Accelerating the Energy Transition with an Open-Source, Decentralized Blockchain Platform
Version 1.0 | October 2018
All contributors from EWF unless otherwise noted. Contributors listed alphabetically.
Sam Hartnett, Claire Henly, Ewald Hesse, Thore Hildebrandt, Christoph Jentzch (Slock.it), Kai Krämer, Garrett MacDonald, Jesse Morris, Hervé Touati, Ph.D., Ana Trbovich, Ph.D.
The contributors also thank the following individuals for offering their insights and perspectives to this work.
Peter Bronski (EWF), Aeron Buchanon, Ph.D. (Web3 Foundation), Dane Christensen, Ph.D. (U.S. National Renewable Energy Laboratory - NREL), Stephen Comello, Ph.D. (Stanford University), Jon Creyts, Ph.D. (EWF / Rocky Mountain Institute - RMI), Dylan Cutler (U.S. National Renewable Energy Laboratory - NREL), Paul Dezpraz (Slock.it), Adrien Gilles (Elia), Joanna Hubbard (Electron), Kevin Johnson (Pacific Gas & Electric - PG&E), May Liew (Singapore Power), Rich Sedano (Regulatory Assistance Project - RAP), Dietrich Summerman (MotionWerk)
The Energy Web Chain: Accelerating the Energy Transition with an Open-Source, Decentralized Blockchain Platform.
Energy Web Foundation, October 2018.
Copyright 2018 Energy Web Foundation
Energy Web Foundation (EWF) is a global nonprofit unleashing blockchain’s potential to accelerate the transition to a decentralized, democratized, decarbonized, and resilient energy system. EWF is building the shared, digital infrastructure—an open-source, scalable blockchain platform—specifically designed for the energy sector’s regulatory, operational, and market needs. Co-founded by Rocky Mountain Institute and Grid Singularity, and with a worldwide network of more than 70 affiliates and growing, EWF is the largest energy blockchain consortium and the industry’s leading choice as the foundational blockchain base layer, providing the digital DNA building blocks powering the world’s energy future.
For more, visit www.energyweb.org.
This is a living document. It is an ongoing mechanism to explain current and planned technical and governance features of the Energy Web Chain (EW Chain), as well as to elicit feedback from energy market participants, regulators, and blockchain developers.
At the time of this publication (October 2018), the EW Chain is in the beta version of its test network; it should be considered an experimental technology, not yet a commercial-grade solution. Numerous technical features remain in development and governance design questions remain open. This paper’s intent is not to provide definitive answers, but rather describe EWF’s leading hypotheses and approaches to development in order to encourage active collaboration with organizations at the nexus of blockchain and energy. We will actively revise this document as we continue to gather input, test, develop, and iterate.
This is version 1.0.
This document is a snapshot of our thinking at the time of writing; much remains to be done. We welcome your input and feedback, so that we can continue to improve our service to our Affiliates and the broader blockchain community.
Please submit questions, comments and suggestions, revisions, etc. via Github:
https://github.com/energywebfoundation/paper
- Executive Summary
- Vision
- Principles
- Ecosystem
- Frameworks
- Governance
- Technology
- Token-Secured Operating Model
- Roadmap
- Appendix A: Glossary of Terms
- Appendix B: EW Chain Technical Detail
- Appendix C: EWF Important Actors
- Appendix D: Preliminary Validator Node Guidelines
As a foundation building the open-source, blockchain-based, digital infrastructure for the energy sector, three core themes define the Energy Web Foundation and our work:
1. Community. EWF has assembled over 70 energy and blockchain Affiliates, including several of the biggest energy players in the world and many of the most successful innovators in the energy blockchain space. This community is growing quickly and we strive to reach 200 participants by summer 2019. It is deliberately diverse geographically— global in scope—and includes utilities, grid operators, renewable energy and cleantech companies, blockchain developers, startups, and others.
2. Technology. EWF provides to the global community a blockchain-based software infrastructure: the Energy Web Chain. The EW Chain, in its current instantiation, is a publicly-accessible test network with permissioned validators. It relies on a Proof-of-Authority consensus mechanism, which provides 30x performance improvement and 2–3 orders of magnitude lower energy consumption compared to Ethereum. In addition, EWF is continuously developing software and hardware modules to lower the cost of application development and enable developers to focus on their core differentiators. The EW Chain will launch in summer 2019 with a novel governance structure that encourages further innovation. It is designed—both technically and in terms of governance—to be future-proof.
3. Delivery. EWF leverages the strengths of its co-founders, Rocky Mountain Institute (RMI) and Grid Singularity (GSy). RMI has a proven track record in building energy-focused communities, with successful programs such as e-Lab and the Business Renewables Center (BRC). Grid Singularity, recognized by the World Economic Forum as one of the most innovative startups globally in 2018, provides—both directly or through its technology partners Parity Technologies and Slock.it—EWF’s software and hardware delivery capabilities.
We organized this document to allow you to have different levels of reading depending on the time you have available
You can stop here—you already have the main points.
You can read the summary of the key sections of this
document to go the next level of understanding.
You can read the main body of the document to get further substance.
We have also added a number of appendices in specific
topics if you want to deep dive in some of them.
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Our Vision: What do we hope to create in the energy sector by 2025?
We aim to bring blockchain technology from “boutique” to “industry” in the energy sector, enabling pioneering market and business models that provide clear societal, environmental, and economic benefits. -
Our Principles: What guides our work?
To achieve our vision of widespread adoption of mass-market blockchain applications, we are following several principles:- Focus on proving the value in one sector—energy,
- Form interdisciplinary teams of experts,
- Build a collaborative ecosystem with representatives from across the sector,
- Build frameworks and tools to accelerate commercial applications,
- Use innovative governance to balance the benefits of decentralization with regulatory oversight, and
- Provide open-source, publicly-available foundational technology that solves common developer needs.
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Our Ecosystem: Who is involved? What is their role?
We strongly believe that the value of blockchain is captured through active community participation and partnerships. Not only is our open-source technology development collaborative by nature, but the way we operate and bring together developers, regulators, and energy companies (our “ecosystem”) is collaborative by design. -
Our Frameworks: What are we building? What is the status?
Frameworks are publicly-available hardware and software components built on the EW Chain to accelerate application development. EWF has thus far built three initial versions:1. EW Origin: a reference application showing the transformative power of blockchain in renewable energy certificate and carbon accounting markets,
2. EW Link: a set of architectures and standards for securely connecting physical devices to the blockchain, enabling them to independently communicate and transact, and
3. EW D3A: a vision and simulation tool for localized, democratized electricity markets enabled by blockchain.Moving forward, we will continue to develop these frameworks and add others based on input from the ecosystem.
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Our Governance: What makes it unique? What are the benefits?
The rules and processes for making decisions about how the EW Chain operates are crucially important; the network will interact with mission-critical energy infrastructure. Regulatory oversight is required not only to ensure that the EW Chain maintains the stability and safety of energy systems, but also protects consumer interests. At the same time, the global energy blockchain community must be empowered to influence the evolution of the network over time. The EW Chain governance structure has been designed to balance the benefits of decentralization with the oversight needed for regulatory acceptance. -
Our Technology: What is our approach? What exists so far?
The EW Chain is an open-source, publicly-accessible blockchain. It is derived from the Ethereum technology stack and currently deployed as a test network. It is designed specifically for energy-sector applications, using a Proof-of-Authority consensus mechanism to significantly increase transaction capacity and decrease energy consumption compared to the Ethereum mainnet and other public blockchains. The EW Chain supports new features such as private transactions and permissioning of smart contracts that make it possible to control data access for competitive and/or regulated energy market applications, in addition to providing technical solutions for secure, low- cost, and efficient integration with hardware (e.g., smart meters). More importantly, EWF has technical development capabilities and resources to continue to develop the EW Chain infrastructure to address the needs of the energy blockchain community, allowing developers to focus on moving their applications swiftly from “proof of concepts” to actual deployment in production environments at scale. -
Our Roadmap: What are we working on next? When will we launch?
We intend to launch the EW Chain in Q3 2019. In preparation for the launch, we will cultivate an active ecosystem of hundreds of Affiliates, test and refine the existing features on our testnet, build additional features, test and complete a functioning on-chain governance model, refine our three software frameworks, and launch additional frameworks and tools. -
Our Token-secured Operating Model: Why is it needed? How does it work?
As with most public blockchains, the EW Chain features a native first-layer utility token, the Energy Web Token (EWT). Native tokens, intrinsic to a platform’s protocol, serve two main purposes: security and validator compensation (via transaction fees and/or block validation awards). A total of 100 million EWT are planned to operate the EW Chain.
What do we want to create in the energy sector by 2025?
Energy Web Foundation’s overarching objective is to accelerate the global transition to a decentralized, democratized, decarbonized, and digitalized resilient energy system. We do this by unleashing blockchain’s potential across the energy sector. To be certain, blockchain technology is not a singular solution; it is one of many tools that will influence the evolution of energy systems. However, we believe blockchain has the potential to play a critical role in transforming energy markets.
Below are three specific examples of how blockchains enable our vision, followed by an explanation of the broader trends made possible by introducing blockchain to the energy sector.
Community solar was invented to provide renters and owners of multi-family buildings a way to capture the benefits of solar energy without installing solar panels on their own roofs. A community solar project is normally a ground- mounted solar installation, which tends to be cheaper per installed kW than a rooftop installation and whose ownership and benefits are shared by the community.
Soft costs—the costs of a project that come on top of the actual equipment and installation, such as legal fees, permitting, interconnection, administration, customer acquisition costs—are proportionally higher for community solar projects due to their complexity, often rendering these projects cost prohibitive.
Blockchain technology can help reduce soft costs considerably. Using smart contracts, a community can establish partial asset ownership, governance, and profit division so the entire process of owning one piece of an asset is automatic, trusted, seamless, and much less costly.
The same goes on the revenue side. Currently, community solar projects are constrained by geography. Using a blockchain, production of the community solar project can be shared via the chain for a global set of potential contributors opening new and geographically diverse sources of revenue. In addition, owners—participants in the project—can now have liquidity; they can decide to sell the kWh they are entitled to or even their shares in the project easily, electronically, with no need for complex legal paperwork.
By reducing costs and unlocking additional sources of revenue for community solar projects, blockchain can grow this underutilized source of renewable electricity generation. This approach could also be extended beyond community solar to other renewable energy infrastructure, especially in emerging economies where access to capital can be difficult.
Today’s grid architecture—a largely one-way relationship between grid operators and customers—is changing. Customers are adopting distributed energy resources (i.e., smart, small, energy-producing or -consuming devices) at unprecedented levels. Collectively, these devices could serve the same function as centralized thermal power plants. However, they are rarely used to their full potential since they are naturally decentralized and distributed, making secure digitization, coordination, control, tracking, and financial settlement with each device expensive and oftentimes cyber- insecure. Furthermore, the process of aggregating devices into a single grid participant is difficult given the market interests of each individual device manufacturer.
