IoT devices that support LoRaWAN can access the dispersed, global Helium Network, which is a long-range wireless network. The network is made up of Hotspots, which offer public network coverage in exchange for payment in HNT, Helium’s native money. Additionally connected to the network is the Helium blockchain, which offers a reward for hosting hotspots.
What is LoRaWAN?
The point-to-multipoint networking protocol LoRaWAN makes use of the LoRa modulation technique developed by Semtech. It involves more than just the radio waves; it involves how they interact with LoRaWAN gateways to perform tasks like encryption and identification. Additionally, it has a cloud component to which numerous gateways can connect.
The Helium Blockchain
Known as Proof or Coverage, the Helium blockchain employs a new consensus mechanism (PoC). The blockchain’s mainnet was introduced on July 29, 2019, and since then, it has expanded significantly, especially in North America and Western Europe. The largest LoRaWAN network in the world is powered by the Helium blockchain, which also offers Hotspot incentives in the form of HNT payments.
Proof of Coverage
For Helium, a new algorithm called Proof of Coverage was developed. It confirms that the network’s Hotspots are actually placed where they say they are and that they are accurately describing the wireless coverage they are generating at each location.
Why Proof of Coverage?
The ability of the Helium network to deliver dependable wireless network coverage for the connected devices utilising the network is essential to its success. This necessitated the employment of a work algorithm designed expressly to address that use case. By utilising radio frequency’s special features, the Proof of Coverage protocol allows the Helium network and blockchain to generate proofs that have value for both the network and its users. Proof of Coverage depends on these three qualities in particular:
Physical propagation and consequently distance are constrained by RF;
RF travels at the speed of light with (practically) no latency, and the strength of a received signal is inversely proportional to the square of the distance from the transmitter;
Through these attributes, the blockchain continuously questions Hotspots about their coverage and location using the PoC challenge mechanism. This enables the Helium Network to continuously use the data produced to unambiguously confirm the precise wireless coverage that the network’s Hotspots provide.
Proof of Coverage Challenges
The Proof of Coverage algorithm’s discrete unit of work is called a PoC challenge. Tens of millions of challenges have been issued and handled by the Helium blockchain in the less than two years since the network’s introduction. The Helium blockchain gets and stores more information about the network’s quality when each new challenge is issued and handled.
Three different network roles are involved in each of the PoC challenges:
The Hotspot that creates and issues the POC Challenge is known as the challenger. On average, challenges are issued by hotspots every 240 blocks.
Transmitter – Also known as the “Challengee,” this Hotspot is the POC challenge’s intended recipient and is in charge of transmitting (or “beaconing”) challenge packets so that nearby Hotspots may observe them.
Hotspots that are geographically close to the transmitter and that, after the challenge packet has been broadcast, report its presence are considered witnesses.
Consensus Protocol Design Goals
The following guidelines served as the foundation for the design of the consensus mechanism utilised by Helium:
Permissionless – As long as a Hotspot complies with the network requirements and consensus rules of Helium, it should be allowed to join without restriction in the Helium Network.
Truly decentralised by design – There are no incentives to take advantage of things like low energy costs or the placement of extra devices in the same place.
Byzantine Fault Tolerant: As long as a certain percentage of participants are being truthful, the protocol should be tolerant of Byzantine failures such that consensus can still be obtained. For this, Helium employs a BFT version known as HoneyBadgerBFT, which is described in more detail below.
Based on valuable work – Reaching consensus on the network should be beneficial and reusable for the network. Work done to reach consensus is only valid for a particular block in Nakamoto Consensus-based systems like the Bitcoin blockchain. In contrast, Helium’s consensus algorithm does work for the network that goes beyond just protecting the blockchain and is both helpful and reusable.
High number of confirmed transactions per second – The protocol should be able to perform many confirmed transactions per second, and once a transaction is seen by the blockchain, it should be regarded as confirmed. The Helium Network’s users cannot withstand the lengthy block settlement times that are typical of other blockchains when transferring device data.
Transactions that can’t be censored: Hotspots shouldn’t be able to choose or reject which transactions go into a block.
HoneyBadger BFT
As previously indicated, the HoneyBadger BFT protocol, which was developed and constructed by Andrew Miller and the team at the University of Illinois, Urbana-Champaign, forms the foundation for consensus in Helium.
