EXECUTIVE SUMMARY

A significant factor limiting blockchains is the blockchain trilemma, a term first discussed by Vitalik Buterin that describes challenges in creating a scalable, decentralized, and secure blockchain. The blockchain trilemma implies that blockchain designs cannot achieve all three aforementioned features. As a result, developers face a tradeoff and often optimize their architectural designs based on the intended use cases for their blockchain. For instance, Bitcoin focuses on maximizing decentralization and security while sacrificing scalability. On the other hand, BNB Chain or Solana gives importance to scalability.   

Subspace Labs develops Subspace Network to address the blockchain trilemma with no compromises. Subspace is an open, scalable platform for storage and compute that is fully interoperable with any layer one. The project introduces a new form of disk-based farming in which anyone can share space on their home computer and earn rewards for producing blocks. 

The project leverages multiple academic research works. Subspace can be a Web3-scale storage solution for off-chain files, on-chain data, and databases, using a Proof-of-Archival-Storage consensus. Currently, the project’s ecosystem consists of:

  • Polkadot relayer (15 networks archived on Aries Testnet)
  • Kusama relayer (29 networks archived on Aries Testnet)
  • SSC token

 

The network’s native token, SSC, offers the holders at least two use cases. The token supply is finite and is affected by an annual halving event.   

The project is located in the United States, a country with the most significant number of crypto investors, trading platforms, exchanges, investment funds, and crypto mining firms.

Subspace Labs team comprises seasoned professionals who have already worked in the crypto industry. The team is further strengthened by the world-class academic background of David Tse, the project’s technical advisor. A group of well-known investors financially backs the project. 

However, the mainnet is yet to be launched, and there is also no detailed timebound roadmap. Nonetheless, the network is in active development with clear goals up to its Gemini Incentivized Testnet.

Our researchers gave Subspace Network a final rating of 58.94%. (Note: The tokenomics of the Subspace Network are not considered in this rating). The breakdown of this rating is available at the end of this report.

 

PRODUCT & COMPANY DESCRIPTION

Introduction to Subspace Network

Subspace is touted as the first protocol to resolve the blockchain trilemma without creating compromises entirely. It is powered by a new layer-1 blockchain, based on several years of R&D, initially funded by a US National Science Foundation’s grant. Subspace Network uses a Proof-of-Archival-Storage (PoAS) consensus, which the team claims resolve several of the incentive challenges that lead to centralization in Proof-of-Space blockchains like Filecoin or Chia.

David Tse, a distinguished professor of electrical engineering at Stanford University, plays a considerable role in the project. Many of David’s ideas have been incorporated into the design of Subspace Network. The research undertaken by David resolves a vital aspect of the blockchain trilemma by enabling secure scaling with decentralized participation in consensus.

The team considers Subspace to be the first fourth-generation blockchain.

Vision: The team believes that Subspace “reflects a model for a sustainable, scalable and incentive-compatible data availability layer, which holds true to Nakamoto’s vision for a more decentralized and democratic future” (Source: whitepaper).

Objectives: The next major objective is to launch Gemini, an incentivized testnet enabling scalable smart contracts via decoupled execution. Other objectives are to implement a decoupling of consensus and computation between farmer and executor nodes, expose the API over a simple Javascript Developer SDK based on Polkadot-JS, and extend the Object Storage API to include a dynamic cost-of-storage.

The team claims that Subspace’s blockchain resolves the Farmer’s Dilemma, which states that in any Proof-of-Capacity blockchain, a consensus node (farmer) must choose between maintaining the state and history of the blockchain or maximizing the amount of space pledged towards consensus. The platform’s notable features include:

  • A new form of disk-based farming
  • Trustless bridges between networks
  • Distributed archival storage
  • Decoupled smart contracts

 

At the moment, the Subspace Network’s ecosystem consists of the following products:

