Identity theft has been on the rise in the US recently. Every 14 seconds, someone becomes a victim. According to data security experts, people active on social channels like Facebook, Snapchat, and Instagram are more likely to have their details stolen.
This then poses the question: Do you know who currently has access to your data and how it’s being used? Unfortunately, the majority of us can’t answer this question.
However, there are some existing platforms in the blockchain industry that seek to fill this gap. One of such platforms is Ontology. Ontology is building a future that guarantees you total control over who can access, see, and use your online data and identity.
In this article, you will learn about the Ontology ecosystem, how it works, and the ONT, Ontology’s utility token.
What is Ontology?
Ontology is a network of public blockchains that is designed to facilitate digital identity management and self-sovereign data. The blockchain aims to increase privacy, transparency, and trust while giving users and businesses the flexibility to build blockchain-based solutions.
Initially, Ontology focused on offering blockchain-as-a-service (BaaS) to businesses. However, following the network’s successful venture into digital verification, Ontology has doubled down on identity security.
As a result, Ontology’s ecosystem features smart contracts, ONTO, the network’s primary digital wallet, and identity proofs through ONTID, which can all be seamlessly transferred cross-chain.
Ontology’s protocol was first launched on NEO, but the network later launched its mainnet on June 30, 2018, independent of NEO. Similar to NEO, the network utilizes a dual token system; ONT and Ontology Gas (ONG).
ONT, the primary token, was first deployed as a NEP-5 token on NEO. However, after the mainnet was launched, Ontology swapped the NEP-5 tokens for native mainnet ONT coins. Rather than holding the typical Initial Coin Offering (ICO), Ontology airdropped free ONT tokens to both NEO holders (1 ONT for every 5 NEO held) and email subscribers.
Ontology Use case: Network Governance
Unlike other blockchain governance systems, holding ONT doesn’t guarantee any network incentive. ONT tokens have to stake their tokens in reserved pools to participate in governance and earn rewards. This gives them the right to secure the network and reach a consensus by confirming transactions.
Ontology’s governance system is made possible by the Triones Consensus System governance protocols; a model Ontology uses to incentivize network participants. The concept is simple; the Ontology network consumes gas (ONG) to facilitate services on the blockchain. ONT token holders that participate in the Triones Consensus Node system receive the consumed gas.
There are two types of nodes: the consensus node groups and the candidate node groups.
There are typically seven consensus nodes and 42 candidate nodes. The consensus nodes carry out activities such as block generation, maintaining ledger consistency, and confirming transactions. Candidate nodes do not participate in the consensus process. Instead, they are connected to the consensus nodes and update new blocks in real-time.
All ONT holders can join the Triones Consensus Node system. But to do so, token holders are required to own a minimum of 100,000 ONT and pay a 500 ONG fuel cost. Once a user is accepted as a node in the network, they start earning ONG for actively participating in the network.
Ontology Use Case: Stake ONT and Earn ONG
Another utility of ONT is that the token allows holders to stake ONT and earn rewards. Staking ONT is a great way to earn passive income on Ontology. Unlike banks which give an annual return on investment of about 0.05%, every staked ONT can produce a healthy return on investment of 2.75%, according to Ontology.
Here’s how it works: A user stakes their ONT coins into any of Ontology’s network nodes. First, the user must specify the staking period, which is then recorded by the smart contract.
Each stake requires a minimum of 1 ONT and 0.1 of ONG (0.05 ONG for network fee to start staking and another 0.05 ONG to claim rewards). Staking can be done on a wallet like Exodus, and the amount staked can be seen inside the “Earn Rewards” section as “Staked,” which is the user’s staked balance.
Staking rewards are distributed once the next consensus round begins and could take up to 60,000 blocks. Each block takes about 1 – 30 seconds to process, and the user has to wait until then to receive their staking reward.
By staking ONT, a user supports the network by allocating resources which helps improve the scalability of Ontology’s network. However, the user can decide not to actively participate in governance. Doing this doesn’t stop them from receiving their staking rewards in ONG.
Ontology Use Case: Ontology Network and Transaction Fees
The Ontology network supports the use of other blockchains without the need for migration. This feature means users can build decentralized applications and deploy smart contracts cross-chain. However, these network transactions and operations have to be paid for. Ontology Gas (ONG) which is Ontology’s second utility token, is used to pay the fees.
You could think of ONG as the “toll fee” for interacting with Ontology’s blockchain. In this way, it is similar to gas on Ethereum. The difference is that the fees aren’t paid for in the main cryptocurrency, ONT. Instead, the network accepts payment using a separate token, ONG.
The standard transaction fee is 0.01 ONG for every Ontology transaction, such as transferring ONG/ONT, claiming ONG rewards, and executing smart contracts. It might not make sense that you have to pay gas to claim gas. But then, “claiming” ONG is essentially a “transaction” that gets recorded on the Ontology blockchain, so the user has to pay for it.
It is important to note that you can purchase ONG by simply exchanging your crypto for the token on any crypto wallet.
How Ontology Works
Ontology makes it possible for two or more blockchains to interact with each other without linking the two networks. In doing so, any user can deploy smart contracts and build decentralized applications cross chain all from the Ontology network.
Ontology also acts as a bridge between the digital and real-world for businesses in a trustless manner. But, how do you know you can trust the network’s information? Simple. Ontology uses a consensus mechanism different from other blockchains.
Each blockchain uses a certain type of consensus mechanisms to confirm and verify transactions without the need for third-party interference. What sets Ontology apart from other blockchains is that the network utilizes what is called the VBFT consensus mechanism. This mechanism combines Proof-of-Stake(PoS), Byzantine Fault Tolerant (BFT), and Verifiable Random Function (VRF).
By maintaining a global cross-chain platform that benefits all users economically, the Ontology network is making great strides to utilize blockchain’s true potential.