Helium Network


4/7/20243 min read

Elon Musk's Starlink represents a groundbreaking backbone network in the aerospace communications sector, fundamentally relying on "corporate" high capital investment to deploy networks more efficiently than traditional operators. In contrast, Helium introduces a change in the underlying economic model. Governed by a DAO, it innovatively proposes a blockchain-based sharing economy model, akin to the Airbnb of wireless networks. Users host hotspots at home, ensuring their operation, and thus, industrial and commercial IoT devices can "visit" and connect to these networks. This highlights Helium's open and barrier-free value orientation, distinguishing it from the traditional telecommunications industry's dominant charging schemes. Network usage and contributions come from individuals and small organizations, making it a "network of the people."

Setting up a hotspot is straightforward, requiring no knowledge of wireless communication or cryptocurrencies. Simply set up the device provided by Helium at home or in the office, connect it to the internet, and you can support IoT devices in your city. Participants earn Helium's native tokens, HNT, through a network coverage proof mechanism of "witnessing" and being "witnessed," earning rewards for the data transmitted over their network. Helium promotes network sovereignty, allowing individuals to own the value of the networks and data flows they provide.

IoT device connectivity is highly fragmented, often tied to different protocols/technologies with low interoperability. Unlike mobile devices like phones and computers, IoT devices have yet to embrace an equivalent to WiFi or Bluetooth, representing open standards based on open hardware for programmability and configurability for interconnection and collaboration. Helium seeks to innovate in this pattern, aiming to fill this void more efficiently than ISPs.

From the supply side, Helium creates a decentralized peer-to-peer wireless network, motivated by blockchain incentives for maintenance, allowing each person to own the value of their network and data flow. Helium leverages "the power of the masses" to offer hotspots, allowing devices from other networks to roam into the Helium network, aiming to bridge the global IoT ecosystem. Network providers earn HNT through a "Proof of Coverage" mechanism.

On the demand side, Helium offers decentralized low-cost benefits to its users (including major IoT applications like logistics, smart cities, agriculture, and environmental monitoring), providing a flexible access method for IoT devices needing long-range low-power data transmission without locking into long-term contracts with network operators.

With the phase-out of 3G, an estimated 2 billion cellular IoT devices face disruption, shifting towards more expensive 4G networks or open wireless networks like Helium. Helium's alternative pricing requires only a few dollars per IoT device annually, supporting a market value in the billions. Helium's modest fees ($0.00001 per 24 bytes of data in the form of Data Credits) could potentially redefine the rules for IoT network providers through exponential cost reduction.

Following the launch of Helium + FreedomFi 5G network last April, Helium expanded from enterprise to consumer communications. Initially focused on IoT networks, its impact on traditional telecom giants was indirect, possibly why there hasn't been significant opposition yet. With 5G, some network operators are considering using Helium's network coverage through roaming. Can Helium, by becoming a 5G infrastructure provider, challenge the dominant market?

Helium blockchain's mechanism design includes a dual-token economic model, using HNT and Data Credits. HNT, with a total supply of 223 million and no pre-allocation, incentivizes various contributions to the network. The distribution of HNT rewards changes over time, initially favoring hotspot owners significantly. Data Credits, priced fixedly in dollars, are used for transaction fees within the Helium ecosystem, creating a burn-and-mint equilibrium.

Proof of Coverage (PoC) is a novel mechanism where gateways prove their operational status, location, and wireless coverage, incentivizing network expansion. This system replaces the energy-intensive Proof of Work (PoW) used by Bitcoin with a method leveraging radio waves, rewarding nodes for maintaining the network and verifying coverage through encrypted data packets.

As the Helium network grows, the introduction of "Validators" aims to alleviate pressures from the rapid increase in hotspot and block numbers, enhancing user experience and resource efficiency within the network.

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