  • Polkadot relayer

Subspace has launched a Polkadot relayer to back up Polkadot Network and every parachain within its ecosystem. The relayer is a public and decentralized service that archives the entire history of the Polkadot Relay Chain and all live parachains in real-time in its ecosystem. It has over 1,000 active nodes across several continents on the Aries Testnet. Subspace can help the Polkadot ecosystem improve or maintain its decentralization through seemingly simple integration while ensuring the entire Relay Chain’s history is always accessible and permanently stored. Through this initiative, Subspace complements the Polkadot Relay Chain and its parachains in the following ways:

  1. “Ensuring the shared history of all parachains — Subspace provides a standard archival storage layer to ensure the history of each parachain is retained indefinitely and remains accessible under a common retrieval API.”
  2. “Providing simple off-parachain storage — Parachains may offload non-essential contract state, such as a video or image file associated with an NFT, to Subspace while retaining the same guarantees of persistence, immutability, and availability, at a fraction of the cost.”
  3. “Allowing for asynchronous cross-parachain storage — Using XCMP, parachains will be able to snapshot and offload the state of any smart contract to Subspace and later retrieve the contract state when it is needed for computation.”
  • Kusama relayer

Kusama relayer archives the entire history of the Kusama Relay Chain and all parachains to the Aries testnet. This incentive is meant to benefit the Kusama ecosystem, and there are two ways the Subspace Network supports the Kusama Relay Chain and its parachains:

  1. “The Subspace Network’s standard archival storage layer retains the history of each chain indefinitely and ensures the history will remain accessible under a common retrieval API. This means parachains will not need to run their archival nodes or sync from a centralized source.”
  2. “Parachains may also choose to offload any non-essential contract state, such as a video or an image file associated with an NFT, to Subspace while retaining the same guarantees of persistence, immutability, and availability.”   
  • Subspace Credits (SSC) token

SSC is the native token of the Subspace Network. The token already exists on the Aries Test Network. Farmers who produce new blocks mint SSC. Although tokenomics are still in development, tokenomics will roughly implement Bitcoin’s model with an annual halving event and a capped supply. SSC will be used to pay compute (gas) and storage fees on the Subspace Network, depending on the number of executors and farmers on the network. In general, the more compute resources and storage there would be on the network, the lower the cost. It will be necessary to stake SSC to run an executor node, but this will not apply to farmer nodes.

 

The Subspace Network’s underlying concepts and cryptographic primitives are based on numerous academic research papers published by different authors. The project has published a whitepaper outlining its technical aspects. The whitepaper lacks details concerning tokenomics and is most suited to an audience with an advanced DLT/blockchain understanding level.

The project has launched Aries, the public testnet employing the Proof-of-Archival-Storage (PoAS) Consensus. The testnet can be explored, and the homepage indicates that over 20k nodes are active on the testnet. According to the information posted on the Telegram in April, there is no launch date for the mainnet, but Gemini, the incentivized testnet supporting scalable smart contracts via decoupled execution, will be launched in a few weeks.

Subspace Network is purportedly the first fourth-generation blockchain, and in that regard, it can be seen as unique with no competitors. At the same time, the team also claims that its protocol is the first one to fully resolve the blockchain trilemma. If these claims are valid and the project succeeds in delivering a successful product, it might have a good market fit because the blockchain trilemma is a major limiting factor in developing blockchains.

Success Factors

Based on our understanding, there are several success factors for the project. These factors are listed below:

  • First mover advantage: Subspace Network could secure a unique place within the blockchain ecosystem.
  • A team with a solid technical background: Several team members have worked for crypto companies. David Tse, the Technical Advisor, holds a Ph.D. in Electrical Engineering from the Massachusetts Institute of Technology and has 75,548 citations.
  • The project secured financial backing from venture firms and other agencies.
  • Large potential market as exemplified by the growth of the Web3 industry.

 

MARKET CONDITIONS AND COMPETITION

Market Conditions

Electric Capital Developer Report (2021) states that “Web3 developers are at an all-time high and growing faster than ever”. Also, “34,000+ new developers committed code in 2021 — the highest in history”.

