Like Ethereum or NEO, Lisk is a decentralized platform that allows developers to build decentralized applications. LISK (LSK) is the native token on the platform with a starting supply of 100 million LISK and increases gradually from the annual forging rewards. Lisk aims to create an ecosystem that continually improves over time as more people build on top of the Lisk platform. It addresses the issue of scalability by implementing Delegated Proof of Stake (DPoS) as its consensus algorithm and by providing a software development kit (SDK) to aid in the development of sidechains and blockchain applications.
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Delegated Proof of Stake
Instead of having to go through hundreds or even thousands of nodes to verify transactions, Lisk uses Delegated Proof of Stake, narrowing it down to 101 delegates, who are elected to secure the network. Having only a handful of delegates ensures that the network is fast, efficient, and congestion-free. The election process can be compared to elections in a state democracy; delegates who wish to be part of the 101 official delegates ‘campaign’ and make a proposal of how they will contribute to the system. The incentive in becoming one of the 101 delegates is getting paid the transaction fees and receiving forging rewards (rewards for verifying transactions). At the same time, Lisk holders are incentivized to vote for delegates because delegates usually promise a portion of their earnings to the people who vote for them. Voting power is proportional to the LISK users hold; the more LSK a person has, the more weight his or her vote will hold. This system encourages Lisk holders to be active on the platform by taking control and deciding on what is best for the Lisk network.
While this is good for scalability and benefits both delegates and voters, Lisk gives up complete decentralization by putting the network in the hands of the 101 delegates. In theory, a majority of the delegates could collude to do something malicious on the network. In addition to that, there is also a huge disparity in rewards between the 101 delegates and the voters, making the delegates ever more powerful in the network. Delegates who are not performing up to par can be ousted by the community by voting another delegate in, but given that delegates own and earn a lot of LISK tokens, they have enormous influence considering the weight of their voting power.
Software Development Kit (SDK)
Sidechains
The Lisk App SDK gives developers the power to create their own customizable blockchain that can interact with the Lisk mainchain. In Ethereum, applications run on one blockchain, making the network slower as more applications enter the space (see CryptoKitties). The use of sidechains protects the mainchain and other sidechains from any sidechain that might be faulty or overcrowded. This also gives developers the opportunity to create their own sidechains as testnets for any experiments or new updates they are developing.
Blockchain Applications
The most important feature of the Lisk App SDK is that it enables the creation of blockchain applications – an independent application with its own blockchain, possibly token, front end, and back end, and can interact with the Lisk platform. This means that developers can leverage other blockchain applications to integrate into their own applications. For example, if decentralized cloud storage blockchain application is built on the Lisk platform, other blockchain applications can use this service to store files for their own application.
This interoperability is what makes Lisk attractive to developers. The growth of the whole ecosystem benefits everyone within the space. New developers can take advantage of existing blockchain application services while the older ones can make use of the newcomers’ applications as well. A directory of these applications can be found on the Lisk platform, making it easier to search for and integrate other applications. To use other blockchain applications, one can purchase as needed using LISK.
JavaScript
One of Lisk’s selling points is that it is written in JavaScript. It does not intend to reinvent the wheel like what Ethereum did in conceiving Solidity. Lisk invites developers to write applications in a well-known language. There is no need to learn a new language to get started, making it a low barrier to entry of building on the Lisk platform.