of more than 30,000 hotspots per month, with an average of 1,810 hotspots added per day, and the network scale is growing rapidly.

As of now, Helium hotspots have covered 68,268 cities and 182 countries, with more than 570,000 hotspot owners and a hotspot online rate of 95.16%.

As can be seen from the two pictures below, Helium Hotspot has now reached a certain scale around the world.

Agreement income

According to tokenterminal data, as of this writing, the total revenue of the Helium network has reached $24.65M, with a 30-day revenue decline of 25.24%. The historical high of the token is $54.88, and the revenue has also reached a historical peak. This period is also the bull market of the crypto market, and the trend is highly consistent with the overall market.

https://tokenterminal.com/terminal/projects/helium

Helium Token $HNT

HNT started to be distributed in October 2019. When the token was launched, the supply was zero and there was no pre-mining. A block is packaged every 1 minute, and every 30 blocks are classified as a cycle. Rewards are released once in each cycle. It is currently at the 1449774 block height.

As mentioned above, the total supply of $HNT tokens is 223 million, and there is a destruction mechanism. The current circulation of tokens in the market is 122,293,014, accounting for about 54.81% of the total, with a market price of about $9, and a market capitalization ranking of 46th.

Summarize

In general, the Helium network is still a relatively new project, and its vision is to build a global decentralized wireless network, which is a grand vision. Helium has won the favor of many well-known VCs at the beginning of its birth, and has received strong support in terms of funds, and has developed rapidly. As a member of the Internet of Things sector, Helium's technology and market performance are impressive enough.

The biggest challenge now facing the Helium team is to increase the number of hotspots and expand their coverage to other countries. As the importance of IoT grows, competition is inevitable.

Helium's model is to attract participants to actively purchase Hotspots through token incentives. Most users also take this into consideration and participate in the Helium network to obtain token benefits.

At present, Helium's network deployment is relatively concentrated in Europe and the United States. The denser the deployment hotspots, the more stable the network, and the higher the benefits. This will cause a serious imbalance in the benefits of $HNT, which will flow to Europe and the United States. In addition, the yield rate of participating in Helium network mining is at a low level, and the user's payback period is seriously extended, which will greatly reduce the user's willingness to participate.

Although Helium network also has gateway hotspots deployed in China, the density of hotspot deployment is far lower than that in Europe and the United States. In addition, due to the influence of policy and other factors, there is a lot of uncertainty, which also raises the threshold for mining users who want to participate.

Helium's token economic model is reasonably designed. The token has application scenarios and a destruction mechanism, and mining is halved every two years (the next halving will be on August 1, 2023). The "net release" mechanism in the Helium network ensures that the network has enough HNT to permanently reward hot spots and consensus groups. These factors will drive up the price of $HNT.

reference:

Helium (HNT)

https://twitter.com/helium

Helium’s revenue and on-chain data in a bear market

https://twitter.com/KiwiCryptoBig/status/1539922561160876032

Flywheel Hypothesis | Helium's on-chain data and valuation research https://mirror.xyz/0xfu.eth/HX6QmdbmK5xMaJFsfR5ggqdc6R73yNZ-kwEVojLgsBM

Network hotspot data market, etc.

https://explorer.helium.com/hotspots

Text material introduction

https://heliumchina.gitbook.io/helium/

Helium Token Model and Ecosystem Progress

https://www.zvstus.com/article/news/1/75d87ffffe85389e1b909c5e1dfe0000.html

How to Mine Helium

https://0xzx.com/2021111220301866222.html

Analyzing Helium

https://web3caff.com/zh/archives/3845

AMA Interview:

https://www.bitpush.news/articles/2508291