Most recent update: [November 15, 2023]
What is TIA?
TIA, the cryptocurrency underpinning Celestia, marks a significant innovation in blockchain technology, positioning itself as the inaugural network of its kind with a modular structure. Its core design simplifies the creation and deployment of distinct blockchains, reducing complexity and resources required. Celestia redefines the traditional blockchain structure, adopting a minimalist concept which separates the execution process from the consensus mechanism. This is accomplished through an innovative method known as data availability sampling, enhancing the platform’s overall performance and flexibility.
The standout aspect of TIA is its emphasis on adaptability, steering clear of fixed rules for execution or settlement processes. This allows developers the freedom to customize their blockchain environments according to their specific requirements, a notable shift from conventional blockchain systems. The introduction of Celestia’s mainnet beta, which heralded a new phase in modular blockchain technology, underscores its scalability and potential to overcome issues faced by other prominent blockchain platforms like Ethereum and Solana.
Who is behind TIA?
TIA, the core of Celestia’s blockchain innovation, is driven by a dynamic team of experts. Mustafa AI-Bassam, the CEO of Celestia Labs and a Ph.D. graduate in blockchain scaling, initiated the project with his ground-breaking research paper “LazyLedger”. His vision for a modular blockchain system has set the stage for a new era in blockchain technology, focusing on scalability and efficiency.
Ismail Khoffi, the CTO at Celestia Labs, brings a wealth of experience in IT security, cryptography, and blockchain infrastructure. His work at the Interchain Foundation and academic background in Mathematics and Computer Science from The University of Bonn have been instrumental in shaping Celestia’s technical foundation.
John Adler, Celestia Labs’ CRO, is renowned for creating the Optimistic Rollups design paradigm. His expertise, gained from his time at ConsenSys and formal verification studies
at the University of Toronto, is crucial in Celestia’s research and development efforts, particularly in enhancing blockchain scalability.
How does it work?
Celestia’s TIA is a modular blockchain network, allowing for the creation of independent blockchains without starting a new consensus network. This simplifies blockchain development and maintains security and independence across multiple blockchains.
TIA tokens serve as a deflationary currency within Celestia, decreasing in supply over time. They incorporate three key functions: Reflection (redistributing transaction fees among holders), Rebalance (transferring fees to LCX token reserves), and Burn (destroying a portion of tokens in transactions).
Technically, TIA operates on the Ethereum blockchain as an ERC20 token. Its unique data availability proofs, based on erasure coding, ensure reliable data verification. This system allows nodes to verify the availability of data in a block, enhancing the overall integrity and functionality of the blockchain. The modular nature of Celestia allows rollups to independently handle transaction validity and customize their chain environments.
The TIA Token and Tokenomics
TIA tokens are currently available for sale on multiple exchanges worldwide. The maximum supply is capped at 1,000,000,000 tokens, and as of November 15th 2023, the market cap for TIA amounted to approximately US$860,388,730. The circulating supply of TIA tokens is around 141,043,527.
The initial distribution for TIA is broken down as follows:
- Public Allocation (20%): This category includes allocations for future initiatives (12.6%) and the Genesis Drop and Incentivized Testnet (7.4%).
- R&D & Ecosystem (26.8%): Allocated to the Celestia Foundation and core developers.
- Early Backers Series A&B (19.7%): Early supporters of Celestia.
- Early Backers Seed (15.9%): Seed backers.
- Initial Core Contributors (17.6%): Members of Celestia Labs.
The TIA token is purported to serve as a utility token to pay for transactions on the network but also for the functions of Reflection, Rebalance, and Burn.
Celestia’s TIA token operates within a secure, modular blockchain framework. Its Proof-of-Stake consensus mechanism, where users stake TIA tokens to participate in network security, forms a key aspect of its defensive strategy. This approach, combined with the opportunity for token holders to earn staking rewards, underpins the network’s robust security.
The network employs availability sampling to enhance security and scalability. This technique allows light nodes to verify large data blocks without downloading the entire blockchain, making the network more efficient and secure. Additionally, the Inter-Blockchain Communication (IBC) within Celestia’s Data Availability (DA) layer promotes interoperability, further strengthening the network’s security by fostering a collaborative technical ecosystem.
Drawbacks and Risks
As a Proof-of-Stake blockchain, the Celestia network dictates that those with the most staked tokens will have the most sway in the network’s functioning. This effectively places richer wallets in a position of power. Thus, if one person or a group of entities can acquire 50% of the network’s voting power, they would be able to control it.
In terms of token distribution, the vast majority of tokens are not circulating among the general public. Not only could this imply potential market volatility in the future, but it would also, per the point above, lead to a concentration of power among few entities in the Celestia ecosystem.
Further, as an ERC20 token, TIA’s functioning may be dependent on the success of the overarching Ethereum network, the latter which could be subject to heightened scrutiny from regulators.
Finally, although not directly related to the merits of the Celestia project, one should note that Mustafa AI-Bassam pleaded guilty to computer misuse following his involvement in high-profile cyberattacks under the guise of the hacker group “LulzSe”, which targeted the likes of Sony, Fox, News International, Nintendo and the CIA. He employed denial-of-service attacks to conduct some of these operations, some of which have resulted in an official investigation into HBGary Federal, exposing potential wrongdoing by the intelligence contractor. It’s important to note that AI-Bassam was not charged with theft nor money laundering, but his past criminal behaviour could nonetheless put TIA at heightened risks for fraud and theft.
Before listing TIA on the VirgoCX Platform, VirgoCX performed due diligence on TIA and determined that TIA is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis includes reviewing publicly available information on the following:
- The creation, governance, and location of TIA and/or its primary development team;
- The supply, demand, maturity and liquidity of TIA; and
- Legal and regulatory risks associated with TIA.
Statutory Rights under Securities Legislation
VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30th 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.
To learn more about the technology behind TIA, check out these in-depth resources here: