Halving 101: What Happens to Blockchains After Halving? (Part 2)

In our previous article, we explored the fundamental concept of halving in cryptocurrencies. Now, let's delve deeper into its profound impact on blockchain networks.

The Ripple Effects of Halving on Blockchain Networks

Halving events affect various aspects of the blockchain network. Let's examine some of the key areas in Web3 impacted by halving.

Tokenomics

Halving directly influences the scarcity and value of a cryptocurrency. As per the basics of economics, the supply of new coin decreases, and existing coins become more scarce, potentially driving up their value.

This effect has been demonstrated in Bitcoin's history, where each halving event has preceded significant price increases.

Network Security

Halving can impact network security by affecting the incentives for miners. Reduced block rewards may decrease the overall hash rate, potentially making the network more vulnerable to attacks. However, this is often mitigated by the increasing value of the cryptocurrency, which can offset the lower block rewards.

Bitcoin, for instance, has maintained a robust level of security despite multiple halvings.

Mining Profitability

Miners face reduced rewards for their computational work, forcing them to optimise efficiency or consider alternative ventures. However, the potential increase in the crypto's value can help maintain profitability. Bitcoin miners, for example, have historically adapted to halvings by upgrading their equipment and employing more efficient mining strategies.

Blockchain Network Sustainability

Halving can also encourage improvements in network efficiency. With reduced block rewards, miners are incentivised to seek more energy-efficient mining methods, while juicing up operations. This can lead to a reduction in the overall energy consumption of the blockchain network.

How the aelf Halving Will Look

While the general impacts mentioned above apply to most blockchains, the aelf halving presents unique considerations due to its distinct architecture—with Web3 and AI integrations—and consensus mechanism.

aelf's Delegated Proof of Stake (DPoS) Consensus: Unlike traditional Proof of Work (PoW) blockchains, aelf utilises DPoS, where elected nodes validate transactions. This introduces a different dynamic to the halving process, as miners are not directly competing to solve complex mathematical problems.
Focus on sustainability: aelf's halving aligns with its commitment to long-term sustainability. By reducing the rate of new ELF token creation, aelf ensures a stable and secure network for its growing ecosystem, which is crucial for Web3 and AI integration.

aelf's layer 1 AI blockchain is equipped with artificial intelligence functionalities that provide real-time support to Web3 users and developers, making the technology more accessible and user-friendly.

With its customisable architecture featuring a MainChain and dAppchain, aelf boasts scalability and interoperability, making it conducive for supporting a variety of dApps across DeFi, gaming, and SocialFi.

aelf is preparing for its first halving event—set to take place on 12 December 2024—a key milestone that will see a greater expanse of growth and evolution for the AI blockchain.

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*Disclaimer: The information provided on this blog does not constitute investment advice, financial advice, trading advice, or any other form of professional advice. aelf makes no guarantees or warranties about the accuracy, completeness, or timeliness of the information on this blog. You should not make any investment decisions based solely on the information provided on this blog. You should always consult with a qualified financial or legal advisor before making any investment decisions.

About aelf

aelf, an AI-enhanced Layer 1 blockchain network, leverages the robust C# programming language for efficiency and scalability across its sophisticated multi-layered architecture. Founded in 2017 with its global hub in Singapore, aelf is a pioneer in the industry, leading Asia in evolving blockchain with state-of-the-art AI integration to ensure an efficient, low-cost, and highly secure platform that is both developer and end-user friendly. Aligned with its progressive vision, aelf is committed to fostering innovation within its ecosystem and advancing Web3 and AI technology adoption.

For more information about aelf, please refer to our Whitepaper V2.0.

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Tool/Platform	What's it about
ChainGPT	An AI-powered assistant for the blockchain and crypto industry, specializing in content creation, language translation, smart contract coding, and more.
aelf	A high-performance, customisable multi-chain blockchain framework with AI-powered smart contracts and a developer-friendly environment.
Quick Intel	An AI-powered crypto security platform that helps investors avoid scams, rug pulls, and honeypots by analysing smart contracts, social sentiment, and on-chain data.
Cogwise AI News Aggregator	An AI-powered news aggregator that analyses real-time news and global trends to predict market movements in the crypto market.
OpenAI Codex	An AI system that transforms natural language into code, automating code creation for smart contracts, blockchain applications, and other development tasks.
QnA3	An AI-powered Web3 knowledge hub that provides real-time information and insights on cryptocurrencies, blockchain projects, and the broader Web3 ecosystem, with unique Solana Actions integrations.
Fetch.ai	A platform that combines AI and blockchain to create autonomous economic agents (AEAs) for various applications, including supply chain optimisation and smart city management.
Octavia	A decentralised digital identity (DID) platform for creating and managing self-sovereign digital identities, empowering users to control their data and online presence.
TensorFlow	A versatile open-source machine learning framework used for building AI models that can analyse blockchain data, enhance security, and predict market trends.
Alethea	A platform that creates 'Intelligent NFTs' (iNFTs) with unique personalities and the ability to engage in conversations, powered by AI and blockchain technology.

Chain	URL	Explorer
AELF	https://aelf-test-node.aelf.io/	https://explorer-test.aelf.io/
tDVW	https://tdvw-test-node.aelf.io/	https://explorer-test-side02.aelf.io/

Feature	Description
Inheritance	ERC-404 inherits from the interfaces IERC-404, IERC721 Receiver, and IERC165, implementing functions specified in these interfaces, behaving as both ERC20 and ERC721.
Data Structures	Mappings track balances, allowances, approvals, and ownership of tokens. Double-ended queue stores ERC721 token IDs. Data for managing ownership and indices of ERC721 tokens.
Constructor	Initialises token name, symbol, decimals, and other necessary variables for ERC20 and ERC721 tokens.
Token Minting and Burning	_mintERC20 function for minting ERC20 tokens. _retrieveOrMintERC721 function for minting ERC721 tokens and retrieving from a bank. _withdrawAndStoreERC721 function for depositing ERC721 tokens into the bank.
Transfers	Functions for transferring ERC20 and ERC271 tokens between addresses. Distinguishes between token types based on ID. _transferERC20WithERC721 function handles transfers involving both types.
ERC20 and ERC721 Interactions	Approve function handles approvals for both token types. Functions like transferFrom, safeTransferFrom, and permit handle transfers and approvals.
EIP-2612 Support	Supports EIP-2612 permit functionality for ERC20 tokens.
Interface Compatibility	Implements necessary functions for ERC-404 and ERC165 interfaces, indicating compatibility with ERC20 and ERC721 standards.

Role	Max Number
BP	2N+1, N starts from 8 in 2022
Candidate node	5*(2N+1)
Voter	No limit

Benefits	Description
Makes smart contracts 'smarter'	AI-driven smart contracts can autonomously modify terms based on predefined conditions and real-time data input, ensuring that the contracts are not just automated but also intelligent and self-improving over time.
Levelled up data analysis	Data is the new oil, and AI is the machinery that refines it. It is possible for AI to reduce large-volume blockchain data analysis time by up to 90%.
Boosts security	Through machine learning models, AI can prevent frauds and detect security threats in real time. It can identify potential breaches, predict future threats, and adapt to evolving security measures.
Lowers carbon footprint	AI algorithms help optimise energy consumption in blockchain operations, given the flak drawn by activities like Bitcoin mining.