What is Lisk? | The Ultimate Beginner’s Guide
Lisk is a blockchain application platform designed to provide developers with easy to use tools with which to build and maintain their own decentralized applications (DApps). Based on the Lisk blockchain network and LSK tokens, Lisk users can create and distribute their own modular sidechains that act as fully independent and customizable blockchains, including support for custom tokens.
In this guide we’ll go through the following topics in order to help you understand the fundamentals behind Lisk:
- What is Lisk?
- Lisk App SDK
- Delegated Proof of Stake (DPoS)
- Advantages and Disadvantages of Lisk
- How to Buy Lisk
- How to Store Lisk
Lisk is the brainchild of developers Max Kordek and Oliver Beddows. The idea behind Lisk is to address a major problem within blockchain technology: There are not enough developers familiar with blockchain to meet the demand for custom DApps. What Kordek and Beddows proposed was a system that would make blockchain technology more accessible. They would create a virtual toolbox, the Lisk App SDK (we’ll cover that in the next section), to offer users the chance to create their own distributed blockchains without having to become experts in the tech themselves.
Once users are ready to get started, they can create sidechains that are independently distributed blockchains linked to the Lisk mainchain without affecting its overall speed for performance. Developers maintain full control over their blockchain network as a sidechain, while the team behind Lisk maintains its mainchain. One of the most important things to note with Lisk sidechains is that any bad code that may negatively affect a network will be self-contained and cannot harm your chain or the mainchain.
Like many other blockchain projects, Lisk was first created by forking another blockchain, Crypti. Forking allows developers to take an existing codebase and branch it off into an independent chain that can then be upgraded and modified as they see fit.
Once the Crypti chain was forked, Kordek and Beddows decided to launch an initial coin offering, or ICO, to raise funds to further the development of the project. The ICO was a huge success, raising 14,000 Bitcoin, making it one of the most successful crowdfunded cryptocurrency projects to date. On May 24, 2016, Lisk’s LSK token went live and was made available for trading on many major exchanges.
The Lisk App Software Development Kit (SDK) is a set of tools that gives developers the power to create custom, fully operational blockchain DApps. The SDK allows for the following 4 features to be modified:
- Consensus Algorithm – This is the system that will be used to verify network transactions. Lisk uses a delegated proof of stake (DPoS) system by default.
- Sidechain – This function initiates the creation of your chain as an offshoot of the Lisk parent chain. Sidechains maintain full autonomy.
- Back-end – The underlying codebase functions on sidechains can be fully customized to meet user requirements.
- Front-end – This part of the network is made up of the user interface (UI), and is how end-users will interact with the system. Whether these users will be performing B2B, C2C, or B2C transactions is up to each sidechain.
The SDK is designed to save time and effort, allowing developers to create and build their applications without worrying about creating new blockchains from the ground up and dealing with all of the added issues that come with it.
The consensus algorithm used by Lisk and its sidechains by default is a delegated proof of stake system (DPoS). Unlike cryptocurrencies like Bitcoin, which has its network transactions validated by proof of work mining, Lisk’s DPoS system does not require the use of costly hardware.
Most proof of stake (PoS) systems have holders of a certain amount of the network’s currency stake some of their holdings for the right to view transactions on the chain and validate them. These stakers are held responsible for voting by having their staked tokens removed from their holdings if they are deemed to be acting in bad faith. For example, if you staked 100 tokens on a PoS system and had your node reject a transaction that all of the other stakers approved, you would either lose any chance at transaction fee rewards or you would lose your 100 tokens entirely, depending on the severity of your actions.
The Lisk DPoS system simplifies this process. All holders of LSK tokens are given the ability to vote for 101 delegates running master nodes on the network. These delegates maintain the network and validate all transactions. If any delegates were to be found operating inappropriately they could be voted out and the network would resume working as intended. Think of the delegates as a board of directors and LSK token holders as traditional shareholders. You, as a LSK owner, have a vote weighted by the amount you hold to ensure that your interests are being upheld by the delegates.
Lisk uses an inflationary forging rewards system to compensate the 101 delegates. Every block on the Lisk chain completed in the first year rewarded 5 LSK to be distributed equally among the delegates. Every 3,000,000 blocks after that, the reward is reduced by 1 until the block reward is 1 LSK. It will then remain at that reward level indefinitely.
- Scalability and Security – The sidechains of Lisk all perform their own transactions that will not interfere with other chains, including the mainnet. This protects against situations that have challenged the Ethereum network in the past. Buggy DApps built on Ethereum have been hacked (The DAO) and accidentally locked tokens (Parity Wallet). When the DAO was hacked because of security flaws, the Ethereum community controversially decided to fork its blockchain. The Parity wallet incident has not been dealt with. Millions of dollars in ETH is locked in a smart contract.
- Partnership with Microsoft – In 2016 Lisk began working with Microsoft to provide guides and templates for custom blockchain development using the Microsoft Azure cloud platform.
- App Directory – When fully implemented, the Lisk network will operate like an App store, allowing users to seamlessly search through the different sidechains connected to the mainnet.
- Brand Strategy – Lisk developers have recognized that they will be a platform used by potentially hundreds of different projects and they have hired a brand strategy firm to grow the brand and earn the trust of potential users and LSK speculators.
- Generalized Risk – Even though each sidechain operates independently, your blockchain project would still be tied to the success of Lisk. If the Lisk developers were to abandon the project, it is possible that all of the sidechains would go under as well.
- Lisk is a Young Network – Other DApp platforms like Ethereum and NEO have years of development experience and support compared to Lisk. At the moment, Lisk does not have a fully operational system in place.
LSK is available for trading on a number of exchanges, including major ones like Binance and Bittrex. Most of the trading pairs available at the moment include Bitcoin so you would need to purchase some BTC on an exchange like Coinbase and you can send that BTC to one of the exchanges trading LSK.
The best way to store LSK at the moment is the Lisk nano wallet, which is a light wallet or SPV wallet. Light wallets do not run full nodes for storing a copy of the blockchain. This one connects to Lisk Foundation nodes.
There has been an announcement of a full desktop wallet being developed from the ground up.
Lisk provides something unique that the field of blockchain technology desperately needs: simplicity. There are countless projects out there that are filled to the brim with groundbreaking technologies, but often they’re undone by their own ambition. Lisk delivers impressive tech, but the selling point here is the Lisk App SDK. Lisk is lowering the barriers to entry at a time when every corporation is trying to hop on the blockchain bandwagon. While Lisk may be young and not have quite the community support of Bitcoin or Ethereum, it is presenting a worthwhile product at a time when companies are desperate to get their hands on it.
Jack of all trades, master of none but enjoying life all the same. I love the often chaotic nature of the crypto world and the disruptive new technologies. Excited to learn more and share what I know along the way.