Blockchains could enable grid operators to overcome many of these challenges, effectively re-architecting the grid from the bottom up. Imagine being able to automatically connect a new appliance or entire microgrid to a secure, decentralized platform that incents devices—acting on behalf of their owners—to use or not use electricity at certain times via detailed, close-to-real-time price signals. Imagine renters or homeowners participating in new electric markets by simply setting their home to ‘economy mode,’ making their devices available to grid operators and perhaps being paid to do so.
In a blockchain-based grid system, each distributed energy resource would have a digital identity linked to its corresponding information, such as capacity and consumer preference. Using these identities, each device’s actions can be transparently tracked on the blockchain, and revenues can be divided and distributed automatically via smart contracts.
To respond to commercial interest and government regulation, renewable energy certificates and guarantees markets have emerged in the United States, Europe, Australia, and elsewhere. While these markets have noble intentions, their administration is highly manual and costly, rendering the markets opaque, high-cost, and inaccessible for most smaller participants. In addition, these analog, largely manual markets are not able to support any higher-level functionality such as consumption-linked purchasing, carbon-impact selective purchasing, or renewable generator aggregation.
Why can’t buying renewable energy credits be like buying an airline ticket–allowing buyers to search for exactly what they want and allowing sellers to join forces to get a buyer to their desired destination? Blockchains can create such a system for renewable energy.
In a blockchain-based renewable energy credit market, each asset would receive a digital identity that links to all production of that asset and subsequently associates with each owner of the credit. This record of identities and ownership would reside on the blockchain for all market participants to use. Smart contracts could then provide automated additional functionality such as mapping kWh production to carbon offset or automating credit purchasing based on a consumption profile. In use cases where privacy is needed, a device owner could cryptographically derive sub- keys off-chain, so the identity of the owner of the device can remain obfuscated.
By digitizing identities, records, ownership, and contracts, blockchain can make renewable energy purchasing transparent, highly functional, and low cost.
Beyond the three aforementioned examples, there are many more ways that blockchain can create the value in the energy sector. We will not go into the same level of detail or attempt to be exhaustive with this list; consider it as a guide to what future blockchains could enable.
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Expanded Market Access: With blockchain-based applications, or smart contracts, automating many of the functions necessary to register, bid, settle, and generally participate in markets, blockchain can open markets to smaller participants. In electricity markets, residential households could allow their smart devices to bid into wholesale markets or whole households could aggregate with their neighbors to sign a direct power purchase agreement with a low-cost bulk supplier. Further, blockchain-based markets may enable more-rapid and efficient electrification in greenfield settings by enabling low-cost implementation of functions traditionally performed by utilities and grid operators.
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Greater Contract and Market Diversity: Smart contracts can automate bilateral or multilateral contractual arrangements, allowing for a much greater diversity of contract types and market structures. Wholesale electricity market contract structures can be extended to the edge of the distribution grid and need not be limited by prohibitive back office costs. Forward-looking capacity, real-time energy, and ancillary services markets can be localized, aggregated in a nested hierarchy, and better reflect the value of energy and services over time and place. Automated dispatch, settlement, and reconciliation could enable many more contract types for both individual and aggregated distributed energy resources, making the market more diverse and “complete.” Unconventional business models will emerge for existing utilities and new market entrants as operating costs of market management continue to decline, the cost profiles of distributed and renewable resources continue to improve, and technological capabilities of blockchain and other digital technologies continue to expand. In an era where volumetric energy sales no longer grow revenue and the majority of value accrues in balancing services, “energy- as-a-service”—where consumers pay fixed subscription fees to retailers who in turn operate and monetize behind- the-meter assets—may become the norm.
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Improved Traceability: Any digital object, whether representing a person, a physical asset, or an abstract concept like a carbon credit or avoided generation, can establish a unique and trusted digital identity. Over time, these identities establish robust digital records that track relationships with other identities, thus creating a common ledger for tracking ownership of assets and data. In carbon and renewable energy credit markets, this creates the potential to seamlessly trace credit ownership with drastically lower overhead and no risk of double counting. Utility customers and regulators alike can obtain increased information about the source and societal and environmental impacts of consumed energy. “Negawatts,” or energy savings, created by demand response and energy efficiency measures can be granularly and perpetually attributed to the appropriate asset or individual, providing utilities, regulators, and consumers with better information for making investment decisions and structuring program incentives.
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Direct Ownership: Through automated smart contracts, blockchain makes it possible to raise financing for an asset that directly represents an ownership stake and right to partial profit at a level of granularity not possible or practical with other technologies. As the asset comes online and begins creating value, all owners are compensated directly and automatically. A tenant in an apartment building in New York, whose on-site solar PV and battery system is collectively owned by the equivalent of a real-estate investment trust composed of other tenants, can finance a specific panel on a solar PV installation in rural Tanzania, entitling them to a proportional share of revenue generated.
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Asset Agency: For most of history, only people or organizations have had the capacity to conduct economic transactions. Through unique and trusted digital identities combined with software-driven “intelligence,” blockchain can enable physical assets to participate directly in markets without the need for a human intermediary. Each asset would have a unique identifier and record of transactions on chain. In electricity markets, electric vehicles could use this functionality to enter into direct legal agreements with counterparties, removing the need for a vehicle to re-enter a legal flexibility service agreement with a grid operator even if the human ownership of the car had changed. This is a powerful foundation for digitalized and distributed ownership, market participation, and wholly new profitable economic models.
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Data Sovereignty and Democratization: By creating unique identifiers for asset owners, assets, and the data produced by those assets, blockchain can allow for direct data ownership and selective permissioning. The concept of personal data being “owned” and monetized by centralized service providers and the risk that such data is exposed through a breach of centralized servers is made obsolete. Users of blockchain networks and applications are empowered to control how their data is used and stored. Residential households could bid out their metering data anonymously to a range of retail providers to get the best retail rate, or sell their consumption profile to energy efficiency companies in exchange for the chance to offer goods and services. Not only could data ownership be tracked on a blockchain, but it could be enforced, with encryption protecting data owners from unwanted access and, where data is voluntarily shared, rights ownership ensuring only approved use.
...about the fundamentals of blockchain technology, take a look at the Bitcoin and Ethereum whitepapers, the gentle introduction series from Bits on Blocks, and many of the introductory articles on MultiChain.
...about blockchain use cases in the energy sector, take a look at the many articles we and others have published on the topic on the EWF blog and news pages. In addition, we are working on a comprehensive paper on the subject that will be released this winter.
...about startups active in the blockchain and energy sectors, take a look at the startup review from the EWF- sponsored event, EventHorizon.
What guides our work?
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Focus on proving blockchain’s value in one sector: energy. We recognize that we must intimately understand the problems facing a sector to scale up a new technology within it.
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Form interdisciplinary teams of experts from across the blockchain and energy sectors. There are very few people who have expertise in both areas.
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Build a collaborative ecosystem with representatives from across the sector. Our work will only create value in the energy sector if we have a large ecosystem of users and our technology will only improve if we offer that ecosystem extensive opportunities to collaborate with us and provide input.
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Build frameworks and tools to accelerate commercial applications. Blockchain technology is at a very early stage and application developers need framework examples and standards to accelerate their application development.
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Use innovative governance to balance the benefits of decentralization with regulatory oversight. In order to take over transactions in the heavily regulated energy sector, public blockchain governance must allow for regulatory oversight.
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Provide foundational technology that solves common developer problems and which is open-source and publicly-available. The short blockchain history has shown that public networks foster more innovation than closed networks. We recognize that innovative solutions will come from many hands.
Who is involved? What is their role?
In order to ensure that our work and technology is useful and appropriate for energy-sector blockchain applications, we have been gathering and engaging an ecosystem of market participants and users to inform EW Chain development. We call them EWF Affiliates.
EWF Affiliates are companies, large and small, who are playing an active role in informing the early development of the EW Chain during its testnet phase (prior to the launch of the production network). We currently have an ecosystem of 70+ Affiliates ranging from the largest energy-sector market participants (including utilities, grid operators, and renewable energy and cleantech developers) to the smallest blockchain and energy startups.
Figure 1: EWF Affiliates
EWF has assembled a growing roster of more than 70 energy and blockchain Affiliates to date. Those logos shown here omit
those that have chosen to remain anonymous.
Many of our Affiliates are actively working on blockchain applications in the energy sector on topics ranging from electric vehicle charging to demand response market settlement to certificates of origin tracking to peer-to-peer energy trading. To date we have engaged this ecosystem to gather input into the development of our core technology, governance, and frameworks.
What are we building? What is the status?
Open-source frameworks (“frameworks”) are software modules or reference applications that developers can use to accelerate and reduce the costs of application development.
The art in framework development is to provide tools that increase application developer productivity while leaving enough space for competitive differentiation. It is analogous to providing a Wifi or Bluetooth module that can be incorporated into larger systems on chip designs. The modules themselves (“frameworks” in our terminology) are not the base on which developers will differentiate their product, but rather provide important functionality that would have had to be developed from scratch in the absence of the framework.
We use the term “framework” loosely at EWF. We mean not only 1) open-source modules that can be used to develop applications, but also 2) fully-fledged, open-source reference applications that can be copied, modified, or simply used as a reference to develop commercial applications. Below are descriptions of three frameworks on which we have started development work that fall in one or the other category.
EW Origin: a reference application for the exchange of renewable energy certificates / certificates of origin (RECs / COs)
EW Origin provides an end-to-end standard and set of developer tools for renewable energy producers and consumers to commercially exchange the “green attributes” of renewable generation using a trusted, transparent, and low-cost approach.
EW Origin is protected by an open-source software license. [1] Using the alpha version of the EW Origin application Microsoft, E.ON, SP Group, Engie, and others have executed demonstrations of certificate exchanges in several markets across the world.
Learn more about the EW Origin reference application by: a) reading more on the EWF website, b) watching a demo from EventHorizon 2018, c) watching an overview video, and d) reviewing the open-source codebase on Github.
EW Link is a set of reference architectures for connecting physical devices and off-chain systems with the EW Chain so they can communicate and transact on the blockchain in a low-cost, secure, and reliable way. One example—already deployed—is an EW light client on a simple IoT device (the Artik 7) to facilitate communication with utility-grade electricity generation meters.
Learn more about the Artik 7 demonstration by watching the demo from EventHorizon 2018.
Moving forward, EW Link will deliver frameworks and reference implementations to support application developers as they connect to the relevant devices for their applications. All EW Link work will be released to the EWF developer community open-source.