 

Source: Electric Capital Developer Report (2021)

 

Google search volume indicates an exponential increase in the interest in the Web3 industry.

 

Google Search Volume – Web3. Source: The Block

 

The Web3 industry has also witnessed an exponential increase in monthly investments and, in comparison to the other crypto industries, had the most investments in February and April of 2022 and is still in the lead in May.

 

Monthly Investment by Category. Source: Footprint Analytics

Competition

According to the information posted on Discord, the team does not consider any other projects as competitors as Subspace is deemed to be a layer-0 scalable protocol, which could technically provide services for any protocol, including storage protocols. However, Filecoin, Arweave, and Chia were mentioned as the most comparable protocols. Besides Filecoin, Arweave, Chia, and LazyLedger (now Celestia), the whitepaper has mentioned other projects like Burst, SpaceMesh, SpaceMint, Storj Flow, Truebit, Chainspace, MASS, and Sia, to make a point at how Subspace is different from these other projects. Celestia is a project that offers data availability sampling and uses the erasure coding concept, similar to Subspace Network.

 

How is the project different from other projects? 

 

Several features differentiate Subspace from other projects.

  • A permanent storage layer: In contrast to mutable storage services such as Sia, Storj, or Filecoin, Subspace provides a permanent storage layer, which is better suited for blockchain-based computation.
  • Availability and pricing of storage: Unlike other permanent storage networks, like Arweave, Subspace can price storage based on network capacity, while making storage available to a global execution layer.
  • Proofs-of-Archival-Storage: Farmers first create and store provably unique replicas of the chain history before responding to publicly verifiable and random storage audits, which allow them to forge new blocks. This is in contrast to a Proof-of-Space, as it was implemented in Burst and proposed by Chia, SpaceMint, and SpaceMesh, in which a node stores some randomly generated data.
  • A system of non-interactive fraud proofs: Unlike Truebit, Subspace employs a system of non-interactive fraud proofs while also resolving the verifier’s dilemma differently.
  • Decoupling: Unlike Celestia and ChainSpace, which accomplish decoupling by assigning computation to clients, Subspace’s system retains a global state, allowing for cross-contract calls and composability of applications.
  • Farming/staking mechanism: Unlike Filecoin and MASS, Subspace distinguishes between a permissioned staking mechanism for block finalization and a permissionless farming mechanism for block production. Unlike Chia, plotting does not require or destroy Solid State Drives (SSDs) and is up to 10x faster. Unlike Filecoin, farmers do not have to stake coins proportional to their disk space. These attributes allow anyone in the world to quickly and easily pledge their free space and participate in consensus.
  • Compatibility with Nakamoto consensus: Subspace’s approach, while similar to, and influenced by, Flow, is more straightforward with two, not four classes of nodes, retaining compatibility with Nakamoto consensus (in contrast to BFT-style consensus), and maintaining the honest majority security assumption.

 

TECHNOLOGY REVIEW

Product

Subspace Network is an open-source project. In the project’s Discord channel, users have been encouraged to make contributions to the project’s open-source code hosted on GitHub.

As depicted in the illustration below, Subspace Network consists of many components based on research work by many scholars.

 

Solutions to the Blockchain Trilemma: Subspace Network components. Source: Subspace Network (illustrated by D-Core)

 

Blockchain

Subspace Network implements a Proof-of-Capacity (PoC) consensus mechanism where machines plot disk space. Farmer Nodes write 4kb pieces to their free disk space under an hourglass scheme. The pieces are encoded with a time-asymmetric permutation based on SLOTH. A tag is computed over each piece and stored within a Binary Search Tree (BST). Subspace has designed disk space contributions to minimize entry barriers (SSDs not required, and farmers do not require stake proportional to disk space) such that anyone can pledge their free space and participate in consensus.