An asynchronous atomic broadcast technique called HoneyBadger BFT was developed to allow a group of known nodes to reach consensus over a number of faulty links. The consensus has been implemented in Helium so that the consensus group of chosen Hotspots first receives encrypted transactions before deciding on the order in which they should be processed. The transactions are subsequently included in a fresh block, which is then added to the blockchain.
Threshold encryption is the system that enables HoneyBadger BFT to operate correctly. With this, a common public key is used to encrypt all transactions. Only when the entire elected consensus group collaborates can the transactions be encrypted. Helium can achieve censorship-resistant transactions by employing this approach.
How to Earn HNT Tokens
While the selfless notion of merely assisting the network by operating a Hotspot is a wonderful one, the fact that Helium has set itself up to provide HNT tokens as a reward informs us that most individuals will not merely assist the network out of the goodness of their hearts. However, the availability of incentive payouts means that operating a Helium Hotspot can result in the acquisition of HNT tokens.
At the conclusion of each epoch, Helium gives awards to the Hotspots that have earned them. Each epoch in Helium consists of 30 blocks, and the network aims to create a block every 60 seconds. Therefore, an epoch has a total theoretical duration of 30 minutes. On the Helium Block Explorer, you can view the current block production data.
As of April 2021, Hotspots receive 65% of the mining rewards as an incentive, and Helium Inc. and a few other early investors receive the remaining 35%. All of the following actions can earn hotspots rewards:
submitting challenges to legitimate proof of coverage (as a “challenger”)
Successful target (as a “challenger”) involvement in proof of coverage
observing a proof-of-coverage dispute
Data exchange between devices via a network
Participating in a consensus group
Following is a breakdown of how the 65% Hotspot awards are distributed:
CHALLENGERS: 0.95%
The network selects Hotspots to send challenges—encrypted messages sent over the Internet—to a specified set of Hotspots. Proof-of-Coverage use challenges to verify wireless coverage. Hotspots can send challenges to Hotspots in any area, not just nearby ones.
PROOF-OF-COVERAGE: 5.31%
For taking part in Proof-of-Coverage and certifying the wireless coverage of their peers, hotspots receive a portion of HNT. The amount that each Hotspot makes is based on how frequently it participates directly in Proof-of-Coverage activities.
WITNESSES: 21.24%
Based on the amount of activity they have observed and the Challengee’s reward scale, Hotspots that keep an eye on and report Proof-of-Coverage activity (beacons) from other Hotspots are awarded a share of HNT.
NETWORK DATA TRANSFER: 32.5%
Hotspots that transported data from networked devices receive HNT. Depending on how much data a Hotspot transmits, a certain amount of HNT is distributed.
CONSENSUS GROUP: 6%
Hotspots are randomly elected to the Consensus Group to perform tasks including validating transactions and publishing new blocks to the blockchain. Group members receive a portion of the 6% distributed to the Consensus Group.
The Helium Hotspot
On the Helium network, mining and broadcasting are done via physical devices called Helium Hotspots. Anyone who wants to use a Hotspot to connect to the network must buy one from a third-party manufacturer.
The Helium internet store now lists 5 distinct Hotspot models, with prices ranging from $410 to $577. As of April 2021, the demand for these Hotspots, which come in indoor and outdoor varieties, has outstripped supply due to their immense popularity. The majority are now backordered and won’t ship until the summer.
Set-Up
The Helium Hotspot devices are simple to set up and not unlike from many other IoT devices in this regard. Beyond the fundamental first setup, keep in mind that the Hotspot should be put close to a window and definitely not hidden behind walls or metal enclosures in order to have the best range possible. Even better is if you have the money to add an antennae to extend the Hotspot’s range.
Depending on the quantity of Hotspots in your neighbourhood, your profits will change. Hotspots can make as little as 0.25 HNT every day, or they can make 50 HNT or more.
There isn’t much more to do once the Hotspot has been deployed and configured. You may log in to view your profits and performance, but that’s about it.
Rewards in Practice
For the majority of people, earning money from helium doesn’t just include purchasing a hotspot, setting it up, and waiting for the money to come in. Other Hotspots must be within range of you, but not too many. The revenue generated by your hotspot will be reduced if there are either too few or too many nearby. Urban areas in the United States and Western Europe are currently the finest locations. A greater elevation or the installation of antennae can increase each Hotspot’s range, which is typically around 10 miles.
