The world is constantly changing. 12 years ago, blockchain technology appeared, it breathed new life into the world of finance. This technology brought the unexpected possibility of deleting the centralized intermediary while exchanging data and value. New blockchains were being introduced, but there was still a major drawback, the nonexistence of any blockchain interoperability solution.
Over the years, more and more developed and innovative blockchains have been created, but each blockchain was isolated, blockchains had no proper way to communicate and exchange with each other.
This is exactly where the project Fusion comes in, to melt together traditional finance with all these isolated blockchains in one ecosystem and introduce the “internet of values”. Fusion aims to use blockchain technology to solve the problems of traditional finance with the help of unique technological solutions, it also brings blockchain interoperability, the main problem that prevents blockchain technology from being adopted on a larger scale.
Fusion Project in a Nutshell?
Fusion is a public blockchain that aims to create a cryptofinance platform that “has it all”. A cross-chain (Bitcoin, Ethereum, Litecoin, and others), cross-organization (banks, exchanges, insurance), cross datasource (index, stock prices, identity) ecosystem. Fusion is an open-source project that encourages and rewards community members that contribute to the project, it offers its technology for free to any company wishing to use it to build decentralized applications (dApps). With all the features it offers, Fusion is the ideal candidate to bridge the current gap between traditional and blockchain finance.
DJ Qian is the CEO and founder of Fusion, one of the best-known players in the blockchain industry. He’s also the founder of BitSE, one of the earliest teams researching and developing blockchain. BitSE owns the first and largest mining center in China. It’s the incubator of two high profile blockchain projects, Vechain and Qtum.
Fusion coin uses a hybrid consensus model PoS/PoA. It was chosen in order to avoid the process that every node validates every transaction like the case of Bitcoin’s PoW. The Proof-of-Stake consensus is used to select a winning node, and only then, this particular node will validate transaction blocks. It’s also worth mentioning that Fusion’s PoS is a unique model in the industry, it only uses the time value needed for staking.
To achieve its goals and expand its network, Fusion created the DCRM alliance at the end of 2019. This alliance brings together fintech companies, businesses, academic, and government partners who will work together on solutions for decentralized finance using DCRM. The first members that joined the alliance are Fantom, Karlsruhe Institute of Technology, Realio, Totle, and most recently SolidX. Pretty prestigious names!
What Sets Fusion Apart?
When I said earlier that Fusion is the ideal candidate to bridge the gap between traditional and blockchain finance, it was not to throw flowers at the project, but rather based on facts, mainly the unprecedented technological functions that it brings to the table. Take a look by yourself!
Fusion’s DCRM Function
The Distributed Control Rights Mechanism (DCRM) is the key component of Fusion crypto technology, it’s the solution that provides the blockchain interoperability mentioned earlier in this article. Fusion offers true blockchain interoperability, which is based on cryptography mechanisms and allows to transfer value and logic in a decentralized and trustless way, unlike many other projects that claim to be specialized in blockchain interoperability, while their solution should, in fact, be considered as a compatibility solution.
Karim Chaib, (CCO at Fusion), explains the difference between true interoperability and compatibility in his article. Basically, Fusion’s cryptographic blockchain interoperability allows different blockchains to communicate and easily integrate into the Fusion network while keeping their different characteristics. However, with projects specializing in compatibility such as Icon, Cosmos, Quant Network, or Polkadot, blockchains are forced to integrate and obey to the standards of the network.
Some of the best cryptographers in the world have been gathered to work together on the DCRM solution.
- Pascal Paillier, Ph.D., CEO and Senior Security Expert at CryptoExperts
- Rosario Gennaro, Professor of Computer Science at CUNY.
- Steven Goldfeder, Ph.D., Postdoctoral Researcher in the Department of Computer Science at Cornell University.
- Louis Goubin, Professor of Computer Science at University of Versailles
This technology allows blockchain interoperability using the LILO (Lock In – Lock Out) function which is a portal that allows you to deposit your assets in the Fusion network and also to withdraw them. An Address is created for you, it allows you to lock your assets from any blockchain. The LILO function is reliable and secured by the DCRM function which uses the following cryptographic mechanisms:
- Distributed key generation
- Private Key Sharding
- Zero-knowledge proof
- Homomorphic encryption
This combination of LILO and DCRM allows owners to grant the rights of their assets to the Fusion crypto algorithm when they Lock-In their assets. These assets can then be used in the Fusion network to do many things, like taking advantage of network scalability to make Bitcoin transactions within seconds, to exchange values across heterogeneous digital assets, etc. All these operations are carried out in a decentralized way using smart contracts.
This is another technological innovation introduced by the Fusion project to the world of cryptofinance. It is widely known that today, blockchain can replace banks and allow individuals to carry out financial transactions without the need for any third party. These transactions include two variables: the asset (such as BTC, ETH or FSN), and the quantity (2, 10 or 25). So, Thomas can directly transfer money, say 2 BTC, to his friend Eric in a peer-to-peer transaction without needing the help of a bank or any intermediary.
But what about financial transactions that are not instant, and require the intervention of a third variable: time?
Time is a major factor in many types of financial transactions such as investments, loans, mortgages, etc. The fact is that the value of an asset today is higher than the value of that same asset tomorrow or the day after tomorrow. Currently, the only possibility of carrying out this kind of financial operations is to establish a real-world contract which requires the presence of a third party to be legitimate.
However, for the first time, blockchain technology can be used to ensure such operations, thanks to the “Time Lock function” introduced by Fusion. But how does it work?