Illustration of plotting space. Source: Subspace Network

 

Following Ouroboros, the project constructs a secure randomness beacon from the blockchain’s history of farming blocks. It has been explained that:

“At each slot, all farmers search their BST for any tag close enough to the challenge to satisfy the difficulty setting. They may then compile the tag and corresponding encoding into a Proof-of-Replication (PoR) and produce the next block in the chain. Anyone may then cheaply verify the proof by inverting the encoding with the farmer’s public key and checking the tag. This allows farming to be lightweight in terms of the storage and compute overhead required”.

Illustration of farming blocks. Source: Subspace Network

 

In order to prevent simulation attacks, “the challenge is re-used over many consecutive timeslots”. The project addresses grinding attacks by segregating “PoRs from the block content while basing the randomness solely on the PoRs”. Compression attacks are addressed by requiring “farmers to periodically re-commit to their BSTs”. The project is employing a  Proof-of-Time (PoT) based on AES-256 to prevent bribing attacks, long-range attacks, and space-time trade-off attacks. For a full analysis read this article.

Illustration of security maintenance. Source: Subspace Network

 

Distributed archival storage is one of the features to achieve decentralization besides decoupled smart contracts (see the following sub-section). In a distributed archival storage:

“Farmers store the history collectively, forming a distributed storage network which ensures the history is always available to download. To provide for proper load balancing and consistent replication, each farmer is incentivized to store pieces closest to its randomly assigned node id. To prevent the history from being lost, blocks are erasure-coded into both source and parity pieces. To allow for efficient retrievals, farmers join a simplified Kademlia DHT. Importantly, this allows clients to embed data within a transaction, and later recover that portion of the history from the DHT, creating a scalable immutable object store”.

Illustration of distributed archival storage. Source: Subspace Network

 

Subspace decouples consensus and computation (decoupled smart contracts) to help farmers reduce their workload. Due to this division of labor, farmers need only focus on ordering transactions while Executor Nodes maintain and compute the transition of the blockchain state. Executors are held accountable via a system of staked deposits, non-interactive fraud proofs, and verifiable computation.

Illustration of decoupled smart contracts. Source: Subspace Network

 

As discussed briefly below, Subspace achieves scalability with several implementations, Secure Vertical Scaling, Flat Horizontal Scaling, and Permissionless Fast Finality.

Secure Vertical Scaling: The project adapts the Prism scalability proposal to achieve higher transaction throughput. It has also been proposed that farming can be made highly decentralized with data availability sampling and super-light clients. Any interested person could refer to this simple explainer about Prism here.

Illustration of vertical scaling. Source: Subspace Network

 

Flat Horizontal Scaling: The project aims to eliminate bottlenecks inherent in monolithic chain structures by using a virtual beacon chain that could support up to 2^16 shards. In this structure, farmers rotate shards at each block while executors may choose to stake on as many shards as they wish based on the Free2Shard design.

Illustration of horizontal scaling. Source: Subspace Network

 

Permissionless Fast Finality: The Subspace Project extends the TaiJi fast confirmation protocol to its PoC consensus. TaiJi combines a ‘longest chain protocol’ (Bitcoin’s Nakamoto design) and a Byzantine Fault Tolerance (BFT) protocol. With this approach, the project reaches near deterministic finality by achieving confirmations in three blocks.

Illustration of permissionless finality. Source: Subspace Network

Consensus Mechanism

The team initially came up with a Proof-of-Capacity (PoC) consensus protocol called Spartan,” a simple and secure PoC consensus protocol that realizes the vision of free-and-fair consensus as described by “one-disk-one-vote.” Spartan is not planned to be deployed in a production setting and is instead viewed as an extensible stepping stone towards Subspace.

The Spartan Proof-of-Space consensus has been extended into a Proof-of-Storage of the blockchain’s history to incentivize farmers to retain the history. The project enforces a maximum plot size and discourages Sybil farming under multiple identities to ensure farmers store as many unique pieces as possible. Under the Proof-of-Archival-Storage consensus, each farmer stores as many unique and provable segments of the chain history as their disk space permits. The likelihood of being elected to produce a new block increases if a farmer stores more pieces of the chain’s history.