Of all, getting a Hotspot first in your neighbourhood might not be all that awful. Your income will increase as the coverage does. As new Hotspots are installed to the same region where they already have a Hotspot, for instance, some customers have noticed a noticeable rise in profits over a short period of time. Early adopters will benefit the most from bitcoin, as is the case with many other things.
Helium Hotspots – US vs EU
There are 25,957 active Hotspots on the network as of April 8, 2021. The likelihood of making a respectable income in the U.S. and Western Europe’s large cities is already high, and in certain places, coverage is already extending to the suburbs. Here is a screenshot of the recent coverage in Europe and the United States.
Additionally, coverage in China is expanding, and there are a few other hotspots in Japan and other countries in Asia. It will be fascinating to revisit this map in six months and monitor the expansion in Asia as well, as the number of Hotspots increased extremely quickly across North America and Europe.
Maximizing HNT earnings
Adding more Hotspots is the apparent step you may take to enhance your income. However, that might not be in your best interests in the long run because the awards per Hotspot start to decrease at a certain degree of coverage.
In a perfect world, you would install your hotspot early and in a place where there are ever more hotspots. The best location for a Hotspot at the moment is on the east coast of the United States, but other regions are catching up quickly, and coverage in Europe and the UK is much greater now than it was six months ago.
Additional suggestions from Helium include:
Install sensors because hotspots that route genuine sensor data receive 30% of all HNT (such as the trackers Helium sells)
The strategy most likely to boost your income is making sure you aren’t the only hotspot in your neighbourhood. You are more likely to take part in PoC challenges and see more PoC challenges taking place nearby if you are in an area with three or more Hotspots. Optimising around these two has a significant influence because they have the largest HNT distributions for Proof of Coverage per epoch.
In circumstances where there are other Hotspots nearby but you either fail challenges that you participate in or do not witness challenges that they are participating in, upgrading to a larger antenna will help.
Opening internet network ports makes it easier for the PoC Challenger to receive receipts from the Witness and Challengee.
The Helium Team
Shawn Fanning, Amir Haleem, and Sean Carey established Helium in 2013 with the goal of making it simpler to create connected devices. Only Amir is still employed at Helium and holds the post of CEO. Amir was the CTO of the video game firm Diversion in the past. Additionally, he was a founding member of the DICE development team for Battlefield 1942.
Marc Nijdam, a technological expert with more than 25 years of experience, serves as the CTO of Helium. He served as a Senior Engineer at Yahoo! before joining Helium in 2015, and before that, he held a variety of positions with industry giants like Qualcomm.
Frank Mong, the COO of Helium, is another. For Helium, Frank is in charge of business development, sales, and marketing. Mong worked in cyber security for 20 years before joining Helium, serving as CMO at Hortonworks, SVP of Marketing at Palo Alto Networks, and VP/GM of security at HP.
Shawn Fanning, the co-founder, continues to serve as one of Helium’s consultants. American computer programmer, business owner, and angel investor Fanning. In 1999, he created Rupture and Napster, the first widely used peer-to-peer file sharing technology. Additionally, Shawn is a co-founder of Path and Airtime.
The Helium (HNT) Token
The Helium Token, sometimes known as HNT, is the native cryptocurrency of the Helium blockchain. HNT had no pre-mine, and on July 29, 2019, the genesis block generated the first token.
The two main participants in the Helium blockchain ecosystem are intended to be served by the Helium Token:
Network administrators and hotspot hosts. hosts HNT mining while setting up and keeping network coverage.
using the Helium Network to link devices and create IoT applications include businesses and developers. Data Credits, a $USD-pegged utility token created through the burn of HNT, are used to cover the transaction costs for network wireless data transmissions (in addition to things like adding Hotspots and sending).
HNT Tokenomics
Three distinct tokenomic principles are used by the Helium blockchain to make sure that there is enough HNT to meet network demands while simultaneously being scarce enough to enable price growth. Maximum supply, burn-and-mint, and net emissions are the three guiding concepts. Let’s examine each in more detail below.