To support a future vision of electricity markets, we have designed a model called the Decentralized Autonomous Area Agent (D3A). In this market model, any energy- consuming or -producing device can collaboratively transact with other devices in its local area in order to optimize operational decisions locally—based on user preferences and system conditions—with canonical data and communications up and down the value chain. This model can apply at the level of a house, a neighborhood block, a distribution feeder, or an entire distribution network.
While the full suite of technologies required to realize this decentralized electricity market, including the blockchain components, are not production-ready, the EW D3A team has built a free software simulation environment to demonstrate the economic impact of a decentralized market model in a variety of grid configurations. In fact, EWF Affiliate Stedin, one of The Netherlands’ grid operators, and partners are already piloting a similar blockchain-based solution they call the Layered Energy System. Like the EW D3A, smart devices across a neighborhood of houses collaborate at the local level first to balance electricity supply and demand, before turning more widely to the grid to buy and sell energy and grid services.
Learn about the D3A decentralized market model rationale by reading our April 2018 concept brief and about the alpha version of the simulation environment by watching a demo from EventHorizon 2018.
[1] Origin consists of three distinct parts: 1) an asset and user registry, 2) a national registry, and 3) marketplace features such as matching algorithms to match supply and demand. Parts 1 and 2 are to be released under GPLv3 copyleft, while part 3’s licensing structure is still under development. The intent is to enable Affiliates to adapt and offer commercial products if desired.
What makes it unique? What are the benefits?
True blockchains are used by many and owned by none. Therefore, one of the most critical design considerations when establishing a new blockchain infrastructure is its governance mechanism. How are changes to the blockchain’s protocols designed and implemented? In other words, how does the chain actually work and evolve over time, especially as a founding organization such as EWF pulls back from its initial oversight and stewardship and divests more control to the community?
- What are the design objectives of EW Chain governance?
- What design principles did we follow?
- How does EW Chain governance work in practice?
- How does EW Chain governance differ from other blockchains and what are its benefits?
Energy Web Chain governance should ensure that the EW Chain is:
- Inclusive: open to energy blockchain applications and supportive of their widespread use
- Transparent: open to examination by regulators, developers, and market participants
- Secure: able to resist distributed attack vectors and to protect privacy
- Responsive: able to take action quickly when needed
- Adaptable: able to improve with technology, adjust to evolving needs, and react to threats
- Cost-effective: able to maintain competitive transaction costs
- Scalable: able to support industrial applications at scale, not just proofs of concept
We use the following principles in designing EW Chain governance:
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Transparency on governing parties: Entities participating in Energy Web Chain governance are identified to facilitate market oversight by regulators.
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Governance by “gas”: Application developers are given the leading role to govern the EW Chain. Their voting rights are determined by how useful their applications are. We measure applications’ usefulness via proxy as measured by the computing processing power (i.e., “gas”) from applications deployed from their known addresses on the blockchain. In other words, more-useful applications that are more-widely used by the broader community will “spend” more gas, giving those applications’ developers stronger voting rights.
We fully recognize this system is not without limitations and drawbacks. It creates potential issues and incentives to spend unnecessary gas in order to accrue voting rights. However, we are convinced that developers—rather than network validators or token holders—are the appropriate constituency to delegate voting power to. We are currently experimenting with several mechanisms to prevent potential abuse, including a floor on voting power (i.e., each developer is guaranteed a minimum share), a cap on voting power (i.e., individual developers are limited at a certain threshold), and a rigorous know-your-customer (KYC) process to create legal and reputational deterrents to malicious behavior.
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“Common carrier”: The EW Chain should provide equal and non-discriminatory access to all application developers.
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Conflicts of interest: Application developers remain responsible for regulatory and legal compliance of their applications and cannot use their influence in the EW Chain governance body to generate an undue advantage for themselves, their applications, or their customers.
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Mix of on-chain and off-chain governance: We use on-chain governance mechanisms when possible (i.e., established in software code), complemented by off-chain governance mechanisms (i.e., managed by people under a set of established rules) when the situation is too complex or generally ill-adapted to software-based resolution.
The Energy Web Chain protocol can be changed by agreement among identified actors (approved application developers) using the steps outlined in Figure 2. Additional details on the different actors in the EWF governance model are provided in Appendix C.
The goal of the governance model is to ensure that the EW Chain remains secure, cost-effective, and useful over time by adopting the most helpful technology upgrades and aligning the community around the direction of the EW Chain.
EWF will initially set all processes and criteria described herein prior to the EW Chain’s genesis block and enshrine them in code on-chain. Post-genesis block, all processes and criteria are subject to change via the governance model.
Figure 2: The Energy Web’s Process for Protocol Upgrades with On- and Off-Chain Governance
Approved developers govern the EW Chain through gas-weighted voting on proposed protocol upgrades, after which “winning”
upgrades are built, tested, and officially adopted or rejected.
Step 1. All stakeholders can propose protocol upgrades. Energy Web Chain protocol recommendations and upgrades can be submitted by the general public, the various EWF bodies, or approved developers. Nobody has a monopoly on good ideas. The Energy Web Protocol Implementation Team (PIT) facilitates an open, structured, and transparent process in order for the highest-potential innovations, ideas, and specific proposals from the EWF ecosystem to be considered for adoption. Future publications of this paper will describe additional tools the PIT may use to channel such ideas from the greater EWF ecosystem.
Step 2. Developers identify themselves in order to receive voting privileges and vote to advance the most popular proposals. Any developer may run smart contracts on the network, but only developers that complete a KYC process (initially set by EWF [2]) to publicly identify themselves may participate in the governance process that decides on protocol upgrades. A separate implementing body, the EWF Identity Verification Team (IVT), administers the process, reporting on any action taken. This KYC process intends to deter misuse of voting rights and maximize incentives for developers to act in the EW Chain’s best interest. [3]
Crucially, identified application developers are the only parties eligible to vote on protocol upgrades. [4] EWF will set an initial voting procedure, process, and approval threshold with input from the community followed by rigorous testing. These votes are weighted by transaction throughput on applications as measured by gas spending, up to a determined cap.
Step 3. Proposed upgrades are approved by a supermajority. The threshold will be set after further calculations and testing to ensure efficiency while safeguarding community interests.
Step 4. The Energy Web Protocol Implementation Team (PIT) builds the proposed protocol. The PIT is an implementation team (likely employed by EWF) composed of technical, regulatory, and energy-sector experts. The PIT is responsible for implementing general protocol upgrades approved by the identified application developers in Step 3 by coding and testing protocol specifications, managing the protocol roll-out process, and reporting. [5]
Step 5. The PIT posts the upgrade to the test network.
Step 6. After testing, the identified application developers vote whether to adopt the new protocol. EWF will set an initial duration for test phases, during which protocol changes developed in Step 4 are released on the EWF test network. During the test phase of the network, all users and developers in the EW Chain community have the opportunity to review and experiment with the new protocol. At the end of the test phase, identified application developers vote whether to deploy the new protocol to the main EW Chain.
Step 7. EW Chain validator nodes adopt the protocol change. Validator nodes will automatically upgrade protocols to reflect votes and decisions taken by the identified application developers in Step 6. EWF initially sets eligibility requirements and an authorization procedure for validators. Once set, such requirements and criteria will live on the platform and are subject to change via the governance process. The EWF Identity Verification Team administers the process following up with reports on any actions taken.
Emergency upgrades are expedited. Emergency protocol upgrades are similar to other protocol upgrades except for their level of urgency. The PIT scans for and is alerted to urgent issues that compromise the safety or stability of the network. PIT may submit emergency protocol upgrades directly to the Energy Web test network (in effect, expedite Steps 1–5) and call on the identified application developers to vote for the new protocol.
In contrast to other blockchains that put the leading role to change the network into the hands of miners or token holders, the EW Chain empowers developers who create the most-useful applications and smart contracts for users. The main advantage of our approach is that it is more likely to stimulate continuous improvement and adaptation to future needs—and should be sufficient protection against excessive transaction prices.
One potential weakness of our governance approach would be the possibility of one party to block a decision that it does not support, for any reason. We minimize that risk by allowing voting only by developers who have successfully completed an identification process and by dynamically ensuring minimum and capping maximum voting rights of any identified party based on an empirical formula. We are currently experimenting with different formulas and evaluating a wide range of scenarios in order to develop a cap that appropriately mitigates risk of abuse while still providing an incentive to develop useful contracts.
[2] As with other governance and validator authorization processes, exact procedures are not defined at time of this publication. We intend to be transparent about
our current approach in hopes of eliciting feedback from the EWF ecosystem. Details will be published in subsequent versions of this paper.
[3] Since developers are publicly-known, undesirable behavior both on-chain (for example, intentionally attempting to disrupt the network via extreme volumes of
transactions or malicious contracts) and off-chain (criminal conviction) could be grounds for remedial action, including de-authorization. The power to revoke
voting privileges is an obvious candidate for potential abuse by malevolent actors, but given regulatory and market realities in the energy sector it may be
appropriate to implement in some form. We do not have specific plans to implement a de-authorization process as of the time of this publication. We raise the
issue for consideration.
[4] Note: EWF may engage a game theory expert to define the threshold that will provide robust sustainability (i.e., to enable the network to move forward but
disable a malicious actor from either implementing a negative change or blocking a positive change).
[5] Exact details are not final at the time of publication. Our vision is that the cap size is dynamic, based on the number of approved developers and amount of gas
spent over a specific time period, and the formula is designed to prevent a small number of approved developers from dominating the system while providing
sufficient voting power to the most-used applications. Additional details will be published in forthcoming governance documentation.
What is our approach? What exists so far?
From EWF’s inception, we chose to derive our tailored-to- the-sector blockchain technology from an existing one (i.e., Ethereum), versus developing our blockchain technology from scratch. That allows us not to spend resources reinventing the wheel but rather focus our software development effort on functionalities that address the specific pain points of application developers in the energy sector.
- Why use Ethereum as a starting point?
- What technical capabilities does EWF have to make competent changes to Ethereum?
- How does EWF select which adjustments to make to Ethereum?
- What adjustments has EWF made so far?
- What tools and solutions currently exist for developers using the EW Chain?
We decided to use Ethereum as a starting point for our technology for the following reasons:
- Open-source: It was important for us to use open-source technology as we wanted to have EWF technology likewise be open-source from the beginning.
- Public: It was also important for us to rely on a public blockchain technology as many of our envisioned applications require a public chain.
- Robust: Robustness was another reason why we opted for a public chain. Public chains are more exposed to attacks. Public chains that have survived public scrutiny are more likely to be resilient than private chains. Ethereum is a public chain that was released in 2015 and has survived several years of public testing. Ethereum mainnet today processes up to 1,300,000 transactions per day—more than the number of transactions processed by all other public blockchains combined (excluding Ripple).
- Flexible: We needed a technology that would allow for a large diversity of applications. Ethereum’s key innovation was the Ethereum Virtual Machine (EVM), which is technically Turing complete, and can therefore support any kind of algorithm or application.
