The rise of blockchain has undoubtedly changed the trajectory of finance as innovations such as decentralized finance (DeFi), opening an opportunity for everyone to participate in the system.
While DeFi has been adopted by retailers en masse, many enterprises still remain locked out of the ecosystem. One platform, ParallelChain, aims to change this via its high-performance private blockchain for building applications for enterprises.
We spoke with Ian Huang, Founder, CEO and Chief Architect of ParallelChain Lab, to get a greater insight into how ParallelChain works, its blockchain as a service, the current downfall of FTX, possible regulation in the DeFi and more.
Welcome to Finance Magnates Mr Huang. Let’s start off by briefly explaining to our readers the journey of ParallelChain so far.
Thank you for having us. ParallelChain provides an ecosystem bridging the gap between centralised and decentralised finance, through our innovated native coupling of the public (ParallelChain Mainnet) and private (ParallelChain Enterprise) blockchains, which empowers the sharing of utilities such as smart contracts, not merely messages or app-level data.
Ian Huang, Founder, CEO and Chief Architect of ParallelChain Lab
We first developed ParallelChain Enterprise in late 2018, with the uniqueness of unprecedented high transaction rate, low latency, security (via ‘Proof-of-Immutability’, patented), high scalability (via ‘Parallel Blockchain Processing’, patented) and compatibility with data privacy standards, including EU GDPR (via ‘Ability-to-Forget’, patented).
We envisioned that Web 2 networks would not go away. Web 3 must become interoperable with Web 2 in order to gain trust and reliance for everyone and every established organisation, hence the necessity to have true interoperation between the public and private networks. The interoperation must not be limited to passing messages and/or data.
Furthermore, this interoperation must be enabled natively in order to allow ease of maintenance/upgrade, utility sharing, and strong security without reducing performance, while ensuring the entire ecosystem is increasingly and sustainably profitable.
As a result, we began to develop the ParallelChain Mainnet to complement the two independent systems while maintaining the augmentation of the two independent environments through our Inter-ParallelChain-Communication (IPC) protocol. We also envisioned the need for the non-custodial wallet, which is factually a decentralised component.
We realised the challenges that come with self-custody of private keys, notably, the loss of assets caused by private keys being forgotten or compromised by malware. So, we enlist ourselves to apply our own-invented biometric recognition technology in the development of ParallelWallet, with the objectives of providing end-users privacy, security, and ease of use. We embrace and share the Web 3 value that you should be the sole owner of your own data.
No company, including ParallelChain, should store or use your data. And we’ve stayed true to this mission by making sure ParallelWallet does not store any of the user’s biometric data, every captured data is immediately converted into mathematical templates that cannot be reconstructed, and then further scrambled.
We are currently developing more options and communities to enable the mutual leveraging of the Enterprise Blockchain and the Public Blockchain for our partners and users, and we can’t wait to share them with our users when they are launched.We are looking forward to enhancing and quantum-leaping the current blockchain ecosystem with all parties together.
I understand there are two main blockchain software suites on ParallelChain: the ParallelChain Mainnet and the ParallelChain Private. Please explain to our readers what the two blockchain software are all about.
ParallelChain Enterprise is a high-performance private blockchain for building applications such as enterprise software and networks. It powers the enterprise products that we offer to satisfy data privacy and compliance requirements, and it keeps verified transactions private with our patented Proof-of-Immutability (PoIM) consensus mechanism.
On the other hand, ParallelChain Mainnet is a public Proof-of-Stake blockchain network that employs a multi-class validator design and is protected by the ParallelBFT consensus protocol. Our public chain is designed for fast transactions and low fees.
Businesses can access the decentralised space while enjoying security via Inter-ParallelChain Communication (IPC). The feature allows native interoperability between the private and public blockchain, and businesses can tap into the benefits of the decentralised web while preserving their data privacy.
The project offers blockchain-as-a-service to enterprises and customers to unleash the power of DeFi and the metaverse. Could you explain how ParallelChain expands the adoption of DeFi and Web 3 for its enterprise customers?
I mentioned Inter-ParallelChain Communication (IPC) which allows interoperability between public and enterprise blockchains. The ParallelChain Mainnet provides a flexible smart contract that supports Automated Market Maker (AMM) and order book-based protocols that are used in the development of decentralised exchanges.
IPC essentially acts as the bridge that connects the enterprise chain to DeFi networks built on the ParallelChain Mainnet, and this enables decentralised applications (dApps) to work across both layers. By doing so, we create wider accessibility between communities that are traditionally isolated.
On to the current happenings in the cryptoverse, I’m sure you have heard about the FTX exchange scandal. Do you have any thoughts on this unfortunate event? How will the collapse of FTX affect the broader crypto and blockchain universe?
It is shocking that FTX, a reputable cryptocurrency exchange in the industry, collapsed so suddenly and swiftly. Yet the reason for its demise was clear when its new CEO John Ray III laid out his findings which highlighted a lack of transparency in funds management and severe oversight of system controls and regulatory compliance.
As an exchange that is ranked the third largest by trading volume and second in the futures market, FTX’s collapse had far-reaching consequences that is still reverberating across the cryptocurrency space even today.
The lack of transparency and mismanagement by FTX has utterly destroyed trust in the cryptocurrency industry, and retail traders may have second thoughts before purchasing cryptocurrency assets while institutions may take a more hesitant approach to future venture investments.