Illustration of the Proof-of-Archival-Storage consensus. Source: Subspace Network

Security Audit

According to the information posted on Telegram, an audit will be performed by a security auditing firm before the mainnet release. However, at this point, no further information has been released.

 

ROADMAP

No roadmap has been released. According to the FAQ section, a public roadmap is planned to be released soon. However, the project has laid out the broader milestones up to its Gemini Incentivized Testnet launch, and the project’s progress can be monitored on GitHub.

 

TEAM

The team page lists 18 team members skilled in different fields like marketing, full-stack engineering, and protocol engineering. Some of the team members’ previous accomplishments include making contributions to many open-source projects and co-founding other companies. The team members have also gained business experience working for crypto firms like Dapper Labs, Protocol Labs, and Fantom Foundation.

Jeremiah Wagstaff, Co-Founder & CEO, also founded OmniBuilds.com. Jeremiah has worked as a technology consultant to hardware technology startups and holds an M.S. in Geography.

Nazar Mokrynskyi, Co-Founder & CTO, has contributed to many open-source projects, including the Linux Kernel, PHP, and jQuery, and co-founded Ecoisme. 

Weilei Yu, Chief Marketing Officer, was previously a growth lead at Dapper Labs.

Yeweon Park, Public Relations Manager, has worked as a marketing director at Fantom Foundation.

Advisors

David Tse, Ph.D., Technical Advisor, is the Thomas Kailath and Guanghan Xu Professor at Stanford University’s School of Engineering and a member of the U.S. National Academy of Engineering. David’s research interests are information theory, computational genomics, machine learning, and blockchains. David received the 2017 Claude E. Shannon Award from the Information Theory Society and the 2019 IEEE Richard W. Hamming Medal.

Jianming Liu, Ph.D., Financial Advisor, has worked as a Senior Algorithm Engineer at Fortemedia and holds a Ph.D. in Electrical and Computer Engineering from the Missouri University of Science and Technology.

Lawson Baker, Business Advisor, is an investor and entrepreneur who founded RelayZero and RARA.social. Additionally, he’s an advisor to Hashflow. In the past, he was a Founding Team member at SynapseFi and Head of Operations and General Counsel at Tokensoft.

General Comments on the Team & Advisors

The project is hiring for a diverse range of roles, including a director of product, research director, and P2P network engineer. This hiring program would help the team to fill additional gaps in required skills. The Subspace Network is in an advantageous position by having team members that have already worked in the crypto industry and are further strengthened by David Tse’s world-class academic background.

We did not find evidence that the team members have taken part in any previous or current illegal projects or controversial projects during our review period. We did not find evidence of the advisors’ involvement in any controversial projects.

 

LEGAL AND COMPLIANCE SPECIFICS

Jurisdiction

The Subspace Network is being built by Subspace Labs and will be transitioned to the Subspace Foundation at Mainnet Launch. The project is headquartered in the United States, according to the available information.

In the United States, the regulatory framework for cryptocurrencies is evolving despite existing differences in viewpoints and any overlap between agencies. For example, the U.S. Securities and Exchange Commission (SEC) often views many cryptocurrencies as securities, while the Commodity Futures Trading Commission (CFTC) calls Bitcoin a commodity, and the Treasury calls it a currency. On a positive note, the United States is home to the most significant number of crypto investors, trading platforms, exchanges, investment funds, and crypto mining firms. The President’s Working Group and the Financial Stability Oversight Council will have essential roles in the development of a future regulatory framework to straighten out the regulatory differences and clarify confusion about definitions and jurisdiction.

Partnerships

Subspace Network is based on years of Research and Development work funded by different entities. The project received an NSF grant and an open grant from the Web3 Foundation to implement PoC consensus using the Substrate Framework. As part of the Substrate Builders Program, the project has completed its required milestones. The Subspace Network also acquired Canyon Network in a strategic acquihire. Lastly, the project has achieved a seed funding round of $4.5 million and a strategic financing round of $32.9 million.