- Popular: Ethereum has a large developer community and many available open-source extensions. A technology with a strong existing developer community was also important to us as it would allow us to leverage existing skills and knowledge. Ethereum has the most-robust, fastest-growing developer community in the public blockchain space, with more Github repositories, developers, and code updates than any other open-source blockchain. Ethereum supports thousands of applications. Many functionalities that would be needed for energy applications can be derived from open- source modules developed by the Ethereum community.
To be clear: the EW Chain is not Ethereum. It is derived from the Ethereum code base, but is a different technology stack and a different chain, with a growing number of functionalities designed to meet the specific needs of blockchain applications in the energy sector.
EWF partnered with Grid Singularity, Parity Technologies, and Slock.it for Ethereum expertise. Parity Technologies is a leading developer of peer-to-peer computing systems and decentralized consensus architectures. Parity was founded and is led by Gavin Wood, the chief developer of Ethereum. The Energy Web Chain uses Parity Technologies’s Ethereum client as a starting point.
EWF has also partnered with Slock.it, one of the foremost developers of Internet-of-Things (IoT) and blockchain technology to add IoT-related functionalities to the EW Chain. Slock.it was founded and is led by Christoph Jentzsch, one of the core developers of Ethereum.
EWF has also hired a small team of core technology developers from the market. They work in close collaboration with Parity Technologies and Slock.it.
EWF focuses on technology that addresses the most- common challenges blockchain application developers face in the energy sector.
To determine which functionalities to provide, EWF remains in frequent contact with Affiliates and other ecosystem participants to understand pain points. We then prioritize based on perceived importance and easiness to address.
Our technical team acts as a first filter, leveraging or adapting existing solutions when possible. If that is not sufficient, our team engages our technology partners to develop the required solutions. Depending on the difficulty of the challenge, that phase may require some research and development. In other words, some technology enhancements may be straightforward to implement and require a few days of work. Others are difficult problems to solve—like introducing parallelism in blockchain—and may require a multi-year effort involving significant innovation.
In the April 2018 beta release of Tobalaba, our test network, we have have addressed the five most-important “pain points” identified so far by the application developers in our ecosystem. Table 1 provides a high-level description of these five pain points, together with the adjustments we have made to Ethereum to address them.
Table 1: Energy Web Chain Customizations to Ethereum
| Pain Point | Adjustment made to Ethereum |
|---|---|
| Low network capacity: Due to the way blocks are created, transaction demand often exceeds available computational supply (i.e., there are too many transactions to fit in a given block), resulting in high transaction costs, delayed settlement, and limited scalability for mass-market applications. |
Proof-of-Authority consensus: EWF replaced the Proof-of-Work (PoW) consensus mechanism used in Ethereum with a Proof-of-Authority (PoA) consensus mechanism. That change increased network capacity by 30x compared to Ethereum. |
| Expensive IoT integration: Large software “clients” cannot be integrated into small devices because of insufficient memory storage and computing power capacity, limiting the applicability of blockchain in IoT. |
Light client: EWF provides different versions of light clients adapted to various types of IoT devices, enabling the connection of distributed energy resources to the EW Chain. |
| No differentiation between nodes in the network: The inability to differentiate between nodes and accounts from a rights and obligations perspective restricts higher-level governance and application functionality. |
Permissioning: EWF provides the technical capability to differentiate between nodes based on governance, applications, and regulatory requirements, all while keeping the chain public. |
| Low privacy: Little to no ability to execute private transactions limits the ability to develop applications in markets where data privacy is required (e.g., residential customer data, wholesale market transactions). |
Private Transactions: EWF provides a mechanism to allow developers to maintain data privacy while keeping the validation benefits of a blockchain. |
| Development limitations: The Ethereum Virtual Machine (EVM) is relatively slow and expensive compared to other code-execution engines. To write contracts for the EVM, developers must use bespoke programming languages (predominantly Solidity) that are less secure and more limited in functionality compared to other languages with longer histories and broader uses. |
WASM: EWF provides access to a Web Assembly (WASM) virtual machine on top of the Ethereum Virtual Machine, which has a benefit of faster execution (initial data suggest 1.3x to 15x improvement in execution speed, in addition to reduced CPU usage for validators) compared to the EVM. This has the additional benefit of providing access to additional programming languages beyond Solidity and more-robust developer toolkits for auditing and debugging code. |
The rest of this section covers each of these adjustments in greater technical detail.
Proof-of-Authority Consensus: improved functionality and increased technical capability for regulatory oversight while maintaining network trust and security
Consensus is at the core of blockchain technology. It is the mechanism that establishes agreement among decentralized validator nodes and the trust from the users in the data that is propagated throughout the network.
The key criteria for a consensus mechanism compatible with the energy sector are: a) high capacity, b) security, c) resource efficiency, d) regulatability, and e) fidelity.
We are using a Proof-of-Authority consensus mechanism [6] for the Energy Web Chain, in which a pool of known and trusted computers—called validator nodes—are responsible for validating transactions and creating blocks. This approach offers certain security, regulatory transparency, and considerable capacity benefits, though it does sacrifice a small but not insignificant level of decentralization.
[6] Proof-of-Authority and PoA refer to the Aura consensus algorithm unless otherwise specified. While we are using Aura PoA on the Tobalaba test network at the moment, we will adopt best-practice PoA mechanisms as the technology advances. To learn more, visit https://wiki.parity.io/Proof-of-Authority-Chains.
Figure 3: The Energy Web’s Proof-of-Authority (PoA) Consensus Mechanism
By limiting the ability to create blocks to a known pool of validators, we can achieve the following benefits without sacrificing the integrity of the chain:
Table 2: Proof-of-Authority Consensus Mechanism Benefits
| Benefit | Explanation |
|---|---|
| More consistent and predictable time and state finality | The combination of limiting validator status to a defined number of nodes who have passed a vetting process (for details see Appendix D) and establishing economic and reputational incentives (validators have something at stake) introduces an inherent level of trust between the participants. Since there is no competition among validators to race each other to create blocks, transaction throughput can be increased (faster block time) while energy consumption and computational complexity is drastically reduced (compared to Proof-of-Work). |
| Significantly improved resource efficiency (i.e., lower energy consumption) | |
| Increased throughput | |
| Reduced transaction costs | The reduced computing and energy requirements in turn reduce the operating cost for validators. In combination with the increased throughput and hence a higher supply, transaction costs are drastically lower compared to Ethereum. Given that throughput capacity on the EW Chain is one order of magnitude greater than Ethereum, we expect a corresponding decrease in transaction costs. |
| Minimal network latency | Validator nodes in the EW Chain are typically run on dedicated hardware in professional server environments with high-speed Internet connections. |
| Simplified protocol upgrades | Limiting validator status to known and legally registered entities simplifies the process for rolling out upgrades to the core protocol (coordinating a vetted group of validators with aligned incentives is easier than a dynamic group of anonymous miners). |
| Enhanced security | EWF provides access to a Web Assembly (WASM) virtual machine on top of the Ethereum Virtual Machine, which has a benefit of faster execution (initial data suggest 1.3x to 15x improvement in execution speed, in addition to reduced CPU usage for validators) compared to the EVM. This has the additional benefit of providing access to additional programming languages beyond Solidity and more-robust developer toolkits for auditing and debugging code. |
We are aware, as well, of the limitations and risks of adopting a Proof-of-Authority consensus and are adopting the following mitigation strategies. While these are our current hypotheses, EWF will continue to test and develop new solutions over the next year.
Table 3: Risks and Mitigation Measures to a Proof-of-Authority Approach
| Risk | Description | Mitigation |
|---|---|---|
| Centralization | A common criticism of PoA is that it is not truly decentralized. By definition, introducing a gatekeeper for validators requires oversight by some kind of central entity. And if the validator pool is not sufficiently large and diverse, the risk of 51% or distributed denial-of-service (DDoS) attack vectors is substantial. | EWF’s approach to mitigating this risk is
threefold:
|
| Synchronization | PoA relies heavily on timestamp accuracy and synchronization compared to PoW. There is a risk of inadvertent forks if timestamps on validators become out of sync, competing blocks are created simultaneously, and adversaries potentially manipulate timestamps on validator hardware to disrupt the network. | To mitigate this risk, EWF has established validator node security and hardware guidelines (Appendix D), which prescribe functional requirements for client implementation. Outside of a few isolated incidents, synchronization has not emerged as an issue on Tobalaba to date, due in large part to the fact that validators are run on professional servers in secure environments.9 EWF will continue to identify specific potential attack vectors for validator nodes, update the client as necessary, and publish mitigation techniques. |
| Predictability | Current implementations of PoA have a highly predictable validation schedule, which offers throughput benefits but potentially opens the door for targeted attack vectors. | One approach to reducing the predictability of the block validation schedule would be to adopt a non-deterministic PoA algorithm that randomly, but with equal probability, selects primary nodes from the pool of validators. This would increase the difficulty of a coordinated attack (DDoS or other) on validators as they are called to validate blocks. Another potential solution is to optimize the number of validators to balance susceptibility to targeted attack with cost of maintaining the network (i.e., increasing the total number to sufficiently mitigate predictability without incurring unnecessary costs). We are currently in the process of evaluating these, and other, mitigation strategies for selection. |
Validator nodes in the Tobalaba test network are limited to EWF Affiliates. They are legally registered entities who participate in energy markets globally, ranging from energy companies and other large corporations, to utilities and grid operators, to recently founded startups. [7] For successful operation, the EW Chain must cultivate a pool of validator nodes that is sufficiently diverse in terms of organizational structure and geography to maintain the benefits of a decentralized network. Crucially, once the EW Chain is launched, validator nodes will no longer be restricted to EWF Affiliates (draft validator node requirements for the production EW Chain are described in Appendix D).
At a high level, the PoA mechanism works as follows (also see Figure 3):
- All validator nodes maintain a complete list of the validators, identified by public keys. This list changes as validators are added or removed. [8] In addition to storing the current and historical state of the network, all validators maintain essential information about the network (such as synchronized timing information and current data processing limits).
- For a defined time window, one validator is assigned as the primary validator via the PoA algorithm, responsible for collecting the broadcasted transactions and proposing the new block. Only one validator is designated as primary at a time–based on a calculation derived from the timestamp on synchronized clocks among the validator nodes in the network and the number of validators–in order to prevent validators from arbitrarily creating blocks at irregular intervals.
- If a validator fails to create a block when it is selected (e.g., because of hardware problems on the side of the validator) or its block fails to be validated by the pool of nodes (e.g., because of network connectivity problems), the next validator proceeds to create a block with whatever transactions haven’t been processed.
- The remaining validator nodes verify that the transactions in each block are legitimate for that time window, sign the block with their private keys, and propagate the signed block to the network.
- Once a simple majority of validators have authored a block on top of a given signed block, finality is achieved for that given block, and the block is confirmed by the network and added to the EW Chain.