What was abhorrent to those who trusted FTX was perhaps the façade that its founder Sam-Bankman Fried had built. Its founder had indicated it was solvent during the collapse of Terra, and its safe finance practices had enabled it to stay afloat and even acquire other competitors during the Terra fallout.
Moreover, the founder of FTX was an outspoken proponent of the US Digital Commodities Consumer Protection Act (DCCPA) bill which aimed to regulate cryptocurrencies further, and this drove VCs and retail users alike to place faith in the FTX platform.
The findings laid out by FTX’s new CEO are a literal slap in the face to those who trusted FTX and its founder since it goes against everything they believed he stood for, from the blatant fraud conducted to the lack of safe financial regulation within the company. Entities that survive the fallout will have to work hard in building the trust that has been lost
Following the collapse of FTX Exchange and Alameda Research, there has been a lot of talk about the need for tougher regulation in the blockchain space. Is this the right step for the blockchain space?
Yes, I believe that such a high-profile collapse of the FTX exchange will undoubtedly invite more scrutiny and legislation from financial authorities, and tougher rules are needed to regulate the blockchain space and create an ecosystem of trust.
While critics say that tougher laws will stifle blockchain innovation, it is essential to protecting retail traders who are most vulnerable to market fallout. Customers of centralised entities want greater transparency and trustworthy records before depositing their assets on these platforms, and having a solid regulatory framework creates greater protection and trust for these customers.
On the downside, this may create greater barriers to cryptocurrency access and concentration of power with finance authorities that the cryptocurrency space wanted to avoid.
A silver lining of the FTX-Alameda collapse is the re-invention of the DeFi space as something that is truly decentralised. As one of the leading cryptocurrency exchanges with an aggressive investment arm, FTX has kept multiple promising DeFi protocols tethered to it with venture capital investments, affecting the protocol’s reputation as being truly decentralised. The collapse of FTX has broken the chains tethering these protocols to a centralised exchange, and we could see a more genuine DeFi ecosystem in the near future.
Additionally, a number of experts are predicting possible regulation of proof-of-stake platforms such as Ethereum and ParallelChain by the SEC. What possible impact could this have on the DeFi space in general?
As regulations mount and cryptocurrency users have a greater expectation of trust and transparency, we could well see Know Your Customer (KYC) and Anti-Money Laundering (AML) processes being implemented for DeFi platforms as regulators move to keep laundered funds and blacklisted players off them.
Decentralised exchanges (DEXs) and protocols do not manage the assets of users unlike centralised exchanges, but with the increasing number of hacks in the DeFi space and a need for team accountability after the dubious backgrounds of key players like Do Kwon were exposed, we can expect protocol consumers to demand verifiability in terms of security and team background in the future.
At ParallelChain, we believe that greater transparency and self-declaration about our processes and practices will only benefit the cryptocurrency space as a whole, and we welcome regulations that strive for the same ideals. We built our enterprise offerings with regulations and compliance in mind to help businesses navigate a regulated DeFi future.
Could you explain what exactly ParallelChain offers as its competitive advantages over other Layer 1s like Ethereum and Solana?
Choosing the right blockchain to build a project on is not the same as choosing a computer with the best RAM and graphics card. Every blockchain is unique and seeks to solve a particular problem, which means each infrastructure is built differently as well.
However, adapting and scaling a blockchain is not the same as upgrading our computer systems which can be done with a simple Mac or Windows operating system upgrade.
Instead, Bitcoin and Ethereum adopt Layer-2 solutions such as Lightning Network and Polygon to scale transactions and traffic on the chain. Like other blockchains, ParallelChain aims to solve issues that hinder Web3 mass adoption and create a vibrant ecosystem, but we opt for a Layer-1 approach instead of adopting a Layer-1 – Layer 2 dependency.
Heterogenous blockchains are unable to inter-communicate meaningfully due to their difference in architecture and consensus mechanism. This is something that Layer 2 solutions in the market cannot achieve.
ParallelChain goes one step further by achieving native chain communication between permissioned and permissionless chains for deep-level interoperability and allows enterprise users to tap into the decentralised space in a private, secure manner.
Finally, how do you see the blockchain ecosystem, specifically DeFi, evolving in the next five years?
We will see blockchain systems adding more real-world uses as the technology matures, and it will slowly but surely replace the centralised infrastructure supporting different industries in today’s economies.
Also, we will see another wave of DeFi summer in the next bull market with protocols that will emerge stronger from the current bout of DeFi hacks, and they will have robust smart contracts and regulated DeFi processes to protect users who are using their platform.
With more banks and institutions looking to jump into the cryptocurrency space and tap into the benefits of decentralised finance, we will likely see these protocols taking over the daily centralised functions of financial institutions too.
Ian Huang is an infrastructure technologist and entrepreneur. After his journey at Westinghouse, Tektronix, Raytheon, DEC and Hughes Network Systems, he founded XNET Technology (Silicon Valley) and brought it to NASDAQ.
He is also a big contributor to the inventions of multi-tasked OS, semiconductor design, CPU design and network protocol in TekDOS, Priority Sectoring Processor of USAF A-10 Attacker Cockpit, SCSI, UNIX, RISC, FDDI, ATM Switch and Ethernet/VPN Switch.