Again, Fusion innovated by introducing Multiple Triggering Mechanism (MTM) technology, it’s the next generation of smart contracts that includes in addition to asset and quantity that we can find in any blockchain smart contract, a third factor which is time.
Fusion allows you to divide the period of time during which you own the asset in question, and assigns the corresponding value during each time interval. So, if you have 10 Fusion coins (FSN coin), you can divide your possession time into two or more periods.
Say, the first period would be “from Today to 6 months from now”, during this period my 10 FSN coin will have a certain value (designated by the market). The second period would be between the end of the first period and infinity, the value of your assets during this second period would be different from that of the first period of time. Of course, it would be representative and designated by the market price.
But how do we replace the contract that required the presence of a third party?
Fusion also introduced the concepts of owner and user. By owning 10 FSN coins, you are the owner. You can, therefore, use the time lock feature to carry out financial transactions. You can for example lend your coins to a user for a period of 6 months in exchange for a small profit. During this period, you are still the owner of these coins, but you give the rights of their use to the user. After 6 months, the rights will automatically revert to you without any third-party intervention.
This functionality is very practical and can have very simple use cases such as staking, but also more complex use cases that blockchain does not provide currently for the financial world such as factoring and derivatives.
Open-Source Community Projects
Another important pro that Fusion crypto can boast of offering is the fact that it’s an open-source project that is available to community contributions.
I mean, it’s the goal of blockchain technology, after all, to give everyone a chance and an opportunity to contribute, and that’s exactly what Fusion does. Back in October 2019, the project allocated a huge amount of Fusion coins to their open source community campaign.
Developers, designers, content creators, translators, hundreds of candidates applied, and have been selected to participate in this campaign after which they shared more than 1 million FSN coins in rewards. Worry not though, Fusion is still rewarding contributors regardless of the nature of their contributions. Monthly reports are published sharing the progress of Fusion’s community projects and the amounts of Fusion coin the contributors earned.
Fusion’s Financial and Blockchain Interoperability Use Cases
The technological innovations proposed by Fusion which are intended for the universe of finance are, to say the least, impressive. But how can they be applied in practice? How can businesses and individuals benefit from using them on a daily basis? This is exactly what we will find out:
Risk-Free Financial Operations
We have seen that the Fusion platform allows you to proceed with any financial transaction that involves time (investment, mortgage, bonds, derivatives, etc.) through its smart contract technology, but what you need to know as well, is that it is possible to link several financial transactions by linking different trustworthy and risk-free smart contracts.
An interesting use case of this would be an individual who wants to invest or lend his money. However, what if he doesn’t have it currently, because it is locked in a smart contract that expires soon? Easy, all he has to do is to link the two smart contracts. So, as soon as the current smart contract expires, the second smart contract (that of the investment or the loan) will be immediately triggered.
Any business could join the Fusion network and benefit from all the features that it provides. Whether to exchange data and values with other companies using blockchain interoperability, benefit from the military-grade security of the private key custody, use it as a universal wallet for digital assets, or any other financial operation. Fusion provides businesses with a fast, secure, and scalable ecosystem.
In addition, by using the Multiple Triggering Mechanism (MTM), companies can perform these operations instantly, reliably and securely, avoiding the excessive costs that usually come with this kind of operation.
Larger Scale – Cities and Governments
The scalability of the Fusion network allows for endless use cases in a secure and interoperable environment. DCRM technology can be used to link many different systems regardless of their number and architecture, thus creating a huge cross-organization and cross-datasource ecosystem.
A good example of this would be interconnected in smart cities. We all know that giant companies own private data on citizens all around the world. Data that even a city that wants to improve the quality of life of its citizens does not have. Companies tend to keep data for themselves, sometimes to improve the quality of their services, and sometimes for much worse intentions, unfortunately.
By using fusion’s blockchain interoperability, and combining it with the unique technology of DCRM, cities will be able to bring together businesses and individuals in a single ledger that contains all the useful data they need to improve their city and succeed in their strategies at a local level, while taking advantage of the security and protection of citizens’ data offered by the blockchain.
A simple use case of this solution would be a city that would like to encourage its citizens to go to work by bicycle by rewarding them, the purpose of the city by doing so is to have a cleaner environment and healthier citizens. The city can hire a local bicycle company that could record citizens’ paths on its blockchain in order to reward them. Fusion blockchain interoperability then allows communication between the city system, the bicycle company system, and the citizen in a single environment, Fusion’s ecosystem.
What you should know is that these are just a few of a large number of possible applications. The Time-Lock function opens up even greater possibilities other than the ordinary financial operations. Fusion’s technology allows you to license your song, your content, or anything else that can be digitized.
Fusion is a project that is surprisingly going under the radar in the cryptocurrency market, for now at least. But it is clear that technologically speaking, this is one of the most promising projects, Fusion coin (FSN coin) will be the center of this technology, which will increase the demand for this cryptocurrency.
Currently, the global financial system needs the blockchain and what it offers to facilitate transactions and operations. However, a blockchain interoperability solution is needed to connect otherwise siloed blockchains. Fusion is the perfect solution for this, especially with the DCRM and Time-Lock technology that makes it even easier for financial transactions that involve time.
Fusion ensures the coexistence between different blockchains, banks, stocks, services, businesses, governments, and citizens in one secure, reliable, and scalable ecosystem. A solution that makes it as easy to proceed with operations that are, as small as, sending bitcoin within seconds to operations that are, as big as, connecting all the systems of a smart city.