Hedera Hashgraph (HBAR)

Hedera Hashgraph, a permissioned enterprise-focused mainstay from 2017 known for its blockchain-like distributed ledger technology (DLT).

Basics

• Started in 2017
• Based in the USA.
• Has been launched (18-9-2019)
• "Hedera Hashgraph has officially launched its public network after testing with a small group of clients since Dec. 2018; with the network live investors in the project, which raised $124M in a token sale, will start to receive their HBAR tokens; according to CoinDesk, twelve cryptocurrency exchanges and over-the-counter (OTC) desks plan to list HBAR for trading: AlgoZ, BitOoda, Bering Waters, Bittrex, Galaxy Digital, GSR, Liquid, OKEx, OKCoin, OSL, Upbit, and xFutures"

History

• Comes from the US Air Force University

Audits & Exploits

• Bug bounty program can be found [insert here].

Bugs/Exploits

• From their twitter (11-3-2023):

"Hedera turned off mainnet proxies, which removed user access to the mainnet."

• On March 9, 2023 multiple projects on Hedera blockchain lost $600K+ due to a delegatecall exploit in the virtual machine’s pre-compiled contract.
• A researcher pointed out an ongoing exploit hitting Hedera (9-3-2023):

"All Hedera dApps using Hedera Token Service (HTS), like LP tokens or wrapped tokens are affected. The exploit is targeting the decompiling process in smart contracts. Advice: "Get your funds out now." Bridged tokens have been frozen by Hashport so users can't bridge to other chains now."

Governance

• Clearly centralized. From their twitter (11-3-2023):

"Hedera turned off mainnet proxies, which removed user access to the mainnet."

• From a commissioned Messari report (18-7-2022):

"Hedera is a permissioned Proof-of-Stake (PoS) blockchain network. It is governed by 26 global enterprises, known as the Hedera Governing Council, with input from the community via Hedera Improvement Proposals (HIPs). Members of the Governing Council operate Hedera's validators as the network transitions to a decentralized, user-owned network."

• Will have a governing body called the Hedera Hashgraph Council. As their own website says: “The council will consist of up to 39 leading organizations and enterprises in their respective fields, with membership designed to reflect a range of industries and geographies, to have highly respected brands and trusted market positions, and to encourage a wide variety of perspectives. The Governing Members will elect the Governing Board and also contribute expertise through subcommittee membership.”
• The Hedera foundation selects the first 39 companies globally, some in competing industries to reduce collusion. 3 year terms, 2 consecutive terms max. Council selects future members.
• The governance structure of Hedera (which will make all the decisions about hashgraph) is just a 39 person board. Each spot is occupied by a representative of a big (multi-billion dollar) company. All decisions go through them. This company will own 60% (!) of the supply for the foreseeable future. All dapps and companies that run on hashgraph will have to pay Hedera directly to use the chain. This makes hashgraph very much a permissioned chain, since just running a dapp on them requires not just permission, but also payment to the for-profit company.  the chain will also have a PoS component, and the corporate council will own 60% of the supply, meaning that by definition the chain is compromised from the start, since the security of any PoS chain relies on no one entity controlling the majority of supply to be staked.
• Hedera Hashgraph Council plays the role of rule-maker, indirectly sets the rules, fees, and approve new software updates via Governing Board which is elected by HH Council, and the community just plays the role of rule-enforcer, running nodes to verify transactions and apply only the rules of the software written and approved by the Governing Board. Hedera Hashgraph Council is a for-profit LLC
• Hashgraph is patented by a company called Swirlds. Swirlds gets 10% of all profits from Hedera, a for-profit company that will manage hashgraph. The patents are to prevent hard forks - it is literally illegal to hard fork hashgraph unless you own the patent.
• “The Swirlds platform is the official implementation of the hashgraph algorithm. It is maintained and licensed by Swirlds Inc. The Swirlds platform is included in the Swirlds SDK along with a number of example applications.”
• IBM, Boeing and Chainlink Labs are part of the 21 member council. In the future, Hedera plans to have a total of 39 council members (25-5-2021).