The Light Client: shrinking the size of the client to facilitate connecting IoT devices and distributed energy resources to the EW Chain [10]
Low-powered devices, ranging from smartphones to smart meters, represent a large class of devices that can interact with the EW Chain. It is essential for these resource-constrained devices to have full access to the network without having to store and maintain a copy of the entire, multi-gigabyte blockchain. Simultaneously, interacting with the blockchain should not compromise the security of these devices.
The EW light client stores a “light” version of the entire blockchain on these devices and provides a protocol to request additional data from the network as needed at a level of security on par with validator nodes. The light version of the EW Chain includes block headers and relevant state variables, enabling a similar level of trustless knowledge and usability as full nodes while only storing a tiny fraction of blockchain data. The EW light client extends Parity Technology’s reference light client by allowing it to work with PoA consensus. We are investigating other client and device interfaces, some lighter than others, with lesser storage requirements of the current light client.
Permissioning: providing the technical capability to differentiate between nodes and accounts based on governance, applications, and regulatory requirements [11]
In order to balance the openness of the blockchain network with regulatory compliance, grid operational needs, and other variables, we need some form of permissioning mechanism to grant differing privileges to varying actors.
Permissioning is most relevant to the EW Chain protocol and governance model. At the protocol layer, permissioning enables a governing body (i.e., the EWF Foundation Council initially, and subsequently, the Application Operator Governance Body) to establish specific criteria that determine the list of validator nodes with the ability to create blocks, and thus define a network boundary by permissioning those specific nodes.
In the EW Chain governance mechanism, permissioning similarly grants privileges (voting rights in this case) only to specific developers who have completed a KYC process to identify themselves to the network. Thus, permissioning allows specific user accounts to interact with voting contracts that influence modifications to the EW Chain protocol.
At the application layer, permissioning can grant privileges to specific users or smart contracts to conduct particular transactions (e.g., transfer tokens or deploy new smart contracts). For example, by combining a KYC process to identify specific individuals and grid assets with a permissioned smart contract, a solar farm physically located in Australia could be prevented from offering generation capacity and energy for a North American utility service territory but allowed to sell renewable energy credits in a global market. Importantly, this type of permissioning is implemented by developers of smart contracts working in concert with relevant utilities and regulators and requires sufficient information and processes to verify the relationship between EW Chain accounts and physical assets.
[7] Governmental and regulatory organizations are also invited to run Validator nodes.
[8] In the production EW Chain, the process for adding and removing validators will be embedded in on- and off-chain governance protocols.
[9] For full validator node security recommendations see Appendix D. While EWF strongly recommends these security recommendations we cannot require them.
[10] To learn more about how light clients work, visit: wiki.parity.io/Light-Ethereum-Subprotocol-(LES).
[11] To understand how permissioning works in detail, visit: https://wiki.parity.io/Permissioning or Permissioning on EWF’s Wiki.
Private Transactions: allowing application developers to maintain mandated customer privacy [12]
One of the defining features of a public blockchain is its transparency. Anyone can read and verify data (albeit pseudonymized via hashing) contained within blocks. Transparency is a feature, not a bug, but this trait is not always desirable. To comply with confidentiality regulations or desire of market participants to avoid making certain data like transaction prices and volumes public, the EW Chain needs the ability to hide sensitive information on the platform. Private transactions address this by introducing smart contracts with encrypted code and state data, where strict controls are enforced as to who may access, alter, and validate data contained within.
Private transactions work as follows (also see Figure 4):
- A public smart contract contains a nested private contract to encrypt state and code data; it also establishes a list (subset) of validators for the private transaction (note: this group of validators is separate from the general validator pool of the main chain).
- The only way to access the encrypted data is with a unique key. The key is partitioned among a subset of nodes, called Secret Store, whose purpose is to generate and store keys. A separate Registry Contract grants permissions to specific addresses (i.e., users) to access the encrypted private contract by requesting the key elements from the Secret Store to decrypt the data.
- After decrypting the data, the recipient sends a private transaction message to the private transaction validators, which can then execute it, produce the new, encrypted state, and sign it. If all private transaction validators agree on the new state, a regular transaction in the public smart contract containing the new encrypted data is submitted to the main network.
Private transactions are not appropriate for every scenario, but they are useful in bilateral transactions or other instances where private data can be shared between all of the parties involved in the transaction (i.e., sender, recipient, and private validators). For example, a generator sensitive to disclosing production data could choose to encrypt a certificate of origin transaction representing a particular energy quantity when sending it to a buyer it had an existing relationship with. The known buyer would be granted the decryption key by the Secret Store (assuming it had been previously identified in the registry), verify the details, and send an acceptance message to a private validator pool of its choosing (e.g., nodes run by a local grid operator, utility, and or regulator), who re-encrypt the data and store the state on the main blockchain. Importantly, this process would not make any transfer of EWT (or second-layer tokens) private; only the data in the original transaction is protected.
Due to their complexity and inability to transfer EWT, private transactions are impractical for large markets or registries that support multilateral exchanges of information. In the long term, other privacy solutions based on zero- knowledge cryptography or involving trusted off-chain oracles may provide sufficient capabilities to manage entire marketplaces. It is also worth considering whether privacy- dependent processes are appropriate for blockchain.
[12] To gain an in-depth understanding of how Private Transactions work and how to set up a private network, visit: https://wiki.parity.io/Private-Transactions.html. To fully grasp the topic, it may also be beneficial to understand how Secret Store works: https://wiki.parity.io/Secret-Store.
Figure 4: Private Transactions
WASM: enabling a large ecosystem of previously untapped software talent to build applications on the EW Chain [13]
Smart contracts on Ethereum-based platforms are usually written in the programming language Solidity and compiled to Ethereum Virtual Machine (EVM) bytecode.
Web Assembly (WASM) is an alternative to EVM. WASM is a standard developed by the World Wide Web Consortium (W3C) to serve as a virtual machine for software execution on web browsers. It is not specifically designed for blockchain applications or execution of smart contracts, but it has all the functionalities required to do so. WASM offers multiple advantages compared to the EVM, including more-efficient—and thus faster—code execution, easier integration with off-chain applications via a more robust developer toolkit than EVM, and access to a wider set of programming languages, including Rust.
WASM implementation on the EW Chain remains in an experimental phase, and it will coexist with EVM for the foreseeable future. Our intent with WASM is to make the EW Chain more adaptable to continued innovations in smart contract frameworks and to expand the potential developer community beyond those already familiar with Solidity. As frameworks and tooling around WASM smart contracts continue to evolve, we expect WASM to eventually replace EVM.
The fundamental steps necessary to create smart contracts on the EW Chain—namely, downloading the EW Chain client, creating an account, acquiring tokens, and installing JavaScript packages and related development environments— are identical to Ethereum. The Energy Web Wiki provides detailed instructions and tutorials for developers.
Several other tools and solutions are also currently available or under development:
- The EW Chain block explorer enables users to examine blockchain transactions and activity;
- A first-come-first-served version of the Ethereum Name Service, enabling users to register unique and memorable domain names to hexadecimal addresses;
- An EW Chain alarm clock, enabling users to schedule transactions on the network;
- An identity management solution, helping developers better identify devices and individuals transacting on the network; and
- Oracle services, providing a secure method to provide external data to smart contracts.
For more information, please visit the EWF Wiki.
[13] To learn more about WASM, visit: https://wiki.parity.io/WebAssembly-Home.html. For an extensive tutorial for writing smart contracts for WASM in Rust, visit: https://github.com/paritytech/pwasm-tutorial.
Why is it needed? How does it work?
As with most public blockchains, the EW Chain features a native first-layer utility token, the Energy Web Token (EWT). Utility tokens like EWT derive value from the fact that users of a network extract economic benefits from using it and are willing to pay for those benefits. By attaching economic value in the form of EWT to all transactions flowing across a public network, the network is also protected from various attack vectors.
- Security: the token protects the network against misbehavior (intentional or not) of transaction execution (e.g., infinite loops) or undesirable behavior (e.g., spamming). The mechanism used is similar to Ethereum. Accounts that submit a transaction to the EW Chain are charged a transaction cost based on the computational effort of executing the transaction. That effort is estimated by a proxy of computational effort called “gas.” The EW Chain gas fee estimation is the same as the Ethereum mainnet. [14]
- Validator compensation: EWT from transaction fees and block validation awards [15] compensate validators for the costs of running a node (e.g., capital investment in servers, high-speed Internet connection, operational costs).
Users and application developers are not required to use EWT for their own applications beyond paying for transaction costs on the EW Chain. They can use cryptocurrencies or fiat currencies, as well as second-layer tokens native to their particular applications. The EW Chain supports all Ethereum smart contracts and therefore all second-layer application tokens deployable on Ethereum.
EWT might be subject to price volatility as other blockchain tokens have demonstrated. Token price volatility does not translate directly into changes in transaction costs. The transaction cost or fee in EWT is calculated as the product of gas consumed, expressed as the amount of computation work being performed, and the gas price, denominated in EWT. The gas price is determined by the transaction sender as a function of its own economics. The higher the gas price, the more likely validators will pick up the transaction for execution (assuming that the sum of all pending transactions exceeds a block’s gas limit; in cases where block gas limit is greater than the sum of pending transaction gas, all transactions are included). Each transaction sender is bidding for a place in the current block against all other senders at a given time; the cumulative effect creates an auction, with economically rational validators choosing the highest-value transactions for each block and the market setting the “clearing” gas price.
Though an auction is the best way to ensure that transaction fees are fair, a purely market-based approach leaves open the possibility that fees escalate during periods of high activity as time-sensitive transactions compete for limited block space (akin to surge pricing). In the long term, the most-effective way to ensure low and stable transaction costs is to increase throughput (as explained in Appendix B, our technology roadmap features multiple solutions to improve the EW Chain’s scalability). In the near term, there are non-technical solutions that may mitigate this risk. We are investigating a mix of mechanisms—for example, a second-price auction instead of first-price [16] or floors on gas prices and block validation awards—to stabilize transaction costs while leaving room for “surge” or “priority lane” pricing.
In public blockchains, there exists an optimal gas price that make transactions economically attractive to both users and validators but extremely costly to spam the network with superfluous transactions. If gas prices are too low, security may be compromised and validators may not cover their costs. If minimum gas prices are too high, the chain will not be used. The exact combination of mechanisms that will be used and how these mechanisms will be governed will be outlined in a token economics-focused follow-on publication to this paper.
This section outlines the proposed distribution of Energy Web Tokens (EWT). The final distribution of EWT—and how and when we propose to distribute EWT—is under review and will be finalized in the coming months.
Indicatively, we plan to release the tokens at the time the genesis block is generated (scheduled for Q3 2019 at the time of this publication). 100 million EWT are planned to operate the EW Chain. EWF is also developing a token economics report expected later in 2018 that will go into more detail on the EWF token-secured operating model.
