XDC Network — an enterprise blockchain from Singapore

The XDC Network project has not revolutionized the cryptocurrency or financial space — it is still too difficult to dethrone Ethereum, especially with the strictly corporate orientation of the blockchain. However, the ecosystem has been steadily developing for more than five years. And its currency, XDC, is firmly in the top 100 digital assets in terms of capitalization. So, XDC Network is definitely worthy of attention.

What is the XDC blockchain for?

The target audience of XDC Network is companies working in the financial sector and stock trading. Of course, this does not mean that the network is closed to everyone else — XinFin tries to attract players in the real estate market, medical services, logistics, hotel business and other large companies.

However, the developers make no secret of the fact that the blockchain is optimized for international trade and finance. Optimisation of international payments is a priority area of development, and the network itself is arranged so that small and medium-sized businesses cannot participate in it.

Much attention is also paid to the ease of developing decentralized applications. The blockchain is fully EVM-compatible, so teams familiar with developing and deploying dApps on the Ethereum blockchain can use standard tools.

All protocols running on Ethereum can be simply migrated to XDC, as can decentralized applications built for Ethereum. This greatly simplifies both migration to a new network and (more relevant for corporates) the expansion of the ecosystem to new blockchains.

Another piece of the puzzle facilitates the latter — XDC enables cross-chain transactions, allowing assets and information to be transferred between different chains. The key is for both blockchains to be EVM-compliant as well. However, this is not too significant a limitation in today's cryptocurrency ecosystem.

Of course, it also ensures faster transaction processing speeds and lower transaction costs than Ethereum, which has also long been part of the unspoken package of minimum requirements for an enterprise blockchain.

How the XDC blockchain works

The backbone of the XDC Network is a proprietary consensus mechanism that is a variation on the Delegated Proof-of-Stake theme — XinFin Delegated Proof of Stake (XDPoS). The masternode that gets the right to receive a block is chosen randomly, and nodes with more staked coins have a better chance of being selected. This traditional scheme for all PoS blockchains is complemented by double validation.

After a masternode has created and added a block, a few randomly selected nodes re-validate it and penalize it in case of rule violations.

Despite the double validation, XDPoS is more energy efficient than traditional DPoS algorithms.

Network centralisation

Technically, anyone can run a masternode. But to do so, it is necessary to go through the KYC procedure (with a chance of being rejected without explanation), as well as to secure a modest amount of money — at least 10 million XDC (a little less than 500 thousand dollars at the current exchange rate). In other words, the developers are more interested in the masternodes being owned by the "right" players than in the number of nodes and decentralization of the network.

However, those who are not ready to freeze half a million dollars can still participate in the network — the requirements for participants in the decentralized network of oracles that supply the network with data from outside the blockchain are much more modest. But they are also cross-checked to a greater extent.

XDC coin

Notably, the project uses two coins at once — XDC and XDCE.

The first one is the project's utility token used for steaking in masternodes, paying rewards to network members, paying network commissions, and settlements in dApps on the platform, as well as obtaining funding and trading on the TradeFinex embedded platform.

The second (XDCE) is a de facto "wrapped" version of XDC running on the Ethereum blockchain. It provides cross-chain functionality to the platform and can be stacked in third-party DeFi products. XDCE is also much easier for the average user to acquire.

At the time of writing, the XDC\XDCE exchange rate is around $0.049, significantly below the peak of $0.17 reached in August 2022, but overall, XDC has outperformed the crypto market in 2023.