Altonomy Market Research Report

7 min readMar 11, 2019

Privacy Coin: Beam and Grin

Trading Beam and Grin — Part 1

Overview

Below is the first in a series of articles, focusing on new and pertinent topics in the cryptocurrency space. In this article, Altonomy’s trading and research team analyzed the trading dynamics and technicality of two of the hottest cryptocurrencies on the market, Beam (BEAM) and Grin (GRIN). We will first discuss our observations on the trading side and then dive into the technical aspects of the projects, both based on the MimbleWimble protocol.

Trading — Exchange & OTC

Opening Price Actions

Given the largely positive sentiment around MimbleWimble, the initial interest from investors and speculators on BEAM and GRIN was strong. However, because of the unstable supply from miners, the on-and-off exchange trading was quite volatile in the early stage. As a result, the tokens shared similar patterns on exchange to open the market: extremely high price with low trading volume (see Figures 1 & 2).

Initial Price Formation

Miners had the most influence on early-stage price formations because they were the sole initial suppliers of both BEAM and GRIN, which led to low initial supplies. Despite the low trading volume, both coins experienced an immediate gain of ~150%, in terms of BTC, due mainly the hype surrounding both projects (Figures 3 & 4). These gains were quickly diminished by selling pressure generated by miners (Figures 3 & 4).

To understand the massive miner sell-offs, let’s examine BEAM. BEAM’s on-and-off exchange volume was comparatively low while the price was below mining cost (Figure 5). Once the price rallied above mining cost in late January, trading volume picked up as miners began selling off their coins in massive batches (Figure 5).

Exchange vs OTC Trading (with BEAM & GRIN)

In general, as seen with BEAM and GRIN, when total circulating supply of a token is limited, liquidity and order book depth on exchange are much weaker than in the OTC market. Trading on exchanges with thin depth and no liquidity usually results in negative price impact and hurts the overall trading performance.

Trading with Altonomy

Altonomy is actively trading both on-and-off exchange for BEAM and GRIN

Our OTC block trade service minimizes market impact while we trade for our clients. Our clients benefit from Altonomy’s tight connection to miners and mining pools on the supply side, as well as community members, crypto funds, and other interested parties on the demand side. Two-way information helps Altonomy’s clients achieve better pricing with instant settlement.

Altonomy provides OTC trading service through two channels:

Live all-in quotes on the trading chat, where clients deal at a specific price with no extra fees. No price impact on exchange
Live order with a price target, where Altonomy fills the order via liquidity sourcing on-and-off exchange

Please contact the trading desk at OTC@altonomy.com for any pricing inquiries.

MimbleWimble in a Nutshell

In 2016 August 1st, MimbleWimble was proposed in the bitcoin-wizards IRC channel by anonymous author Tom Elvis Jedusor. And later elaborated in a detailed paper by Andrew Poelstra. The proposal essentially tries to remove bitcoin scripts, add in feature of cut-through to eliminate the intermediary transactions, and introduce confidential transactions to enhance privacy. Inherently, because of the elimination of the intermediary transactions, the block size is reduced significantly, thus performance is improved as well. As Grin’s core dev Igno explained, MimbleWimble broken down into 3 main features:

1. Confidential Transactions: No transaction amounts or addresses are revealed.

2. Cut-Through: Most of the blockchain data can be removed, leading to material reductions in blockchain size as well as a small privacy boost.

3. Fast-Syncing: Even after all that data has been removed, the whole chain state can be validated with guarantees similar to a full node. Therefore, a new node requires a small subset of the whole chain.

Noteworthy Improvements

Scalability

MimbleWimble does not offer order of magnitude sort of scalability improvements, however, the reduction of block size due to the elimination of intermediary transactions provides significant boost of performance compared to bitcoin or monero. And, leveraging compact block technique, removing the redundancy of sending transaction twice, it is making the block size even smaller. In addition, since the chain state is preserved well as the block height grow, the new joining node only need to sync a small subset of the chain. For the first time, making a truly mobile device powered node possible!

Privacy

In MimbleWimble, all transaction amounts are blinded by the excess number called blinding factor, works like a secret key, but can be changed every time a transaction is happening, making it difficult for third parties to decipher. The removal of the intermediary transactions make it even harder to trace or conduct graph analysis like what has been applied on bitcoin today.

Current Implementations

There are two major MimbleWimble protocol implementations. Beam is founded by a team of experienced engineers and startup veterans in Israel, led by Alexander Zaidelson. Beam runs on a treasury model where the Beam foundation is rewarded in the initial 5 years. Grin is an community driven open source project. Led by anonymous developer Igno Peverell and a few other core developers. Grin team did not fundraise in private or public, the team runs on pure donations.

The Era of Fair Mining

Pre-Mine

Both Beam and Grin has no pre-mine conducted before the mainnet launch. Fun fact is that the initial difficulty of beam was set too low and the block time reduced to 30 secs for the first few hours, the team later claimed that they significantly underestimated the hashrate joining the network by an order or magnitude. For grin, the initial difficulty was took from bitcoin around few hours before the mainnet launch and in fact it took more than an hour for hashrate to catch up and mined the first block.

GPU

Both beam and grin use well designed mechanism where they will provide a head start for general purpose hardware. Beam uses equihash (150,5) which requires about 4GB or RAM and Grinuses C29 which requires about 8GB of RAM. The general purpose hardware advantage ensures a widely participation rate from the mining community and good amount of decentralized of the hashpower.

ASIC

Unlike Monero, Both Beam and Grin has officially stated that they are not ASIC-Resistant, infact, they welcome ASIC machines coming to the market, In the long run, ASIC is loyal hashrates that will stay with the coin since there is less opportunity loss, however, ASIC tends to form centralized hashrate owners which might increase the chance of 51% attack.

Mining Community Reactions

The initial response from the mining community is overwhelming, there are in fact more than 700,000 GPUs combined joining the network of beam and grin at peak. The mining speculation is also due to the reduced profit on the ETH side and the block reward reduction as part of the upcoming hardfork. Essentially, GPU miners always swing hashrate to the most profitable coin. On the mining pool side, major pools like btc.com, f2pool, sparkpool already supported both.

What to expect in the next 180 days

Miners

The eth hardfork will change the dynamic of GPU mining dramatically, the effect might not be immediate, but will be persistent. If the market sentiment does not change dramatically, ETH miners will soon have to find choose between shutdown or swing away the hashrates, then, Beam and Grin will benefit from this.

Project

Both projects has solid team backing on the development effort, more ecosystem application will come out in the next 180 days, and since privacy coins has strong cash natures, both projects will work towards payment utility use cases. Interesting features of watch out are Grinbox, Wallet713 and Beam auditability, and Beam mobile app.