[14] The fee schedule is available at https://ethereum.github.io/yellowpaper/paper.pdf, Appendix G.
[15] Details of the award structure are under development at the time of this publication, but EWF is actively experimenting with using EWT as an additional
incentive for validator nodes to join the network.
[16] See https://ethresear.ch/t/first-and-second-price-auctions-and-improved-transaction-fee-markets/2410 for additional details on this approach.
Table 4: EWT Token Allocation Categories
We envision the following categories of EWT allocation at genesis:
| Category | Purpose |
|---|---|
| EWF Endowment | To fund future operations of EWF |
| EWF Operations | To compensate EWF staff and EWF contractors, community partnerships, bounties, and grants |
| Funder Tokens | For EWF founders (Rocky Mountain Institute and Grid Singularity) |
| Round A | To honor commitments to EWF Round A Affiliates |
| Round B | To honor commitments to EWF Round B Affiliates |
| Other | Under development. May include but is not limited to Round C, block validation awards, additional fundraising |
Figure 5: Token Allocation
What are we working on next? When will we launch?
While we have made significant progress since inception of EWF in January 2017, much remains to be done.
- Ecosystem: expanding our application developer network and engaging regulators
- Frameworks: adding software tools to increase application developer productivity
- Governance: strengthening our processes through rigorous testing and review
- Core technology: adding technical features most needed by application developers
If you are interested in engaging with us on any of these topics, please join our community on Github and contribute to our repositories:
https://github.com/energywebfoundation/paper
Cultivating a robust, diverse, and engaged community of developers and regulators is crucial to achieving our vision.
We will continue to grow our developer community by:
- Recruiting additional Affiliates (contact us to learn more),
- Publishing additional documentation, tutorials, and developer toolkits on our Wiki,
- Developing and releasing additional open-source software and frameworks, and
- Participating in, sponsoring, and hosting design workshops, hackathons, and conferences.
We will engage with key energy, financial, and consumer-protection regulators by:
- Conducting education (webinars, conferences, and publications) and collecting feedback from regulators via in-person workshops,
- Publishing position papers on specific topics in collaboration with industry partners, and
- Inviting regulators to host validator nodes and providing blockchain tutorials to help them understand how to leverage the technology to better perform their duties.
We will continue to work closely with application developers on selecting the most promising areas for framework development. Our goal is to focus on areas of highest impact—basically on tools that would bring the most value to a larger number of application developers.
Our current focus list includes:
- Asset registry to support all applications that require establishing and managing unique asset IDs;
- Physical grid integration & device connection via a reference implementation for working in the real world that is small, cheap, and compatible with the laws of physics that govern electricity grids (i.e., real-time balancing of supply and demand on the grid vs. financial settlement and REC trading only);
- Standard measurement and verification (M&V) smart contracts for evaluating the behavior and physical impacts of grid-connected devices; and
- Application programming interfaces (APIs) and application binary interfaces (ABIs) that define data structures for communications between on- and off- chain systems.
We are seeking collaborators to build open-source, commonly valuable frameworks for applications in the energy sector. Also, in the coming months we’ll be announcing bounties and partnership opportunities in association with these frameworks.
We recognize the importance of blockchain governance and, as a result, we have set aside a significant testing period to ensure that our governance can 1) withstand attacks of all kinds and 2) be endorsed by energy-sector regulators.
Prior to the launch of the Energy Web Chain genesis block, we will test iterations of the governance mechanism proposed herein on the Tobalaba test network in order to refine the governance model and maximize reliability and resilience of a mission-critical network.
We invite all stakeholders to engage with us in this testing and review process. In particular, we have identified three initial areas that require further input, attention, and innovation.
- Catalog all current and foreseeable attack vectors in order to improve current and design new dynamic defense mechanisms. For example, social engineering and other manipulative tactics may pose threats to private key management. The governance framework must be capable of withstanding these threats while maintaining the decentralized nature of the network.
- Implement proper incentives to encourage a geographically and organizationally diverse group of entities to join the EW Chain as validators. EWF’s governance approach is intended to minimize the liability and maximize the value proposition for energy-market participants to become validators.
- Establish and maintain transparency about our governance approach, proposed solutions, and shortcomings. We believe that transparency will yield over time the most-robust governance framework. We will continue to publish results from the test network on the EWF Wiki prior to the genesis block. In addition, we welcome active participation from the global community. We will encourage this participation through hosting workshops and posting bounties, among other mechanisms.
After the launch of the network, governance will be outside of the direct control of the Energy Web Foundation, or any single actor, and will continue to evolve. Our goal is to create a high- integrity structure ahead of launch to establish a technical foundation for long-term success.
We are seeking technical collaborators to think through and test our governance structure, as well as regulators to provide further requirements.
We will continue to identify, prioritize, and build features in close collaboration with application developers in the energy and blockchain space, whether startups or large corporations. One critical feature is described below and more examples can be found in Appendix B.
The origination of the ideas can come from our strategic partners (e.g., Parity Technologies, Slock.it), application developers, EWF staff, or any combination resulting from joint work. All good ideas are welcome wherever they come from.
We will fund and make available features prioritized for implementation. Implementation will be done by our technical staff or contracted to our strategic partners on a case-by-case basis.
Glossary of Terms
The following section is a glossary of terms commonly used in the paper that warrant further explanation.
Accounts: Accounts are entities on the blockchain that are identified by a unique address and contain a balance of EWT. Accounts are defined by public-private key pairs and have a known state. All accounts can send transactions or messages to other accounts in addition to reading the state of other accounts. There are two types of accounts:
-
User accounts, also called externally owned accounts, are composed exclusively of an address and an EWT balance; they allow individuals to conduct transactions on the blockchain. User accounts are controlled by the user’s private key, meaning the account state can only be changed by signing a transaction with the private key.
-
Contract accounts, or simply contracts, contain not only an address and a balance, but also executable code (its functions) and data (its state). Contracts are controlled by the code they contain, meaning a contract’s state may be changed by executing its code.
Address: A unique and public identifier for every account on the blockchain, derived by hashing the public key of a given account. Transactions are broadcast from addresses to other addresses.
Affiliates: Active participants in the EWF ecosystem who make one-time financial contributions to EWF; provide input in the development of the technology, governance, and frameworks; and develop applications on the EW Chain. Affiliates range from large, multinational companies to small startups to venture funds.
Block: Transaction data are organized and recorded in blocks, like pages in a book. Each block in a blockchain contains transactional and other data (for example, a timestamp and the block number) and references the block that came before it, thus creating a sequential chain.
Block Gas Limit: A cap placed on the total amount of gas that may be spent on all operations recorded on a single block, limiting the total amount of computation that can be performed by all transactions in a given block. This prevents code from running infinitely and enables consistent and predictable transaction throughput.
Block Time: The average duration required for validator nodes to create a block. Though actual block time may vary, expected block time will fall within a defined range based on the blockchain consensus mechanism. EWC’s block time is 3–8 seconds.
Blockchain State: The information—accounts, balances, and variables—stored on the blockchain and agreed upon by all validators. A transaction between accounts (e.g., the transfer of EWT, modification of a contract variable), the creation of a new account, and/or the creation of a new block are said to change the state.
Client: A program that connects to the blockchain and gives users the ability to check their funds and create new transactions.
Consensus Mechanism: The process by which decentralized validators agree on current state of the blockchain.
Cryptography (Cryptographic): Commonly referred to as encryption. Involves mathematical techniques used to securely transmit data (e.g., funds, identities, messages) in a way that makes it hard in practice to be accessed or amended by an adversary.
Decentralized Application (dApp): An application composed of an interface paired with one or more smart contracts that is hosted on a blockchain.
Ethereum: An open-source blockchain that can be understood as a decentralized computer. Learn more at https://ethereum.org/.
EW Chain: Abbreviation for the Energy Web Chain. The EW Chain is an an open-source, scalable blockchain platform specifically designed for the energy sector’s regulatory, operational, and market needs.It lays the foundation for valuable blockchain applications in the energy sector.
EW D3A: an EWF framework for a blockchain-based, decentralized, recursive electricity market model consisting of a simulation tool and blockchain code base. Currently, it is a research project and educational tool for energy market. Longer term, the D3A code-base will ultimately evolve into the technology needed to efficiently run a decentralized and distributed smart grid, enabling control and financial settlement for energy resources of any size and type.
EW Link: a series of EWF-developed reference architectures, open-source software, and standards for securely connecting physical devices to the EW Chain so that they can establish their own accounts and conduct transactions.
EW Origin: a customizable, open-source decentralized application developed by EWF for issuing, trading, and retiring certificates (or “credits”) in renewable energy and carbon markets.
EWT: Acronym for the Energy Web Token. The EWT is the native first-layer token intrinsic to the EW Chain protocol. Primarily used to pay transaction fees and compensate validators for the capital and operational costs of running a node.
EWF: Acronym for the Energy Web Foundation. EWF is a nonprofit entity incorporated in Zug, Switzerland, whose mission is to steward the EW Chain in the common interest while unleashing blockchain’s potential to accelerate the transition to a decentralized, democratized, decarbonized, and resilient energy system.
Ethereum Virtual Machine (EVM): All nodes run a special computer called the EVM to execute code within smart contracts and to process transactions.
Finality: In PoW, this refers to probabilistic certainty that a given transaction (or block) is irreversible. In PoA, finality is deterministic. After a validator publishes a new block and a simple majority of all validators have authored their block on top, that block is said to have reached finality and cannot be reverted.
Framework: A reference implementation that developers can quickly adapt to solve a specific problem or accelerate the development of an application they are building. For example, a developer building an application in EV charging settlement may use a charging station device connection framework to get to market more quickly.
Gas: A measure of the computational power necessary to complete an operation (e.g., add integers, create a new account) on EVM-based blockchains like the EW Chain. Modifying the state of an account, and thus the blockchain, costs gas. The cost of each operation is an abstract value proportional to the complexity of the operation.
Gas Price: Whereas gas cost is an abstract value, accounts must pay in the blockchain’s native currency, EWT, to conduct transactions. When an account initiates a transaction, the total gas cost of all of the desired operations is calculated; the account must then bid a price (in EWT) per gas unit that it is willing to pay to complete the transaction. See Transaction Fee for additional details.
Genesis Block: The first block of the blockchain.
Hash: A hash function is a cryptographic technique to map data of any size to data of a fixed size. It allows one to turn anything from a word, to a string of numbers, to an entire document, into a code of random characters. Hashing is a way to fingerprint data that has two characteristics: 1) it is extremely difficult to reconstitute the original data from the hash and 2) it is exceedingly unlikely that two different data inputs would generate the same hash.
Identified Application Developers: the community of publicly-known application (smart contract) developers who vote on proposed changes to the EW Chain protocol.