Treasury

• From a commissioned Messari report (18-7-2022):

"The Hedera Treasury holds the total supply of 50 billion HBAR. HBAR tokens are distributed following a distribution schedule through 2025. At Q2 2022 close, 21.08 billion HBAR (42% of the total supply) is in circulation. Any funds spent by the Treasury must win a majority vote from the Council. The primary strategy is to release HBARs such that the growth of the circulating supply aligns with the adoption of the Hedera Network. The last Treasury Funds Report was published on Sep. 16, 2021."

Token

Token allocation

• See Treasury, above.

Inflation

• According to a Messari report (Q3-2023) it has 0.4% inflation at that time.

Utility

• “The Hedera hashgraph network will have a native cryptocurrency, which is a utility token that grants token holders access to distributed applications on the platform. The token may also be “staked” and used to run a node (for example, adding CPU to the Hedera public network), thereby providing the network security within the public ledger.”

Stablecoin

• USDC launched on Hedera (20-10-2021) after it was first announced 3 months earlier..

Technology

• Whitepaper can be found [insert here].
• Code can be viewed [insert here]. Got open sourced (26-8-2022).
• Programming language used: The Hedera hashgraph platform will initially support smart contracts written in the Solidity language. Has Ethereum Virtual Machine (EVM) compatibility (3-2022).

Transaction Details

• Capacity (TPS):
• Latency:

How it works

• “Hashgraph is the first asynchronous Byzantine Fault Tolerant (aBFT) consensus algorithm that results in fair ordering, fast finality, and secure propagation. The Hedera hashgraph platform uses a new kind of consensus mechanism, based on gossip about gossip and virtual voting.”

Fees

• From a commissioned Messari report (18-7-2022):

"Transaction fees are consistently low, averaging less than $0.0001."

Staking

• From a commissioned Messari report (18-10-2023):

"Only 26% of staked HBAR opted to receive rewards. During Q3, the Hedera Governing Council made modifications to the staking rewards structure. The prior staking reward rate of 6.5% was adjusted to 2.5% in August. Furthermore, the highest quantity of coins that can be staked and qualify for the full 2.5% reward rate is set at 13% of the total 50B HBAR supply, which is equivalent to 6.5B HBAR. Should the total staked amount exceed 13% of the overall supply, the reward rate will proportionally decrease."

• From a commissioned Messari report (24-10-2022):

"Phases one and two of staking went live. Users can now stake HBAR with Hedera nodes but do not receive staking rewards."

• From a commissioned Messari report (18-7-2022):

"HIP-406: Staking was accepted on June 3, claiming its spot as the most discussed Hedera Improvement Proposal in history. Hedera plans to use staking as a way to decentralize the network."

Staking Stats

• Hedera concluded Q3 2023 with 28 billion HBAR staked, representing 85% of the circulating supply and 56% of the total supply. This high staking percentage is attributed to core entities staking their HBAR allocations to assist validators.
• Google Cloud is a node operator for Hedera (11-2-2020).

Liquidity Mining

• The HBAR Foundation, the developers of Hedera, announced (29-3-2022) a $155 million “Crypto Economy Fund” with a focus on DeFi. $60 million of the fund is allocated specifically as liquidity mining rewards for decentralized exchanges.

Oracle Method

• From CoinDesk (25-5-2021):

"Chainlink will be integrated into the Hedera Token Service and will be Hedera’s preferred oracle service."

Privacy Method

• From a commissioned Messari report (18-7-2022):

"The HBAR Foundation launched a privacy market development fund."

Roadmap

• Can be found [Insert link here].

Revenue

• Revenue has hit $1M per quarter in Q3 2023, a 10x increase compared to a year earlier. During 2024 it stayed within the 1.1-1.6M range.

Usage

• From a commissioned Messari report (18-10-2023):

"Hedera’s Total Value Locked was $31 million. SaucerSwap expanded its TVL to $27 million, accounting for 87% of Hedera's overall TVL."

