KYVE Fundamentals Level 1

Introduction

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Welcome to the KYVE Fundamentals Level 1 course!

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Once this course is completed, you’ll be a pro in understanding KYVE’s core concepts!

First off, let’s give you a bit of background on KYVE…

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KYVE Network is on a mission to make access to reliable data easier via its decentralized tooling, ultimately solving Web3’s main data infrastructure roadblocks and hack risks. 

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So far, KYVE has gained major support, raising ~$13M across three funding rounds, currently backed by top blockchains such as Arweave, Avalanche, Solana, Interchain, and NEAR, as well as top VCs, including Hypersphere Ventures, Coinbase Ventures, Distributed Global, Mechanism Capital, CMS Holdings, IOSG Ventures.

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Now, without further ado, let’s get to learning! → 

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Today’s Data Issues 

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To put it simply, data* is information or facts that can be stored and used by computers, such as numbers, words, images, or sounds. In the Web3 space, data also includes crypto transactions, user profiles, and smart contract information. 

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Each block in a blockchain encodes data, making it tamper-proof and transparent. However, as Web3 expands, the large amounts of data created by blockchains, users, etc. are becoming harder to manage, leading to two key issues: data access and data validity.

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Data Access Issues

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As Web3 grows each day with new innovations, users, transactions, and more, more data is created and added into the space, making accessing specific data become increasingly difficult, especially when the pieces are reliant on one another.

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Not only this, but more recently, full nodes, which maintain a complete copy of a blockchain, are becoming less incentivized due to the cost of storage. Seeing that now they need to hold a lot more data, it costs a lot more and requires a large capacity for storage. 

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Example: To put it into perspective, imagine a full node needed to have all of Solana’s blockchain data at hand. For those who aren’t aware, Solana produces four petabytes of data per year. Four Petabytes = 4000 Terabytes. To store this amount of data on Amazon S3 standard for example would be $23/TB/month, AKA, $92 000/month. This is definitely not affordable nor sustainable for a node operator!

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Therefore, more and more nodes are relying on bigger, centralized solutions, like the Solana Foundation, to source their data from. However, relying on centralized solutions means taking a risk on the validity of the data, as well as the reliable access. 

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On top of the lack of data sources, there is another issue that hinders data access, which is time. The more data is added into the space, the longer it takes to search through it all in order to find what you need, for example a node syncing the entire state of a blockchain. This can become quite tedious and be a major roadblock in development or node participation. 

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After all of this effort in accessing and retrieving a certain piece of data needed, you might not even be 100% sure that it’s fully correct or up to date. Which brings us to problem number two: data validity. 

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Data Validity Issue

How can we weed through all the data and check if it’s accurate in a trustless way? Bring in true decentralization*. 

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Decentralization is the key pillar in the ethos of Web3, distributing power, trust, acts, etc., among stakeholders and network participants. In general, to determine if a piece of data is valid, there always needs to be a generic solution, i.e., developers creating custom validation methods per data set. However, what’s lacking is managing these different runtimes and ensuring that all data sets are properly sourced and validated quickly and efficiently.

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In order to ease the overall experience in accessing and working with data, we need a decentralized data-sourcing solution with built-in validation and access tooling around it, much like KYVE! KYVE makes trustless* data easily accessible to the public. Continue on in the course to find out how…

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• Want to read further into this article on how KYVE is simplifying access to trustless data
• Run into a few words you weren’t aware of? The words marked with * in this article are defined in KYVE’s Glossary!

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Making Data “Trustless” 

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You might have already heard one of the core terms of Web3, decentralization*, where power or control is distributed to multiple parties rather than just one, avoiding single point of failure, or an overtaking of that one person. 

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In a similar concept, the term “trustless*” is starting to gain traction. Although the word may sound negative, it is actually a very positive and innovative concept, one that is very important for KYVE. Let’s explain: In the Web2 world, when a transaction takes place, there is a trusted intermediary. For example, when sending money from one person to another, a bank acts as the middleman. This puts a lot of trust in just one party, allowing room for error and manipulation of the data.

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To avoid these risks, blockchains introduced “trustless” environments where the participants do not need to trust each other nor need an intermediary for the system to work. This does NOT mean trust is eliminated, but rather that it is distributed.

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In a trustless environment, no single entity has control over the system. Instead, trust is distributed among different actors in the network. These actors are incentivized* in order to behave in the best interest of the blockchain and its community, bringing forward the correct data needed.

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For Example, KYVE…

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KYVE has a simple goal of providing developers with an easy yet reliable solution for sourcing correct data. This way, when they build projects or applications using data such as statistics, token pricing, user data and so on, they know that everything is true. In order to ensure that the data KYVE provides is truly correct, it must rely on a decentralized, or “trustless” environment.

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For KYVE, this environment is a network of nodes* on its blockchain that are incentivized to properly fetch, validate and archive data. When validating the data, all nodes vote on whether it’s true or not. Once they reach consensus*, majority vote will win, with those who voted within the majority earning rewards, and those who voted against the majority, AKA, wrong getting penalized. In this sense, it’s not up to just one intermediary but a whole network of actors to ensure the validity of the data before it's used, creating “trustless data.”

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How exactly does KYVE work? Keep following the course to find out!

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• Want to learn more about this concept? Check out this article about The Hazards of Poor Infrastructure and Lack of Trustless Data
• Run into a few words you weren’t aware of? The words marked with * in this article are defined in KYVE’s Glossary!

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KYVE’s Main Features 

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In order to bringforward our goal in providing trustless data for all who need it (builders, analysts, data engineers, and more), it’s important to focus on three things:

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1. Data Access: Having easy and reliable access to valid data is harder to come by than one might imagine. As mentioned in a previous chapter, this is one of the major issues when working with data today.
   
2. Data Validity: As mentioned in the previous chapter, making sure truly valid data is used when building in Web3 is crucial in order to avoid any hacks, dangerous inconsistencies, and more. In order to truly validate data, it must be done in a decentralized way, avoiding negative influences or attacks. ‍
3. Data Immutability: When working with data, it has to be stored somewhere! Whether that’s temporary storage or permanent, each use case has its own necessity. However, regarding important, valid data, it can be helpful to all if it’s immutably* accessible, AKA, stored forever.

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KYVE Network heavily focuses on these three, providing solutions to each via solutions built around its blockchain. Continue on to the next chapter to find out exactly how…

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• Want to find out more on how KYVE is simplifying data access.

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KYVE’s Layer 1 Chain 

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In order to bring forward a fully customizable and secure solution to the previously mentioned issues in data, KYVE launched its own Layer 1 blockchain*. 

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A Layer 1 blockchain is a fundamental infrastructure technology that forms the backbone of a blockchain network. It provides the basic building blocks for transactions, consensus, security, and node* network. Examples of layer 1 blockchains include Bitcoin and Ethereum. 

There are other blockchain layers, such as Layer 0, Layer 2, and Layer 3.

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Learn more in our dedicated course: “What are the different blockchain layers” 

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KYVE’s Layer 1 chain is split into two distinct layers: the chain layer, and the protocol layer. The chain layer is the backbone of KYVE, relying on nodes called chain nodes to secure the chain in Proof of Stake*. And the protocol layer, AKA, KYVE’s data lake, which is in charge of fetching the requested data, storing it on a storage platform like Arweave, then validating it via its network of nodes. 

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Once this process is complete, KYVE can direct anyone to where the correct data is that they need in a streamlined, fast manner. However, before KYVE goes public, it’s very important to run it through rigorous testing to ensure that it holds a stable and secure state.

The KYVE blockchain started out on a testnet v1 called Korellia*. A testnet* is a test environment for blockchains to try out features and imagined functionalities to ensure all works properly before going live, aka launching mainnet*. 

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On Korellia, we launched integrations and partnerships with over 10 different top blockchains, such as Polkadot, Avalanche, Moonbeam, and more. In order to imitate real-life users and transactions, we launched an incentivized testnet. 

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Incentivized testnets are when projects motivate their community in testing out their project in exchange for rewards. For KYVE, our testnet was on the Korellia chain, hence why it’s dubbed, Mission Korellia. With over 40k unique participants, Mission Korellia took place over four months and included not only engineering-based tasks but also community-content-based tasks to increase the spread of knowledge of KYVE! 

From there, our team was able to learn valuable lessons and bring forward innovations to KYVE’s underlying features. To further prepare for mainnet launch, we launched a testnet v2 called Kaon, only keeping the positive learnings and features from Korellia. 

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Currently (February, 2023), KYVE is on its testnet dubbed Kaon. Kaon is an as-close-to-mainnet replica as possible in order to be able to ensure a smooth launch for mainnet. Mainnet is set to launch in late Q1, 2023, sparking the Token Generation Event (TGE) of $KYVE as well, meaning that the token will go live in listings for the public to purchase and start using on the KYVE blockchain.

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• Run into a few words you weren’t aware of? The words marked with * in this article are defined in KYVE’s Glossary!

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What Are Nodes? 