Identity Verification Team (IVT): the professional team employed by EWF responsible for conducting Know Your Customer processes for validators and AOGB applicants to associate real-world identities with on-chain public addresses.
Know Your Customer (KYC): Refers to the process of conducting due diligence on a potential partner or counterparty to verify their identity and ensure that they meet certain requirements (such as a particular credit rating).
Node: A processor (i.e., computer) that allows a user to connect to the blockchain, read and send transactions, and participate in the consensus. See also Validator.
Open-source: Denotes software that is made freely available to the public under a license that allows users to copy, modify, and distribute the original code.
(De-)Permissioning: (Dis-)allowing a blockchain participant access to a smart contract based on a defined attribute (e.g., holding a cryptographic key, holding a number of tokens, being an approved developer, being in a certain location).
Protocol: Rules that dictate how the communication mechanisms for hardware and software are structured. A blockchain consensus mechanism is an example of a protocol.
Protocol Implementation Team (PIT): the professional team employed by EWF responsible for developing and implementing EW Chain protocol changes that have been approved by the AOGB.
Proof-of-Authority (PoA): A blockchain consensus mechanism in which known, trusted validator nodes are responsible for creating blocks instead of anonymous miners.
Public-Private Key Pair: A private key is the password that allows access to an address (funds, smart contracts, permissions, etc.). Even though the private key should be kept secret, a unique public key and address can be derived from it that are used by the network.
Scalability: Broad term generally used to describe transactional throughput capacity (i.e., how many transactions can be processed in a given time).
Smart Contract: A contract account that contains code to perform a function or modify data stored on a blockchain. The code in a smart contract is executed by all of the validators in the network when another account initiates a transaction with the contract; the contract subsequently changes the state of the blockchain according to the actions defined in its code. From a programming perspective, a smart contract is an object with a known state. Importantly, the code of a smart contract is immutable. Once deployed on the blockchain, it can never be edited or deleted (though contracts can contain a self-destruct function). Smart contracts can perform any kind of function that can be programmed including, but not limited to, holding funds in escrow, automating payments, enabling on-chain voting, tracking and transferring ownership of assets, storing data, and creating marketplaces.
Tobalaba: The name of EWF’s test network. Also a metro station in Santiago, Chile, that is powered by renewable electricity. The traditional naming convention for Ethereum test networks is based on public transit stations.
Transaction: An action whereby an account modifies the state of the blockchain. There are three basic transaction types:
- Transfer EWT from one account to another,
- Create a new contract, and
- Execute the code of an existing contract.
All transactions contain the following data: the address of the sender, the address of the recipient, the amount of EWT being transferred, an optional data field (for interacting with contracts or sending messages), and a transaction fee amount.
Transaction Fee: The expense an account incurs for conducting a transaction, determined by the gas cost (i.e., the computation power required to execute the transaction) multiplied by the gas price (i.e., the EWT per gas unit that the account will pay the validator to include its transaction in the current block). Transaction fees compensate validator nodes for the resources (primarily electricity and computing hardware) they devote to maintaining the network and act as a deterrent for inefficient or spam transactions.
Validator (Node): Validators are publicly-known, reputable or staked entities who maintain the blockchain network. Validator nodes are responsible for validating transactions and creating blocks; each validator node maintains a full copy of the platform state data (and history).
Validator Compensation: Compensation, in the form of EWT, given to validator nodes upon successful creation of each block.
EW Chain Technical Detail
In this section we provide additional detail on two important components of the EW infrastructure
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Applications: Blockchain-based applications, often called distributed apps or “dApps,” are one or more contracts integrated with middleware and a user interface. From a user perspective, there is no discernable difference between a dApp and a traditional app for smartphones or computers. The defining feature of a dApp is storing a known and verifiable state on the blockchain (unlike traditional apps, which store information in proprietary databases). Importantly, not all dApp computations need to be performed on-chain and some information can be similarly stored off-chain. dApps on the EW Chain are currently developed by EWF Affiliates, but ultimately any party will be capable of creating accounts and developing dApps.
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Frameworks: Open-source software, applications, and reference implementations—collectively “frameworks”— provide foundational tools for individuals and industry to accelerate development of blockchain applications. Frameworks offer abstract functionalities that can be repurposed for specific use cases. They include application programming interfaces (APIs), code libraries, development tools, and even full programs. EW Origin is currently the most-robust EWF framework. It includes three main components, 1) an asset and user registry, 2) a national registry, and 3) marketplace features such as matching algorithms to match between supply and demand. Embedded in these components are architectures for connecting physical assets like inverters or metering systems to the blockchain as well as standard contracts for issuing and trading renewable energy certificates. While the sum of EW Origin’s parts could in theory be used off-the-shelf, it has much greater potential value by being customized to a particular market’s specific needs.
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Governance: A combination of on-chain code and off- chain administrative processes make governing the blockchain possible. In blockchain networks, the phrase “code is law” is often cited in reference to the fact that the rules that dictate voting, protocol modifications, and other core functions are hard-coded into the core protocol. However, blockchains must evolve over time in response to changes in technology, and potentially regulations or market forces. When the need to make decisions about how the blockchain should operate arises, the process by which the rules and/or the protocol itself can be amended is enormously important. Blockchains inherently have many stakeholders but no authorities, so a governance mechanism must enable efficient amendments that reflect the will of the majority while mitigating risks of collusion and power centralization. The EW Chain’s governance mechanism is designed to allocate voting power to known developers who create useful applications on the EW Chain.
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Energy Web Chain: The EW Chain is an operating system; a foundational computing platform to support applications that create value. It is the sum of the protocol itself (including the EWT and the consensus mechanism), the state (both current and historical information stored in the network), and second-layer solutions (technical features that enable interoperability with other systems and desirable functionality like private transactions), all replicated on geographically disparate but interconnected hardware (validators).
Following are a select number of measures currently identified as high-potential in the near term; note that none of these are funded directly by EWF. These features are fundamentally about increasing the capacity of the Energy Web Chain. They rely jointly on the two time-tested ways to increase the speed of computer systems: parallelism and locality. Bridges and interoperability projects like Polkadot enable parallelism. Payment channels like Raiden and Slock.it’s Incubed are based on locality—speeding up transactions by making the calculations local and synchronizing to the chain at regular intervals—but not for each transaction.
Beyond the genesis block, we also plan for the EW Chain to be one of the first public networks to fully integrate with a cross-chain interoperability protocol, such as Polkadot. Polkadot enables hierarchical scalability of nodes and the data passing through them into many virtual networks running in parallel, and which would otherwise be contained within the same blockchain network.
These parachains (i.e., parallel blockchains, parallelized blockchains) do not need to be aware of the data passing through the others. They could overlay on the same geographic region but perform different functions and catalog different data, or they could serve entirely different markets and/or geographies. For example, imagine two separate Energy Web chains, each responsible for the electricity grids in North America and Europe, connected through an EWF relay chain based on the Polkadot protocol.
Figure 6: Energy Web Technology Stock
A relay chain acts as the ultimate coordinator between parachains and bridges in the Polkadot system. The relay chain and parachains share consensus resources, enabling scalable throughput without compromising security. Bridges act as a conduit between the relay chain and blockchains with their own consensus mechanisms (e.g., Bitcoin and Ethereum).
Ultimately, this infrastructure approach allows for scalability of energy blockchains up to a theoretically unlimited transaction throughput. EWF will launch a parachain using a protocol such as Polkadot once the technology is ready in the 2019–2020 timeframe. Similar solutions like Cosmos are also being considered.
A bridge connects two blockchains, enabling the bilateral transfer of data and currency between the chains. Bridged chains are linked by nodes that simultaneously operate on both of the blockchain networks. These nodes use specialized smart contracts deployed on each chain to securely transact from one to the other.
Bridge technology will provide essential scaling and flexibility to projects, such as the EW Chain, where performance and chain interoperability are key. High- throughput blockchains may be bridged with other chains, increasing total throughput linearly as additional chains are added. Such a network of blockchains enables the scalability needed to process the vast number of transactions in the energy sector and allows the use of various tokens for financial settlement.
Payment channels are simple form of state channels. Many different solutions are currently being developed; the most widely known payment channel solution is Raiden. In contrast to Polkadot, Raiden is an off-chain scaling solution that uses specialized smart contracts and a separate network protocol to achieve cheap, fast, and scalable financial transactions. Raiden’s payment channel network allows two parties to bond tokens into a smart contract and securely send payments back and forth off- chain, only settling accounts on-chain when one of the parties decides to close the channel. The network of open payment channels extends past whomever opened the original channel, and allows for individuals to securely send payments across multiple channels opened by complete strangers. With a large-enough network of open channels, payments could be securely sent to a vast number of participants without the need to open new channels.
Raiden will enable EW Chain users to send payments of any ERC20-compliant currency, of any size (including micro-payments), without prohibitive gas fees, enabling near-real-time settlement for services. Periodically, users will close their payment channels to claim their currency on the blockchain.
Incubed Device Interface [17]
Targeting the mass scale applications of smart cities and the sharing economy, Incubed is a light client alternative for embedded computers and low-energy devices. It is designed to enable electronics such as padlocks, door locks, suitcases, watches, and mobiles to grant and check access rights, send and verify payments, and execute smart contracts. All with the same security level offered by other options but with significantly reduced footprint.
Incubed leverages an incentivized network running on top of full blockchain nodes that receive micropayments for yielding the blockchain transactions on behalf of the devices. After confirming these transactions, the nodes return proofs to the querying devices. These devices compute the validity of such proofs and will punish nodes providing wrong or outdated data. Thus the network behavior is analogous to insurance market models.
Plasma introduces a new scaling solution that could enable Ethereum-based blockchains to reach many more transactions per second than currently possible. Like the Raiden Network, Plasma is a technique for conducting off-chain transactions while relying on the underlying blockchain for security. Thus, Plasma can be categorized to the increasing group of “off-chain” technologies which also includes state channels and Truebit. While solving different problems, they all take operations away from the “main chain” and are performing them “off-chain” instead. Still, these techniques sufficiently guarantee a certain level of security and finality.
[17] To learn more about Incubed, visit: https://slock.it/incubed.html, https://github.com/slockit/in3, and https://github.com/slockit/in3-server.
EWF Important Actors
The following section outlines the various actors involved in the Energy Web Foundation and the role they play in technical development, governance of the organizations, and governance of the chain. The actors are split into three groups: 1) EWF leadership and advisory bodies, 2) EW Chain Governance Actors, 3) EWF Technical and Research Partners.
There are three critical EWF leadership and advisory bodies: 1) the advisory board, 2) the Foundation Council, and 3) the executive management team. The role and composition of the three bodies are described below.