• From a commissioned Messari report (18-7-2022):

"Hedera averaged 33,000 active users per month, a 51% increase quarter over quarter. Developer activity is trending upwards, with an average of 6,000 developer events per month. NFT activity continues to increase, with 258,000 NFT transactions. The Smart Contract and File Services increased activity, while the Consensus Service and Cryptocurrency Services saw a decrease."

• An official website reports that the chain currently (29-3-2022) accounts for $50 million in total value locked (TVL).
• From CoinSpice (26-12-2019):

"Hedera Hashgraph, the company behind the supposed breakthrough technology capable of beating blockchain in scaling, is having price issues with their HBAR token which has declined 90% since September. The company is proposing token investors delay the unlocking of their coins to the market in exchange for token rewards over time. Mance Harmon, CEO of Hedera, declared: “The rate of adoption and demand for [HBAR tokens] to use on the network has not been what we originally expected.”"

Projects that use or built on it

• So far, Satori, Machine Zone, Intiva Health, CULedger and Artbit have said they would use the platform.

• Interestingly enough, one of the first media news mentions (7-2-2020) of Hashgraph being used was connected with the Coronavirus.

"Acoer, a company using open source and blockchain-based applications for healthcare purposes, designed a pilot application for tracking the evolution of the Coronavirus disease all over the world. Jim Nasr, CEO of Acoe, reinforced the importance of data-driven solutions as a tool to visualize the evolution of the disease. The solution uses Hedera Hashgraph DLT to record each contagion and death as relayed from epidemiologists, so other epidemiologists can trust the information is legit."

• From Cointelegraph (17-11-2020):

"Hedera Hashgraph to be used for crowdsourced airstrike warning app in Syria."

Pros and Cons

Cons

• Clearly centralized. From their twitter (11-3-2023):

"Hedera turned off mainnet proxies, which removed user access to the mainnet."

Team, Funding, Partners

Team

• Full team can be found [here].
• Cohen, David A.; part of the team
• Mance Harmon, CEO
• Leemon Baird; co-founder
• Elaine Song; HBAR Foundation director
• Swirlds. From a commissioned Messari report (18-7-2022):

"Swirlds Labs formally launched on May 1. Swirlds is composed of the development and management teams from Hedera Hashgraph LLC, and it will support the development of the Hedera ecosystem. The Hedera Governing Council will outsource essential services to Swirlds so the Council can prioritize network governance."

Funding

• From a commissioned Messari report (18-7-2022):

"Hedera announced $555 million in ecosystem funding. In early March, the HBAR foundation announced a $100 million Sustainable Impact Fund focused on environmental, nature-based, and sustainable development. The Sustainable Impact Fund is the first of its kind and signals a heavy focus on green markets. In late March the HBAR Foundation announced a $155 million DeFi-focused fund. The announcement said that $60 million would be used as liquidity mining rewards, while the remainder would go to infrastructure-focused grants. Shortly afterward, the HBAR Foundation announced a $250 million Metaverse fund with a focus on enterprise use cases and a $50 million Fintech fund."

• The HBAR Foundation, the developers of Hedera, announced (29-3-2022) a $155 million “Crypto Economy Fund” with a focus on DeFi. At the time of the launch, the platform itself had a TVL of 50M.

Partners

• From a commissioned Messari report (18-7-2022):

"Hedera announced major gaming partnerships with Ubisoft and Liithos."

• A partnership (2-2020) between Hedera Hashgraph and Google Cloud pumped HBAR more than 50 percent. However (14-2-2020):

"Google said it has no plans to use the Hedera Consensus Service, which allows members to plug private networks into the public network. The service launched on Hedera’s mainnet this week.

Rather, Google joined to “provide technical guidance and validate the technology,” Day said. “We are focused on developing solutions that drive real business value across the financial services ecosystem, from capital markets to retail banking and the DLT space.""