Fusion: Revolutionizing the Cryptofinancial Markets

Fusion

the process of combining two or more distinct entities into a new whole. -Wikipedia

Ever since the foundation of the blockchain technology by the birth of Bitcoin, and the creation of the new technology called the Internet of Things, the way our world works has kept improving and the removal of intermediaries and the substitution of ledger technology and smart contracts has changed it drastically. One of the key benefits, it removes the middlemen or centralization of the different industries. Now, another emerging technology is going to potentially disrupt if not, one of the largest industries in the world - finance.

The Internet of Values

the Internet of Values based on blockchain technology has the characteristics of digitization, intelligence, decentralization and inclusiveness.

The internet has revolutionized how the world works. But there is still one unsolved problem - trust. Then comes the birth of blockchain technology. By removing the centrality of industries and letting the digital technology govern on how the parties in between interact, the system became more efficient and less fraudulent. This resulted in a new economy through the emergence of cryptocurrencies.

The private keys of a wallet hold the proof-of-ownership of someone's wealth in crypto, which is protected by the consensus applied on different decentralized public ledgers. The Internet of Values was then created. But then, there are problems that came along with it. How huge can it be scaled? How usable is it for the public? How would different blockchains interact without a centralized intermediary?

What is Fusion?

We are entering an exciting new era of “Internet of Values”, or values derived by the Internet of Things (IoT). But today, interoperability, scalability and usability remain substantial problems within the various blockchain ecosystems, all of which combined have hindered this technological progress.

One of the main points of the distributed ledger technology is the removal of the middlemen in between the transactions. In the recent days, the cryptocurrency ecosystem and the blockchain technology is limited to their own different ledgers and their values can only be exchanged efficiently and effectively through the use of centralized exchanges. What if it would be possible to link these different ledgers using a single chain?

Fusion aims to remove this limitation and revolutionize the cryptofinancial economy. Their key goal is to on create a broad financial ecosystem on the blockchain that is fully intelligent, interopable, and inclusive, providing the infrastructure for fully fledged financial functions on the blockchain.

Fusionsubstantially improves the cost-efficiency of converting values across different distributed ledgers and fulfill almost all the functionality of traditional finance. Fusion allows this to happen without sacrificing speed, efficiency and decentralization.

_{Comparison — parallel computing, off-chain data support(Source)}

Why Fusion?

When Wanchain ICO was launched last year, I was really hyped on what value could it bring in the evolution of this technology. I haven't known anything about this gem until the last few weeks when I was looking for underhyped coins or tokens that might have the possibility to bring more value on the whole cryptocurrency economy. Imagine when one chain could fix the separation of the cryptocurrencies from the global financial markets.

Fusion's vision is to establish a platform-level public chain in the cryptofinancial era that as a key infrastructure for value transfer can connect all kinds of values, provide financial functions, communicate diverse communities and tokens and bridge the centralized and decentralized organizations to bring the Internet of Values as early as possible.

Fusion aims to solve three key bottlenecks of the cross-chain integration: interoperability, scalability and usability.

- Interoperability

Cross-chain smart contracts; imagine how would this evolve the ICO market. One could raise funds by collecting different cryptocurrencies that will be locked in a single smart contract. This will potentially remove the requirement of an escrow or any human intervention that would potentially reduce the risk of fraud. It would also increase the cost-efficiency of these crowdfunded projects due to the removal of some unnecessary fees because of this new feature.

- Scalability

Centralization cannot be totally removed in the system. I see a world that both would co-exist and develop each other. But unlike what we have been used too, the participation of this centralized entities could be possibly on the off-chain data compilations, to maximize the performance and scalability of operation. We can see IDEX as an application of this example. But currently, the high fees under it would hurt the microtraders, which I believe most of the participants on the cryptocurrency economy are. Connecting these centralized organizations with the distributed ledger technology would be one of the things that Fusion would solve.

Usability

Achieving parallel processing by full distribution of nodes, Fusion would allow the inter-chain operations simultaneously. The financial industry would greatly benefit from this, specially in the area of quantitative finance. The Internet of Values would improve its applications in plaforms, institutions, financial economics, interoperation, quantum computing, etc.

How will Fusion work?