Legal Advisors

The project has not appointed legal advisors or team members responsible for legal matters.

KYC & AML

Details concerning KYC & AML have not been released at the moment.

Token Classification

According to the available information, SSC is a utility token. 

Token’s utilities are:

  • Paying for storage and compute (gas) fees on the Subspace Network,
  • The token will need to be staked to run an executor node.

 

TOKEN OFFERING

Subspace Network has not yet announced a token offering.

 

SOCIAL MEDIA AND VIRALITY

The project is active on Twitter. The channel has 8.4k followers.

Discord is the most accessible and popular channel to communicate with the team. Some team members actively participate in community discussions on varying topics about the project. The channel has 16.6k followers. It is understood that the Telegram channel is less popular and has fewer interactions. The channel has 5.0k members. There is also a forum where it is possible to ask technical questions.

Subspace Network has 321 followers on LinkedIn. The account does not indicate much activity; the last update was five months ago. The project is not present on Facebook.

The project has a YouTube channel with 115 uploaded videos (impressive for an early project) and 218 subscribers. As the project gains popularity, its YouTube channel will become a rich source of information and education for enthusiasts. Several YouTube channels are discussing Subspace Network. However, there are not many reviews about the project in English, and the existing ones don’t have noteworthy view counts, e.g.:

 

The project has listed several educational videos featuring its founders on the “Learn” page of the website.

 

RISKS TO THE PROJECT

The following list of risks is not an exhaustive one. Some risks may be minor/not materialize.

  • Technological challenges/security risks: Subspace Network could suffer from malfunctioning, breaking down, unexpected or unintended functioning, and various attacks. The project and its technology are relatively new and untested at the commercial level (operating on a testnet). Subspace is yet to get security audits performed. Although not a complete security guarantee, security audits could serve a useful purpose.
  • Legal/Regulatory risks: Any unanticipated regulatory actions could impede the continuity of the Subspace project. The project may also be subject to various laws and regulations, and if the project fails to comply with them, it could receive negative publicity and face significant liabilities.   
  • Lack of adoption/user growth: Large storage and compute fees may hinder the adoption of Subspace. User growth might also be hindered by the need to stake SSC to run an executor node. Conversely, rapid adoption could also hurt the network if it isn’t able to cope with the rapid growth (which could result in network halts or system crashes).

 

RATINGS

Everything you see in this report is the aggregate result of an extensive research process carried out by a distributed team of researchers and crypto enthusiasts around the world. The process consists of 60 questions divided into three phases. Researchers are called to answer these questions about a project, while providing links or screenshots as evidence to support their answers. For every answer, they also provide a rating from zero to ten. The average of their ratings is detailed below.

 

Our researchers gave Subspace Network a final rating of 58.94%.

 

 

DISCLAIMER

This Report is for informational purposes only and/or all or any of its content thereof, should not, may not and will not be taken to constitute, either as a whole or in part, any investment advice or recommendation or similar, regulated, or authorized advice, and D-Core by producing, disseminating, giving away, or making available this Report does not, should not, may not and will not be taken to advise on investments, or carry out any similar activity, or any regulated activity or any other authorized activity. D-Core is not authorized by the Financial Conduct Authority or by any other competent EU or elsewhere or otherwise competent authority to carry out any regulated activities and/or any activities within the scope of these authorities’ competence. 

D-Core excludes and disclaims all liability and/or responsibility whatsoever and/or howsoever caused, arising out of any actions, or omissions taken, or made by any authorized and/or other recipient of this Report in reliance on, or arising out of, or in connection with any or all content of this Report. Any authorized and/or other recipient of this Report acknowledges, accepts and agrees that they carry out their own independent research and act in their own sole risk in reading or using any or all information contained in this Report. In any event, recipients of this Report are urged to seek professional advice before making any potential investment decision in relation to the project described herein. Any authorized and/or other recipient of this Report accepts this Disclaimer in full. For the avoidance of doubt, this Disclaimer is binding against any recipient of this Report whatsoever.