Helium brings three core technologies together:
Proof of Coverage
- LongFi: LongFi delivers roaming capabilities and supports micropayment transactions, so customers only pay based on network usage without needing to deploy gateways or network servers.
- Tokens and data credits: HNT is a cryptocurrency earned when hotspots provide wireless coverage and transfer data over the network. Data Credits are used by devices to send data on the network and for blockchain transaction fees.
- Proof of coverage: Proof-Of-Coverage is a unique work algorithm that uses radio waves to validate Hotspots. For this validation work and adding blocks to the blockchain, Hotspots can earn HNT.
"Proof of work" and "proof of stake" are the two major consensus mechanisms cryptocurrencies use to verify new transactions, add them to the blockchain, and create new tokens. Proof of work, first pioneered by Bitcoin, uses mining to achieve those goals. Proof of stake — which is employed by many ETH2 blockchains — uses staking to achieve the same thing.
The Helium Network uses Proof of Coverage (PoC), a novel algorithm that rewards users for verifying coverage, thus proving location and network connectivity. Participants deploy Hotspots to participate in building the Network and earn Helium mining rewards by employing PoC. On helium, mining is carried out by means of radio wave technology rather than traditional mining rigs like GPUs or ASICs, making Hotspots much less energy-intensive than their traditional counterparts.
Hotspots are occasionally given tests to cryptographically prove that they are indeed providing radio coverage in a particular place and a particular time. These tests are assigned randomly and automatically, and passing them earns a Hotspot operator HNT rewards.
Helium Hotspots can also earn HNT by transferring data from nearby devices over the Network. The more data that a hotspot transfers, the more HNT rewards it earns. Hotspots earn HNT in proportion to the value they contribute to the Helium crypto ecosystem by completing PoC challenges, serving as witnesses for peers' performance, and transferring device data, with the largest volume of HNT rewards going towards network data transfers.HNT and Data Credits
Hotspot operators earn HNT for providing coverage and transferring data on the Network. As of November 2021, there are about 105 million HNT coins in circulation, with a maximum supply of 223 million HNT. The project initially launched with zero HNT in circulation and without a pre-mine, which was intended to create a more even distribution of HNT throughout the market.
New Helium blocks are produced every minute with HNT rewards distributed approximately every 30 blocks. HNT’s coin emissions rate began at five million HNT per month and halves every two years. On August 1, 2021, the issuance of HNT coins was reduced to two and a half million HNT per month.
Also central to the crypto economics of the Helium Network are Data Credits (DC). Each device using the Helium Network is required to spend Data Credits to send its data to the internet, and users pay with Data Credits to access the Network. Data Credits are fixed in value, tied to individual users, and not transferable. One Data Credit is fixed at a value equivalent to $ 0.1 USD. Data Credits are minted by burning HNT, establishing an equilibrium where, as the network grows and more devices use Data Credits, more HNT coins will be burned.