We envisage that the tokens’ private keys on various blockchains can be securely controlled in a distributed fashion by a public chain and in this way the blockchain manages the control rights of tokens. It will be like a “freeway” in the Internet of Values, which can easily implement the value transfers between various tokens and multi-token smart contracts to provide various cryptofinancial services.

Distributed Control Rights Management(DCRM)

The distributed generation and distributed storage of a private key ensures that no single individual can access the complete private key, which means that no single node can obtain the control of the digital assets under the state of distributed control rights management.

Creating a single public chain that would be able to map different assets, we could achieve multi-token smart contracts. Almost all blockchains are controlled by private keys. By securely controlling these keys by different nodes on the public chain, each coin or token on a different blockchain could be represented in the Fusion chain, thus, cross-chain smart contracts will be achievable. With the inclusivity of the Fusion platform, it would be distributive, democratic and disintermediary.

Storing the private keys in a public chain could cause vulnerabilities. Fusion removes this possibility by the implementation of DCRM. Management of these keys through decentralized nodes by the distributed generation(sharding) and storage ensures that no single individual can access the complete key, therefore no single node can obtain control of the asset.

Through the process of cryptoasset mapping, one token can be freely interact with another. These can be managed by Locking-in and demanaged by Locking-out. The step-by-step process can be found in the whitepaper. Digging deeper into this project, I was shocked when I read this article. I'll leave it to you to directly look at it.

Hierarchical Hybrid Consensus Mechanism (HHCM)

The Hierarchical Hybrid Consensus Mechanism (HHCM) used by Fusion is for stratifying the computational work of generating blocks and adopting a suitable consensus mechanism in different layers.

Proof-of-Work and Proof-of-Stake Consensus have both their advantages and disadvantages when working alone. Fusion combines them both into layers. This would almost cancel out their shortcomings, the PoW being a high-energy consuming consensus and the high probability of centralization by the PoS consensus. HHCM would gradually improve the balance the safety, efficiency and scalability of the whole chain.

The first layer governed by the PoS consensus, the nodes are grouped and completes the calculation of all the current transactions. This would allow the parallel computing of all the current transactions. Then, the PoW layer generates the final block in the second layer.

Where can Fusion be used?

The Cryptofinancial Smart Contract (CSC) is defined as the smart contract that is used to complete financial transactions of one or multiple digital assets among multiple participants by defining the relation and value interaction conditions of one or more digital assets among multiple participants in terms of time succession and spatial location.

Through cross-chain interoperability, there are tons of possible applications of the Fusion platform. These are links to the videos of some use-cases provided by the Fusion Team:

FUSION Use Case 1: Risk-free Token Loan
FUSION Use Case 2: Risk free contracts market
FUSION Use Case 3: Mortgage smart contract

I will give a slightly complex example, that can be initiated in a pair of smart contract. Let's say for example Adam(A) wants to buy a car worth 100 BTC. But, he currently has just about 20 BTC worth of extra ETH, and had invested in a cloud mining company that pays in ETH. Now, Bobby(B) has 100 BTC and wants to invest in lending. Charlie Cars(C) Company accepts cryptocurrency payments but they only accept BTC. The three could initiate a cross-chain smart contract via the Fusion (FSN) platform with the following steps:

1. A pays a downpayment of 20 BTC worth of ETH to B

2. ETH is converted from coinmarketcap to BTC via Off-chain information input

3. B pays C the full amount of 100 BTC, C delivers the car's smart keys to B

4. A could only get the car's smart keys from B via transaction-and-time-trigger, every month for 10 months, if A pays 1.25 BTC worth of ETH every month

5. A gets full control of the car's smart keys if he fully deposits 125 worth of BTC in the smart contract.

6. If A fails to pay B for three consecutive months, B will take full ownership of the car's smart keys.

During these transactions, the Fusion Network will use FSN tokens for the smart contract to be implemented.

Who is behind Fusion?

Of course, this project is not a one-man team. But for this article, I'd love to acknowledge the CEO of Fusion, who is the Visionary and the Principal of the project - Dejun Qian. He is the CEO and Founder of BitSE, he created Qtum and Vechain. He previously was a branch general manager at IBM.

Check out this video with Dejun Qian: