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Press Release
Hedera's native token, HBAR, experienced a remarkable surge of more than 107% on Tuesday before plummeting by 25% as rumors circulated that BlackRock was involved in a tokenization project on the Hedera blockchain.
The network announced on Tuesday that BlackRock's ICS U.S. Treasury money market fund had been tokenized on the Hedera blockchain through a collaboration with Archax. This led to widespread speculation among Hedera supporters on social media, who began asserting that BlackRock had chosen Hedera for this tokenization effort. However, these claims were incorrect.
We take a closer look at what exactly happened, how this affects HBAR price, and discover more about Hedera’s interesting consensus mechanism.
HBAR Price Dynamics
Archax CEO Graham Rodford clarified that it was Archax, not BlackRock, who decided to use the Hedera blockchain for the tokenization project. This clarification came in response to growing criticism about misleading marketing from Hedera.
BlackRock made its entry into the real-world asset (RWA) tokenization space last month when it launched its USD Institutional Digital Liquidity Fund on the Ethereum blockchain.
Despite the decline, the HBAR token has still risen by 61% over the past 24 hours. However, market depth remains relatively thin, with $900,000 in cumulative bids within 2% of the current 14-cent price on Binance and Upbit order books. The token has generated over $2.6 billion in trading volume in the last 24 hours, as reported by CoinMarketCap.
According to CoinGlass, funding rates across derivative exchanges are heavily negative, indicating a bearish sentiment. This suggests that traders holding short positions are required to pay those with long positions. The ratio of long to short positions on Gate.io is currently 0.85 with HBAR being priced at $0.13.
The combination of weighted short interest and low liquidity creates an environment ripe for volatility, which could lead to a return to equilibrium or a short squeeze. Open interest has soared by 442%, reaching $160 million in the past 24 hours, contributing to this instability.
What is Hedera?
Hedera Hashgraph, often referred to simply as Hedera, is a decentralized public network designed to support distributed applications and smart contracts. Unlike traditional blockchains, Hedera uses a unique consensus algorithm known as Hashgraph, which is designed to offer improved speed, security, and scalability compared to conventional blockchains like Bitcoin and Ethereum. The technology behind Hedera promises a high level of throughput, low latency, and robust security, making it an attractive platform for enterprise-level applications.
The Hedera Hashgraph platform is designed to serve a variety of purposes, from facilitating secure transactions to supporting complex smart contracts and decentralized applications (dApps). It provides developers with the tools and infrastructure to build applications that require high-speed transaction processing and strong security features. Hedera's governing council, which includes a diverse group of global organizations, oversees the network's development and ensures its stability.
One of Hedera's key features is its governance model, which aims to maintain a decentralized yet stable and reliable network. The governing council is composed of major companies and organizations from various industries, which are responsible for guiding the network's development. This approach ensures a level of trust and legitimacy that is attractive to businesses looking to leverage blockchain technology for their projects.
In addition to its unique consensus mechanism and governance structure, Hedera offers a low carbon footprint due to its energy-efficient design. This has made it popular among organizations seeking sustainable blockchain solutions. The Hedera network supports a variety of use cases, including tokenization of assets, micropayments, identity verification, and secure data sharing.
With a growing ecosystem and partnerships with major companies, Hedera aims to be a leading platform for enterprise adoption of decentralized technologies. Its focus on scalability, security, and sustainability positions it as a compelling choice for businesses and developers exploring the potential of distributed ledgers.
One-of-a-Kind Hashgraph Consensus
Hashgraph consensus is a unique approach to achieving agreement in distributed systems, distinct from traditional blockchain mechanisms. It was developed by Dr. Leemon Baird and is used as the underlying consensus algorithm for Hedera Hashgraph. Here's a simplified explanation of how Hashgraph consensus works:
Gossip About Gossip: The Hashgraph algorithm starts with a concept called "gossip." Gossip in distributed computing means a node randomly shares information with another node, which then passes it on to other nodes, and so on. In Hashgraph, nodes gossip about transactions and also about the structure of the gossip itself, called "gossip about gossip." This second layer of gossip creates a graph showing the connections between nodes and the order of messages.
Virtual Voting: Traditional consensus algorithms often rely on explicit voting to reach agreement. In Hashgraph, virtual voting eliminates the need for nodes to send explicit votes, saving time and bandwidth. Instead, each node can simulate how others would vote based on the information contained in the gossip about gossip structure. This simulation allows nodes to quickly reach consensus on the order of events without requiring extensive communication.
Famous Witnesses and Strongly Seen Events: In Hashgraph, a "witness" is an event (a piece of information) that has been seen by a node. Some witnesses become "famous" when they are widely known throughout the network. This status is achieved when a large number of nodes have indirectly heard about the event through gossip. Virtual voting is used to determine which witnesses become famous.
Consensus Timestamp: The gossip about gossip structure and virtual voting enable nodes to agree on the order and timing of events. Hashgraph assigns a consensus timestamp to each event based on when a majority of nodes have strong visibility into it. This consensus timestamp establishes a reliable order for events, allowing the network to reach agreement without ambiguity.
Finality and Fairness: Once the consensus timestamp is established, the order of events is fixed and cannot be changed, providing finality. Hashgraph's design ensures fairness, as each node has an equal chance to contribute information to the network. The use of virtual voting and gossip allows Hashgraph to achieve consensus quickly and with minimal overhead, making it highly efficient.
In summary, Hashgraph consensus achieves agreement in a decentralized network through a combination of gossip about gossip, virtual voting, and consensus timestamps. This unique approach allows for high-speed, low-latency transactions with strong security and finality, making it a compelling alternative to traditional blockchain consensus methods.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.