Max Supply
Only 223,000,000 HNT will ever be mined. Since its inception, the network has set a monthly mining goal of 5 million HNT. The monthly aim will drop to 2.5 million HNT every month as of August 1, 2021, as the Helium blockchain also employs a two-year halving cycle. The halving timetable states that all HNT will be mined within the first 50 years after it starts on August 1, 2020.
Data Credits and Burn-and-Mint Economics
Data credits, a utility token pegged to the US dollar, are used to cover all transaction fees on the Helium network. They originate from a burn transaction in which data credits are produced by burning HNT. The data credit has the advantage of always costing $0.00001, which translates to $1 purchasing 100,000 data credits. Obviously, because HNT’s value fluctuates, so does the number of HNT required to exchange one dollar.
The burn-and-mint equilibrium architecture serves as the foundation for the interaction between HNT and data credits. In order to find equilibrium and maintain a constant amount of HNT, it is envisaged to enable HNT to react to variations in network usage.
The concept was strongly influenced by Factom’s use of burn-and-mint, albeit it isn’t the only blockchain that employs this technique. Depending on the USD price of HNT as published by the HNT Oracles, the quantity of Data Credits generated by burning HNT will fluctuate.
Net Emissions
Net emissions were first brought to the Helium network on November 18, 2020, along with HIP 20. The obvious conundrum of how the network can keep producing HNT if its supply is capped at 223 million tokens and they are constantly being burned to create data credits is addressed.
Net emissions were necessary because of this. The protocol receives enough HNT from it to reward Hotspots and consensus group members indefinitely.
An overview of how net emissions will prevent the supply of HNT from being exhausted through burn-and-mint economics is given below:
The blockchain would track, using Net Emissions, how many HNT were burned for Data Credits during a specific epoch and add that number to the total HNT that was scheduled to be created during that era. For instance, the system would produce 10 more HNT than anticipated in that epoch if 10 HNT were burned for Data Credits.
HNT created by Net Emissions does not go against the maximum supply because they do not increase the total amount outstanding.
However, Net Emissions would negate Burn and Mint’s intended deflationary effect. There is no supply reduction if the system substitutes every HNT that is burned to produce Data Credits.
As a result, there will be a limit on the total amount of HNT that can be produced via Net Emissions per epoch once it is in place. A decrease in supply will occur after the HNT burnt for DCs reaches this cap.
The HNT Token Performance
The HNT token had a decent beginning, selling for roughly $0.50 at first before climbing to $2.00 in just two months. The next month, the price fell back to $1.25 before rising to $2.00 by October 2020. The HNT token soon went below $1, however that only lasted for a brief period of time. By the start of 2021, the HNT token was trading around $1.25.
Naturally, the price quickly turned parabolic as a result of the broad-based altcoin rise in early 2021, eventually reaching an all-time high of $21.17 on April 7, 2021. Most customers will easily break even on a Hotspot at this pricing within a month, if not sometimes even sooner.
It is impossible to predict whether prices will stay high or whether they will decline to earlier levels. For most users, it won’t take more than a few months to repay the cost of a Hotspot and have a positive ROI, even if prices drop back to the $1.25 area.
Conclusion
Although Helium started out slowly, it has since developed quickly, growing from about 7k Hotspots in August 2020 to over 25k in April 2021. Although the network is now only well-represented in the major American cities and to a lesser extent Western Europe, there is still room for expansion in both of these regions. Furthermore, Asia has enormous growth potential because Hotspots are just now starting to appear in China. There is currently hardly any representation in Australia, Southeast Asia, or India.
The technology does function as planned, which is one thing that can be claimed. Hotspots are likely to continue growing and be valued as well as profitable for a very long time. Even if the HNT token loses its gain from 2021 and trades back down to the $1 to $2 range, this is still true.
Even if the about $400 investment is out of many people’s price ranges, it is still easily affordable enough to witness continuing network growth, especially if the price of HNT rises.
One thing that can be said is that the technology works as intended. Hotspots are likely to be profitable, appreciated, and continue to grow for a very long period. This is still true even if the HNT token loses its gain from 2021 and trades back down to the $1 to $2 level.
Even if the $400 investment is out of most people’s price ranges, it is still easily doable enough to see continued network growth, particularly if the price of HNT increases.
