Introduction to Helium: Operation, Incentive Logic and Existing Problems

7 min readDec 6, 2021

The practical application of blockchain outside of digital currency has always been a goal that blockchain practitioners have been exploring. In recent years, due to the rapid development of the IoT and its natural distributed characteristics, the combination of blockchain and the IoT in security and edge computing has attracted great attention and exploration in the academia and industry.

The example of the combination of blockchain + Internet of Things that I want to introduce to you is a decentralized wireless network infrastructure called Helium.

What is Helium

Helium is a decentralized wireless network, a distributed hotspot network, but this is not a new type of network that intends to compete with 3G/4G and WIFI ( but the Helium development team is exploring the 5G field ). In fact, Helium is oriented to the LoRaWAN protocol (a bottom layer Internet of Things communication network) . Helium supports devices that use the LoRaWAN protocol, but smartphones and laptops do not support this protocol. More generally speaking, Helium is a blockchain implementation of the LoRaWAN protocol. Its core is to add an incentive layer to an IoT network ( at this point, it is very similar to the relationship between Filcoin and IPFS ).

How Helium works

The core of the Helium network is the LoRaWAN communication network, and an incentive layer is built for it through the blockchain. And through Poc (Proof of Coverage) consensus proves that HotSpot ( a wireless router based on LoRaWAN, it’s similar to WiFi protocol ) provides network coverage. Those miners who provide proof are selected into the consensus group about every 30 blocks, and receive transactions submitted by other miners and pack them into blocks.

(Picture system overview)

The working process of Helium is roughly as shown in the figure above. Users or miners are connected to the network through HotSpot, these HotSpots are connected to the local gateway through the WHIP protocol, which are connected to local gateways via the WHIP protocol, and HotSpot sends data to all the gateways, which adds data to the Helium blockchain, and then sends data to the route, And the device that sends the data pays a fee to the network.

Blockchain in Helium

As I mentioned earlier, Helium itself is more like an IoT project with an incentive layer added, so the main role of the blockchain in Helium is to confirm rights and then incentivize , that is, the blockchain module in Helium (using Poc consensus) ensure that HotSpot in the network does provide services within its range, and then provide HNT token rewards for devices working in these networks.

For ordinary miners, you only need to purchase HotSpot that meets the requirements, and then follow certain steps to install and configure, then HotSpot can be added to the Helium network, and then HotSpot will automatically provide coverage for the wireless network, transmit data, and then get reward. Helium officially provides the network component of Helium Console to manage your device easily.

PoC (Proof of Coverage)

The consensus algorithm used by the Helium network is called Poc, which is a variant of the HoneyBadger BFT algorithm. It is especially important to note that this is not the abbreviation of another more famous Proof of Capacity consensus algorithm .

The core idea of Helium’s Poc consensus is to prove that HotSpots does work where it claims . This consensus algorithm using radio frequency ( Radio Frequency) own characteristics, it means RF signal strength is inversely proportional to the physical distance to produce proof.

In fact, every 360 blocks of time, a role called a challenger in the Helium network (the role of the specific role is shown in the figure) constructs a data packet called “Poc Challenge” through the P2P network, and randomly challenges a role called Transmitter , the whole process is based on the principle of cryptography, a more intuitive process is shown in the figure below (the two clouds in the figure represent the same network, the composition is separated ).

(Picture Poc challenge process)

Token reward

Above we talked about how to reach a consensus in the Helium network through Poc, then as a miner (each HotSpot) how to get token rewards from it?

There are two main ways to get rewards in the Helium blockchain, one is your HotSpot to provide wireless network coverage , and the other is to act as a validator in the Helium network .

Whenever an epoch ( about 30 blocks time ) has passed, Helium awards rewards to the “roles” in each network that contributed during this period. The role of each role is shown in the figure below.

(Picture the roles and responsibilities in the Helium network)

As we can see, there are many roles in the Helium network. Each epoch will produce 1736.1111 HNTs. These HNTs will be allocated to each role according to the ratio shown in the figure below.

(Picture Token distribution ratio of roles in the Helium network)

Special attention is that Helium’s token incentives also take into account the principles of token economics, and its reward distribution is not always the same. For details, please refer to HIP10.

Dual token structure

Helium adopts a dual-token structure, and the aforementioned HNT is issued as a blockchain reward. The other type of DC (Data Credits) is used to pay for network traffic. Currently, 1DC = $0.00001 is anchored in U.S. dollars.

Application scenario

The usage scenario of Helium is not entirely oriented to the general public. It is more like an instance of the industrial Internet of Things. In its official description, Helium puts its eyes on pet tracking and smart medicine bottles . Tushar Jain, president of DeWi Alliance, said in an interview that Helium has provided services for smart water meters , air quality testing and other wide-area scenarios. Of course, because of its decentralized nature, everyone can participate in the mining process by purchasing HotSpot equipment.

Pros and cons of Helium

The advantages of Helium are naturally self-evident. The underlying LoRaWAN is a low-power , wide-coverage wireless network protocol, which is widely used in IoT networks.

The disadvantage is the security of the Internet of Things network. A single sensor in the network is often the easiest to be hacked by hackers, because the large number of low-cost sensors deployed often do not have sufficient security precautions. This is precisely the security issue that Helium officials are further improving its network.

Conclusion

In my opinion, Helium is a project that focuses on the Internet of Things, and the blockchain is just the icing on the cake (Helium has transformed from a pure Internet of Things project to a blockchain + Internet of Things project in 2018) . From a technical perspective, Helium, as a distributed hotspot network, is in line with the development trend of the Internet of Things industry itself, especially in the direction of smart city construction that requires large-scale low power consumption . It has certain potential and room for imagination.

Helium is also very forward thinking to achieve the combination of the Internet of Things and blockchain. However, I think those interested in Helium should focus on the IoT part of Helium. In fact, looking at the entire project, it seems that the role of the blockchain in it is somewhat tasteless. What I mean is that Helium has not exerted its power in the security of the Internet of Things like the traditional blockchain + IoT, but only as a guarantee for an incentive mechanism. However, not everything needs to be decentralized. It seems that Helium, as a centralized and distributed product, will have a better development in the field of industrial Internet of Things.