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Nodes are an important part of how KYVE works. But what exactly are they?

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A node* in a blockchain is a computer or other device that participates in the operation of a blockchain network. Like mentioned in a previous chapter, in a decentralized blockchain network, there is no central authority controlling the network; instead, it is maintained by a network of nodes that work together to validate and record transactions.

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In order for a transaction to be recorded on a blockchain, it must be verified by multiple nodes on the network. Each node maintains a copy of the blockchain and uses consensus algorithms to ensure that the transaction is valid and that it is not a double-spend. Once a transaction is verified, it is recorded on the blockchain and broadcast to all other nodes on the network.

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There are different types of nodes in a blockchain network, each with its own role and responsibilities:

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• Full nodes are responsible for maintaining a complete copy of the blockchain and validating transactions.
• Lightweight or "lite" nodes, don't need to download the entire blockchain, they only download the block headers and validate transactions using simplified payment verification (SPV).
• Mining nodes (PoW) perform complex mathematical computations to validate transactions and create new blocks. These nodes are rewarded with cryptocurrency for their efforts.
• Supernodes or master nodes provide advanced services such as instant transactions, governance, and privacy to the network.

Overall, the nodes in a blockchain network are crucial for maintaining the integrity and security of the network. Without the participation of nodes, a blockchain would not be able to function as a decentralized and trustless system.

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What about KYVE’s nodes?

As mentioned in the previous chapter, KYVE’s blockchain is split up into two distinct layers: the chain layer, and the protocol layer. The chain layer is the backbone of KYVE, relying on nodes called chain nodes to secure the chain in Proof of Stake*.

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Whereas the protocol layer* is technically KYVE’s data lake. This layer relies on nodes called protocol nodes. Protocol nodes also work on the PoS mechanism, but more specifically, have two specific roles: uploaders and validators. They’re therefore are responsible for fetching data from a data source, validating the data, and storing it.

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For each piece of data uploaded, one of these nodes is selected to be the uploader. The selection is based on how many $KYVE they stake, AKA, put at risk. The uploader is in charge of fetching and uploading the data onto the chosen storage platform (like Arweave for example), this way, not all nodes have to take on this duty. 

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The rest of the nodes in the pool are the validators and hence vote on whether the data is correct or not. Once this process is complete, a new uploader is selected.

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Want to know more about how nodes work on KYVE? Continue on to the KYVE Fundamentals Level 2 course!

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• Don’t want to wait? Visit KYVE's Docs to learn more about protocol and chain nodes.  
• Run into a few words you weren’t aware of? The words marked with * in this article are defined in KYVE’s Glossary

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$KYVE

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KYVE Network has it’s own coin* called $KYVE. This coin is an essential part of the KYVE blockchain, being the key to keeping it running properly. $KYVE is not only used for securing the blockchain network through Proof of Stake*, but also for incentivizing its participants to behave correctly within its data lake when fetching, validating, and storing data. 

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This means that anytime someone or some project needs to use KYVE to source and validate data, they need to buy $KYVE and use them to pay forward the network for doing the requested work. 

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If a project needs to have constant access to updated data, for example, the transactions taking place on a blockchain to feed into an explorer that they are building, they are incentivized to continue buying $KYVE to feed the network to maintain access to the needed data. 

Seeing that KYVE handles fetching, validating, and storing the data, these users don’t need to rely on multiple different solutions for completing these steps, but rather just one, trustless source. 

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This means, the more KYVE is used, the more $KYVE gains value, which in turn, motivates KYVE network participants to continue working, creating an infinite positive value loop!

Now, why do we call $KYVE a coin and not a token? 

We most often hear of tokens, which are crypto assets built on top of a network, like $AR, $CAKE and $RAY. They’re mainly used to access a service, for example, $AR is used to buy data storage space on Arweave. Tokens can also be seen as NFTs, wrapped tokens, etc.

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A coin, on the other hand, is a digital currency native to a specific blockchain. Examples of coins include $BTC, $ETH and $ADA. 

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KYVE went through a few different changes when being created, starting off as a smart contract* before ultimately launching its own Layer 1* blockchain. When KYVE was a smart contract, $KYVE was actually a token with utility purposes.

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However, when switching to being a blockchain, $KYVE transitioned into a coin! You can still call $KYVE a token if you prefer, but today, it is technically a coin. 

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Want to go deeper into KYVE’s tokenomics and blockchain economics? Check KYVE Fundamentals Level 2 course! 

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• Want to read into KYVE’s tokenomics
• Run into a few words you weren’t aware of? The words marked with * in this article are defined in KYVE’s Glossary!