9 min read
What is Ontology?
The Ontology platform was created by Erik Zhang and Da HongFei of China’s Onchain (who are behind the NEO blockchain) and was launched with its native ONT token in 2017.
Ontology is a public platform that allows companies, who have no prior knowledge, to integrate blockchain technology into their infrastructure without the need to change the existing business infrastructure from scratch.
As explained in Ontology’s whitepaper:
“Ontology is a blockchain/distributed accounting network that combines a distributed identity system, distributed data exchange, distributed data collaboration, distributed procedural protocols, distributed communities, distributed certification and several industry-specific modules. Together, it builds the infrastructure for a peer-to-peer trust network that is cross-chain, cross-system, cross-industry, cross-application and cross-device.”
As today’s trusted networks face a variety of problems (poor privacy protection, monopolization of data management, ineffective identity authentication), Ontology is born with the intent to solve these limits thanks to its robust trust ecosystem.
ONT and ONG: Ontology tokens
One of the most interesting things about Ontology’s launch is that it was one of the few platforms that did not launch an ICO (Initial Cryptocurrency Offering) to develop its project. Instead, Ontology gave away its coins (airdropping) to all users who subscribed to Ontology’s newsletter and NEO token holders.
Another peculiarity of Ontology is that it has two different cryptocurrencies.
- The main coin is called Ontology (ONT) and has a limited supply of 1,000,000,000 units. Currently 80% of ONT tokens are already in circulation.
- The second token on the platform is Ontology Gas ( ONG) which was created with the goal of rewarding users who contribute to the operation of the platform. That is, by contributing to the platform and the creation of new blockchain, users earn transaction fees in the form of ONG. It is a system that incentivizes users to remain active within the network.
How to mine ONTOLOGY (ONT)?
Now that you know what Ontology is and what its salient features are, you’ll want to know how to mine its tokens.
And well, I have to let you know that Ontology tokens cannot be mined due to their consensus mechanism (i.e., the way blockchains confirm and verify transactions), which we are now going to learn about.
The Ontology platform has another very interesting feature as it works through a unique consensus mechanism called VBFT.
The VBFT is a combination of three different consensus models: the Proof-of-Stake (PoS) consensus, the Byzantine Fault Tolerant (BFT) and the Verifiable Random Function (VRF).
Thanks to this functionality, the platform can execute thousands of transactions per second, as the VBFT mechanism allows for cheaper and faster transactions.
While the Bitcoin and Ethereum blockchain use the Proof-of-Work model (since December Ethereum launched its update to move shortly to Proof of Stake) which, in the case of Bitcoin, can verify up to 7 transactions per second and in Ethereum, approximately 15, the VBFT mechanism can confirm thousands of transactions per second.
This is due to the fact that the Proof of Work based mechanism needs more than 50% of all nodes in the network to confirm and validate a transaction, which means slower waiting times. However, VBFT needs only 2/3, which allows for cheaper and faster transactions.
That said, unlike the Proof of Work algorithm, the consensus algorithm used by Ontology is powered by Ontology Gas and its ‘rewards’ are paid to users holding ONT tokens that staked those coins. Let’s take a detailed look at how Ontology’s reward mechanism works.
ONTOLOGY GAS, THE ONT GAS
As I mentioned earlier, Ontology gas (ONG) is one of the 2 tokens that power Ontology’s blockchain.
ONG was born on June 30, 2018, when the Ontology project launched its mainnet, moving from using the NEO blockchain to its own native blockchain.
Well, Ontology’s platform offers ONT users two things.
Governance rights: this means the right to vote when it comes to making choices in the event of major changes in the network.
Staking rewards: as in the consensus mechanism based on Proof of Stake, when a user stakes or locks his ONT tokens, he is helping to verify transactions and contributes to the security of the network. As a reward, he is granted NGO tokens that we can consider the ‘ONT Gas’.
By this ONG has many similarities to gas in Ethereum, with the difference being that Ethereum pays its rewards in ETH, while the Ontology network does so using a separate token (ONG).
The network works as follows: when a user stakes his ONTs on a node, he earns Ontology Gas (ONG) rewards.
Each block processing a consensus node will earn a share of the ONG tokens paid for each transaction. At the end of each betting round, the node will distribute any ONG earned to the users who bet on the node. The amount of ONG they receive will be based on the amount of network traffic from the transactions for each round.
In addition to the rewards earned from network fees, staking your ONT for one month entitles you to additional ONG rewards. This is a promotion Ontology is offering for the first year only. Promotional rewards are fixed amounts per participation and are not affected by the amount of network traffic. Each ONT a user stakes earns the same amount of ONG (whether staked or not).
Ontology’s new governance and staking economy model
Early June 2020 saw the launch of Ontology’s network upgrade with Ontology 2.0 which marked the transition to a new Ontology engagement and governance model.
In this model, some requirements were reduced so that more users could participate in Ontology governance.
Ontology 2.0 was created with enterprises and developers in mind, with the aim of further addressing issues related to scalability, performance, compatibility and security of personal data.
Let’s see what the new minimum requirements are, after the release of Ontology 2.0, for staking or “betting” on Ontology:
- To allow more participants to participate and earn ONG rewards, the minimum participation requirements have been reduced from 500 ONT to 1 ONT.
- Staking is managed in terms of rounds, which consist of 60,000 blocks each (previously 120,000).
- ONG network fees have registered an increase, rising from 0.01 ONG to 0.05 ONG (five times), which gives stakers a much greater opportunity to earn more from the network fees.
- Unpublished ONG rewards are now only shared between gamblers, instead of between gamblers and nongamblers.
- You can get more ONG released for the same amount by betting on an existing candidate node, compared to when you run your own candidate node.
- Generally, running your own node can generate more rewards than betting the same amount of ONT on an existing node.
- Transaction fees of 500 ONG are required to start a node.
- The rate of return changes all the time according to the increase or decrease of the bet amount.
If you decide to run a node you can use a calculator to calculate the incentives for your nodes or the incentives you earn as a participant.
If you want to start staking Ontology, I advise you to use one of the following wallets:
- ONTO mobile app
- O3 Wallet
- Cyano Wallet
- Ledger Nano S/X cold wallet
If you don’t already know, ONT has a market capitalization of $709,019,975 and a price of $0.8875 and, currently using ONT to generate ONG as a staker or node is a good way to earn extra money.