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The Ethereum Foundation is funding efforts to create specializing mining hardware in partnership with blockchain data storage network Filecoin.

Announced Thursday at Devcon, the annual gathering of developers in Prague, Ethereum Foundation researcher Justin Drake unveiled preliminary designs for application-specific integrated circuits, or ASICs, that will support an upcoming ethereum technology called the "beacon chain.

"In essence, the beacon chain is a random number generator, and it's expected to form part of the next major iteration of the ethereum network – ethereum 2.0 – under an alternative, proof-of-stake consensus protocol (compared to the proof-of-work approach utilized today).

While the term "ASIC" in the cryptocurrency space is more commonly associated with the technology applied to mining, the proposed ethereum 2.0 hardware isn't engaging in that same, computationally-intensive process.Instead, these ASIC devices will engage in a comparatively less costly operation known as the Verifiable Delay Function.

This helps to shuffle the validators that are intended to replace miners in ethereum's proof-of-stake system. The idea is that the hardware will prevent any one individual or organization from coalescing enough power to overtake system operations.

All told, the project is estimated to cost between $20 million and $30 million, according to Drake. That includes $15 million to $25 million for research and development, as well as $5 million to build an estimated 5,000 machines.

At present, the Ethereum Foundation and Filecoin – which raised more than $250 million through an initial coin offering (ICO) last year – are currently splitting costs for a project viability study to the order of "a few hundred thousand dollars," said Drake in email to CoinDesk.

Looking at the work ahead, Drake struck a positive tone – particularly the prospect of designing and implementing the plan in an open-source fashion.

"Open-source ASICs haven't really been done before so it's all very exciting for me," Drake remarked.Correction: 

Filecoin has not committed to funding full research and development expenditures for this project.  

Photo of Justin Drake taken by Phil Lucsok

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

In a thumbs up to blockchain technology, the government of Kenya is planning to use blockchain technology to distribute 500,000 housing units sponsored by the state, as reported by The Star on Oct. 16. Speaking at a World Bank dialogue about affordable housing in Nairobi, Charles Hinga, Principal Secretary of Kenya’s Housing and Urban Development, said:

“Kenya will use blockchain technology to ensure the rightful owners live in government-funded housing projects.”

Kenya is tapping into the technology to ensure transparency and fight corruption, which has hemorrhaged the country, leading to underdevelopment and a sovereign rating downgrade.

Project Funding

The state-funded project will be financed by the National Housing Fund under Finance Act 2018. Three percent of the funding will come from borrowing, revenue generated from rental obtained from the current housing stock, employers and employees, and the issuance of securities to investors.Hinga said the government needs to raise Sh6billion ($59.4 million) per month in order to unlock the supply side of projects. 

He also acknowledged that houses are expensive, making it difficult for ordinary citizens to own properties. The government will build houses that cost between Sh300,000 ($3,000) and Sh3 million ($30,000) in different areas already identified by the state.James Macharia, Cabinet Secretary of Transport and Housing, said that the state requires Sh3.2 trillion ($52.5 billion) to develop a million houses. Macharia also said:

“You should not pay more than 30 percent of your disposable income to own or rent a home. For an average formal sector earning of close to Sh50,000 ($495) per month, one should pay at most Sh15,000 ($148) for rent.”

Despite the financial constraints, the real challenge in Kenya is corruption by government officials and beneficiaries. Hinga highlighted that the citizens have lost trust in the government because of how it has handled previous projects.

Kenya is one of the most corrupt countries in the world, alongside Zimbabwe, Burundi, Somalia, South Sudan, Eritrea, and Libya — all of which have suffered from conflicts or political instability.

Blockchain technology can be a solution to Kenya’s (and any other country’s) corruption woes as it is a transparent and immutable ledger of entries that can act as an auditing mechanism.

Kenya’s Relationship With Blockchain Technology

While African countries have taken an overall backseat in adopting blockchain, the technology can help to address some of the challenges facing the continent.

In August, Bloomberg reported that Kenya’s Independent Electoral and Boundaries Commission (IEBC) was planning to implement blockchain technology in its voting process.

This, given the history of Kenya’s disputed elections that have led to violence and deaths, it could be a huge leap in increasing the efficiency of Kenya’s elections. IEBC’s plan, as expected, received support from the Blockchain Association of Kenya.

Early this year, Cabinet Secretary for Information and Communication Technology Joe Mucheru said that he was setting up a task force within his ministry to study how the technology can be used to improve transparency in both the public and private sectors.

An ICO issues crypto currencies like bitcoin or tokens to raise funds for a start-up company, and regulatory warnings that investors could lose their shirts may be falling on deaf ears.

Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), said he was examining how ICOs fit into existing regulation and how they affect competition in the wider capital raising sector.

ESMA and national regulators in the EU are assessing which ICOs come under existing securities rules on “case-by-case” basis.


“Some of these ICOs are like a financial instrument. Once it is a financial instrument it comes under a whole regulatory framework,” Maijoor told the European Parliament’s economic affairs committee.

“The subsequent question is what do we do with those ICOs that are outside the regulatory world. We will assess that as a board.

We expect to report by the end of the year.”ICOs, so far, have had “difficulty” showing their viability and what extra benefits they bring compared with traditional capital raising, Maijoor said.

In the United States, the Securities and Exchange Commission Chair Jay Clayton said in February he believed most of the sales of new tokens should be considered securities, but it has not classed which coins are securities. [nL2N1VX1VM]

So far, EU regulators have limited themselves to issuing warnings to retail investors about crypto assets, but this may not be enough.

Andrea Enria, chair of the European Banking Authority, told lawmakers he had been minded to let innovation like ICOs develop without a set of specific EU rules.

“This is not working as expected,” Enria said.Market developments and initiatives by national regulators in what is meant to be a single EU market mean that more regulation at the European level could be warranted, Enria said.

“Consumer warnings don’t seem to be sufficiently effective in raising awareness among consumers that there is a lack of safety net for these investments,” Enria said.

A report for EU finance ministers last month said the EU should adopt common rules on cryptocurrencies and scrutinize how digital units are distributed. [nL8N1VQ4Y5]

Reporting by Huw Jones; Editing by Mark Potter

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