The Advisory Board is an independent committee that advises the Foundation Council, providing an opinion on validator node certification requirements, application certification (identification) requirements, the structure of the professional teams, and the overall consensus mechanism framework. Currently, the Advisory Board is composed of representatives from the first twelve EWF Affiliates and two independent academic advisors. In the future, the composition of this body should reflect a wider set of expertise—legal, technical, and regulatory—possibly achieved by Affiliates delegating select and complementary experts from their organizations as Advisory Board representatives.
The Foundation Council provides strategic direction for and supervises EWF and, by association, the Energy Web Chain. The EWF Foundation Council sets standards to ensure that the EW Chain serves the mission and that it operates in accordance to defined principles of good governance. It does not directly manage the Energy Web Chain.
To promote the EWF mission and not the interests of individual organizations represented by members of the EWF Foundation Council, the seven-member Council must include at minimum one representative from each of the following groups:
- EWF co-founders (i.e., Rocky Mountain Institute and Grid Singularity)
- Representative of major electricity corporations
- Representative of the energy blockchain application ecosystem
- Independent member with a nonprofit and/or academic background
In the EW Chain governance structure, the EWF Foundation Council has five defined responsibilities:
- Set the initial Energy Web Chain protocol development and implementation mechanism,
- Set initial validator node certification requirements,
- Set initial application certification (identification) requirements,
- Recruit the chief executive officer, and
- Approve recommendations on the organizational structure of the professional teams made by the advisory board
Executive Management Team (EMT) performs daily operating activities including stakeholder engagement and education, research and convening functions, managing EWF staff and contractors, performing regulatory compliance and reporting functions, and managing funds to promote the EWF mission. For this purpose it needs to recruit experts in relevant legal, regulatory, and technical areas.
There are two types of actors involved in EW Chain governance: 1) professional administrative teams employed directly by EWF, and 2) publicly-known stakeholders involved in the remainder of on-chain governance. The bodies involved in both roles are described below.
EWF Teams
The Protocol Implementation Team (PIT) is a processional
team employed by EWF composed of technical, regulatory,
and energy-sector experts (including the EWF chief technical
officer / Energy Web Chain product owner). The PIT is
responsible for:
- Protocol Upgrades: implement protocol upgrades by coding and testing protocol specifications, managing the protocol roll-out process, and reporting on the process; PIT may reject an upgrade on legal or technical grounds, in which case the protocol is sent back to the proposal stage for reconsideration and new vote by the Application Operator Governance Body (AOGB).
- Ecosystem Engagement: facilitate an open, structured, and transparent process in order for the highest- potential innovations, ideas, and specific proposals from the EWF ecosystem to be considered for adoption.
Should PIT members do anything other than implement decisions, this would be considered a breach of the rules of conduct and action would be taken to stop the breach.
The Identity Verification Team (IVT) is a professional team employed by EWF responsible for identifying and certifying application developers operating on the Energy Web Chain who wish to participate in the Application Operator Governance Body as well as approving or rejecting validator node applications. The requirements and process for becoming approved as a developer and validator are initially set by the EWF Foundation Council. Certification requirements may change over time through the EW Chain governance process.
Developers describes the greater energy and blockchain community comprising blockchain and energy developers, electricity market participants (e.g., retail service providers, distribution system operators, utilities, transmission system operators, vendors and other electricity system service providers), regulators, and other parties focused on using blockchain technology to unlock value in the energy sector using the Energy Web Chain. Developers are the primary source of innovation for blockchain applications in the energy sector.
Application Operator Governance Body is composed of approved application developers that elect to participate in the AOGB by undergoing a KYC process. AOGB votes on proposed protocol upgrades.
Validator nodes authenticate transactions—initially on rotating basis based on a majority approval—verifying the authenticity of information and ensuring system stability. Validator nodes are automated to the highest extent possible, particularly regarding protocol upgrades. Nodes are run by publicly-known, permissioned entities selected according to a transparent set of certification requirements explained in Appendix D. EWF will aim to engage a sufficiently high number of validators to ensure collusion resistance. Geographic and organization type diversity will be sought in selecting validator nodes, with priority granted to entities headquartered in less-represented geographic or business areas. Certification requirements may change over time as relevant protocol upgrades are implemented via the EW Chain governance process.
The following companies are important technical and research partners for the Energy Web Foundation. Their capabilities and role in EWF work are described.
| Rocky Mountain Institute (RMI) engages businesses, communities, institutions, and entrepreneurs to accelerate the adoption of market-based solutions that cost-effectively shift from fossil fuels to efficiency and renewables. With over 35 years of experience, 180 staff, and a global reach and reputation, RMI employs rigorous research, analysis, and whole-systems expertise to develop breakthrough insights. RMI staff working on behalf of EWF contribute to use-case research, business model innovation, regulatory engagement, and EWF thought leadership efforts. |
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| Grid Singularity (GSy) is an energy blockchain technology company leading the development of an open, decentralized energy exchange platform (D3A) and the lead organizer of the annual global energy blockchain summit, EventHorizon. GSy was founded by a team of experienced energy market and policy professionals and prominent blockchain technology developers with a common vision of an open, decentralized energy network. GSy staff working on behalf of EWF help develop software to simulate and implement transactive energy markets, perform research on the economic and regulatory implications of more-active distributed energy resource participation in energy markets. |
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| Parity Technologies is a leading developer of peer-to- peer computing systems and decentralized consensus architectures. Parity’s full technology stack spans from core platforms (including Bitcoin and Ethereum clients as well as Polkadot, a heterogeneous multi-chain protocol that provides interoperability between disparate chains; see section G), to middleware (including systems for secure decentralized data storage and identity verification), to front-end applications. EWF commissioned Parity to develop the initial EWF client for the Tobalaba test network, and contributed funding to support the development of multiple technical features necessary to support energy-sector applications. |
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| Slock.it is one of the foremost developers of Internet- of-Things (IOT) and blockchain technologies working to enable new peer-to-peer and IoT economies. Slock.it’s solutions include an IoT layer to efficiently connect devices to blockchains as well as an architecture to securely and reliably allow people to interact with smart objects in new ways. Slock.it has played a key role in supporting EWF’s technical development with a particular focus on the EWF light client reference implementation. |
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Preliminary Validator Node Guidelines
Inherent in a Proof-of-Authority network are criteria and processes for vetting and authorizing new validators. As a public blockchain, the EW Chain validator pool must be sufficiently diverse geographically and organizationally to attain the benefits of decentralization. At the same time, the EW Chain interfaces with critical physical infrastructure, so mitigating the risks of malicious validator behavior is imperative. Thus, the EW Chain validator approval process must strike an appropriate balance between openness, security, objectivity, and legality.
The following section outlines our current hypotheses for the initial validator node requirements (requirements may change over time via the aforementioned governance process) that will be set by the EWF Foundation Council at genesis block. As all parts of this document, these requirements are a starting place for discussion and collaboration to establish the best set of requirements by genesis block, and are subject to change. Feedback on these guidelines is welcome via Github.
The EWF Foundation Council has developed a draft list of initial requirements for authorizing Energy Web Chain validator nodes:
- Organizations must be one of the following:
- Energy regulators,
- Independent System Operators and other state-level or regional network operators balancing authorities (ISOs, RTOs, TSOs, DSOs, etc.),
- Government-sponsored or accredited academic research institutions, or
- Legally registered organizations or companies
operating as energy market participants or energy
blockchain developers, which need to demonstrate:
- legal registration, determined by website, business address, tax information, documents of incorporation, etc.
- market participation, determined by registration as one of the following: a utility, a third- party utility service provider, an aggregator of assets offering grid services to utilities and/or wholesale market operators, a retailer, a trader, an independent power producer, upstream energy resource producer and/or trader, a blockchain application developer, a peripheral energy market service provider, or a nonprofit organization promoting innovation in the energy sector
- Organizations must not be listed on any current sanctions lists; owned or controlled by, or acting on behalf of or for the benefit of, any person on a Sanctions List; otherwise the target of any sanctions laws, regulations, embargoes, or restrictive measures (additional detail on specific sanctions lists shall be provided in a later draft)
- All validator nodes must provide relevant identification and documentation to complete a know-your-customer (KYC) process.
- All validator nodes must meet robust physical and cyber security requirements, following the guidelines below.
The Foundation Council may further design and implement a de-authorization procedure to prevent validators from acting contrary to defined process and principles. This process would work at several levels, from automated technical monitoring of adherence to the platform protocol, through technical assessments based on statistical metrics, to completely off-chain appraisal around change of status in the areas affecting the criteria for initial authorization.The ultimate decision to de-authorize an authority could be based on a voting system managed by validator nodes and/or token holders.
Potential behaviors that could warrant de-authorization include:
- Repeated failure to create blocks when selected as the primary node,
- Repeated attempt to create blocks with invalid transactions,
- Extended periods of latency and/or connectivity, and/or
- Non-compliance with initial authority node requirements (e.g., sanctions lists).
As stated above, these guidelines for authorization and de- authorization are a work in progress. Additional details will be published in advance of the EW Chain genesis block.
Since validator nodes ensure the stability and security of the network, they should be managed with best practices to protect against physical and cyber intrusion. Validator nodes are not required to be located in data centers since they do not hold any customer data. As such, physical security of the server is particularly important if it is stored in an office environment. The following general security guidelines should be considered when running an EWF validator node.
1 EWF node-specific recommendations
- The only private information that is generally stored on the server running the validator node is a keyfile containing the authority’s public-private key pair. Although this file is encrypted, most companies will store the decryption password on the server to provide more autonomy to the EWF node. It is necessary for exactly that reason to ensure that this file is properly backed up and protected. All funds that are assigned to that key (e.g., transaction fees collected) should be moved to another wallet on a regular basis.
- EWF validator nodes should only use port 30303 by default. This is to ensure that no other attack surface is given. It is highly discouraged to open other ports such as rpc ports that would enable remote use of the node.
- It is further recommended that checksum or hash files for the EWF client binary are held and used to ensure code integrity and prevent compromised clients from entering the network.
- It is also recommended that a dedicated server is used to run the validator node and that server resources are not shared with other processes.
2. General security considerations
- Access to the server should only be possible via a ssh key pair, and there should be one per user, which is never shared with other users, even within one organization. This way we can maintain full accountability. Additional security can be provided by only allowing access through the company’s internal VPN network.
- The organization should assign one responsible person to be in charge of server maintenance and security. This person should run service audits and the above-mentioned file audits. Maintenance includes security patches for the operating system, user administration, and ensuring a redundancy plan so the server does not experience downtime. Documentation of maintenance and administration is highly recommended in case there might be a change of the responsible person.
- Firewall settings are to be kept strict. All ports should be closed and unnecessary services disabled.
- If the server is run on a cloud service, network security can be enhanced by running a choke point server that manages access control and buffers requests.
- Logging of all access and security events can be helpful to find the origin of possible incidents and to prevent further exploitation of the system.
