Classifying Bluzelle according to the International Token Classification (ITC) framework

 

As of April 29, 2021, Bluzelle’s ERC-20 token is ranked at position 388 on coinmarketcap. ITSA has fully classified the BLZ token according to the International Token Classification (ITC) framework and assigned a unique identifier. Bluzelle was founded in 2014 and uses a delegated Proof-of-Stake (dPoS) economic incentive mechanism to create a decentralized storage network of individuals who rent out their disk space to Dapps/organisations to earn extra income.

Authors: Anushuk Bhojwani, Christian Viehof, Maximilan Bruckner

 

The dPoS decentralized database

Bluzelle is a decentralized information network that manages data for Dapps in a secure and scalable manner. Through its advanced data delivery network, Bluzelle protects organizations and Dapps from problems that can arise when working with centralized databases, including data breaches and network failures. The protocol combines blockchain swarms to create a decentralized network of databases with no single point of failure and no performance limitations. Bluzelle uses blockchain principles combined with sharding & partitioning concepts to create a marketplace for data storage and management. It serves as an “Airbnb of databases” where developers pay for storage space. The network is made up of autonomous nodes around the world that have no hierarchy, and information is stored in multiple nodes at no additional cost.

 

Bluzelle tokens: BLZ Mainnet and BLZ

The Bluzelle network incorporates the use of 2 separate tokens:

  • BLZ Mainnet is used to settle transactions between consumers and producers within the bluzelle ecosystem. This token is based on the Cosmos network.
  • BLZ is an ERC-20 token that functions as a bridge between BLZ and Ethereum. BLZ can be interchanged into BLZ mainnet via the Bluzelle token gateway. The two tokens are pegged to each other and are exchangeable at a 1:1 rate.
Figure 1: The BLZ token gateway (Source: https://pm4.short.gy/HJvOVx)

Currently, most Dapps run on Ethereum. All of these Dapps create massive amounts of data which needs to be stored and managed somewhere. Due to high gas fees in Ethereum, many Dapps are forced to store their data in centralized databases, which prevents these applications from being truly decentralized. This is the niche targeted by the BLZ token. Dapp developers can purchase BLZ and convert it to BLZ Mainnet, which is then used in the bluzelle network to rent out decentralized data storage capacity.

 

Interactions on the Bluzelle network

In the Bluzelle ecosystem, there are only two types of participants. There are consumers, which are the Dapp developers spending BLZ Mainnet to store, manage and receive their data, and producers, which provide the necessary storage facilities to the network in exchange for BLZ Mainnet token. The core business model of Bluzelle network involves taking spare computer resources (bandwidth, storage, memory, and CPU processing) from producers and providing them to consumers as a faster, and globally accessible decentralized database.

To keep bad actors in check, Bluzelle features a Karma Index for all of its node operators. Each producer has a “Karma Index” which is a rating & regulating system, with a score that dictates how well-behaved the producer is. The index goes up or down depending on the producer’s decisions & activities and spans across all the nodes operated by the producer. Furthermore, the producer is required to stake BLZ Mainnet tokens proportional to the number of nodes they operate and inversely proportional to their karmic index. Producers with a low karmic index will receive penalties in the form of restrictions on their node operations.

 

Bluzelle’s Revenue Model

The Bluzelle token gateway charges a micro-transaction fee for every conversion going through the gateway in either direction. The fee is charged in BLZ tokens and is sent over to an Ethereum wallet owned by Bluzelle. The goal is for the ecosystem to remain fully decentralized, while still providing revenue for Bluzelle to innovate and improve the network and its complementary services.

 

The classification of BLZ according to the ITC:

 
Figure 2: The BLZ token is fully classified (Source: https://itin.itsa.global/XKTY3BWN0)

Economic Purpose (EEP): BLZ is listed as a settlement and governance token (EEP22TU03) due to its design as a means of transaction settlement within the Bluzelle network.

Industry Type (EIN): The issuer of BLZ is active in the field of software, data storage and processing (EIN05DA05).

Technological Setup (TTS): BLZ is the native token of the Bluzelle network, which has its own native blockchain. BLZ is classified as a Blockhchain-Native Token (TTS41BC).

Legal Clam (LLC): BLZ does not entitle its holder to any legal claim or rights against the issuing organization, therefore it is listed as a No-Claim Token (LLC31).

Issuer Type (LIT): The dimension “Issuer Type” provides information on the nature of the issuer of the token. Bluzelle’s blockchain platform is built by an expert team of engineers and researchers in the field of computer science, AI and blockchain. It’s Issuer Type is a Private Sector Legal Entity (LIT61PV).

Regulatory Framework (EU) (REU): The dimension “Regulatory Status EU” provides information of the potential classification of a token according to the European Commission’s proposal for a Regulation on Markets in Crypto Assets (MiCA, Regulation Proposal COM/2020/593 final). BLZ qualifies as a Utility Token according to the definition provided in Article 3 (5) of Regulation Proposal COM/2020/593 final.

 

The International Token Standardization Association (ITSA) e.V.

The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.

  • The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
  • The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to market capitalization of classified tokens.
  • ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.

Remarks

If you like this article, we would be happy if you forward it to your colleagues or share it on social networks. More information about the International Token Standardization Association can be found on the Internet, on Twitter, or on LinkedIn.

Anushuk Bhojwani is currently writing his master thesis with Frankfurt School of Finance & Management on the topic “Why should corporate treasuries allocate between 1% — 5% of their investment in Bitcoin in contrast to traditional investments and what are the main drivers for this allocation?”. He is currently working in the Treasury department at BorgWarner Inc. and also pursuing his master’s degree in finance at Frankfurt School. He has also classified many security tokens for the Tokenbase for ITSA e.V. He has a diverse background with significant time spent in Spain, India and currently Germany. You can contact him via anushuk.bhojwani@icloud.com and connect on Linkedin if you would like to further discuss ITSA e.V or have any open questions.

Christian Viehof is an Executive Director at the International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database including a classification framework and unique token identifiers and locators. He completed his Bachelor in Economics at the University of Bonn, the Hong Kong University and the London School of Economics and Political Science with a focus on Behavioral Economics and Finance. Currently pursuing his Master of Finance at the Frankfurt School of Finance and Management, you can contact him via christian.viehof@itsa.global and connect with him on Linkedin, if you would like to further discuss ITSA e.V. or have any open questions.

Maximilian Bruckner is Executive Director at the International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database including a classification framework and unique token identifiers and locators. He has a strong international background with significant time spent in Spain, South Africa, and Canada. Currently pursuing studies at the Frankfurt School of Finance and Management, you can contact him via maximilian.bruckner@itsa.global and connect on LinkedIn if you would like to further discuss ITSA e.V. or have any other open questions.