GRAFT Development Status Update June 2018

Supernodes and Real Time Authorizations

Let’s start from implementation of full supernode, which is essentially an implementation of real-time authorizations (RTA). Although we are close to the finish line, we do not release it yet to public alpha. We need more time for optimization, fine-tuning, and QA testing. One of the main reasons for the delay is an issue with communication. Unlike other two-layer cryptocurrency networks which use a separate mechanism for communication between their second-layer nodes, we reuse the existing peer-to-peer network as a basic transport. Our original algorithm finds the shortest and fastest routes between the supernonodes by maintaining a set of P2P tunnels through the network of cryptonodes. The main difference and greatest benefit of using the same communication base for two layers (both cryptonode and supernode networks) is not exposing the authorization sample’s supernodes – because in our design they are not required to have a public IP. Such design is the major difference and significant improvement comparing to other layer two implementations such as Dash masternodes.

Remember that one of GRAFT’s key differentiators and goals is absolute privacy initially provided by underlying CryptoNote blockchain protocol, which is the first layer of GRAFT platform. The fact that the auth sample supernode does not require a public IP attached to it makes GRAFT even more private and decentralized, because the supernodes are less dependant on regulated hosting providers. Without public IP the supernodes are “hidden” behind the large, distributed, and complex P2P network, which makes them less vulnerable to DDOS attacks. At the same time, the hosting and maintenance are less complicated and less expensive for supernode owners. (Note that wallet/POS proxy supernodes, which typically belong to service providers and large merchants, still require public IP address in order to be able to serve wallets and POS/payment apps).

However, such great benefits do not come for free. Along the way we found several issues in existing CryptoNote/Monero P2P communication implementation, which we are fixing in order to make it more efficient, stable, and suitable transport for our purposes. With that said, we anticipate the public alpha of supernode with RTA to be released by the end of July. Meanwhile, we will start a private alpha release for testing in a coupe of weeks, so if you are interested in helping us with preliminary testing please contact us at [email protected]

While working hard on RTA implementation and getting ready to its production launch, we realized that hosting a supernode, either full (authorization) or proxy/gateway, requires a special DevOps skill set, so we are working through making arrangements and building relationships to provide turnkey solutions to supernode owners and merchant service providers.

Payment Apps

We are continuously working on improving the Verifone terminal app so it will be fully polished for production by the time RTA is released. As Verifone have written on their merchant marketplace website, where GRAFT app is listed as the Featured Apps Partner, “Our app partners are working around the clock to help empower our merchants with applications that enrich the customer experience and provide business productivity.” This is absolutely true statement, there is not much to add. Since the Verifone certification was achieved last month, we have done several improvements such as UI redesign (in both terminal app and our wallet), enhanced configuration utility for merchants, integration with CoinMarketCap for real-time exchange rates, and some bug fixes. Also, we are working on Ingenico terminal app integration into their marketplace.

One of important and promising features we are planning to develop is using NFC (Near Field Communication) for initial engagement between the mobile wallet and terminal app, so instead of scanning QR code displayed on payment terminal the buyer will just wave the phone (the same technology is used by contactless payment cards and Apple Pay). Implementation of such a feature will help improve both buyer and merchant user experiences and reduce the overall transaction time. We will keep you posted about our progress in this area.

We just finished design and now are ready to start implementation of the payment gateway which will facilitate GRAFT payments on online shopping platforms. Once implemented, integration with GRAFT payment gateway, among other features, will bring to online merchants and buyers a unique combination of absolute privacy and instant transaction confirmations (using RTA) – something they have never seen before. Plus, after we finish RTA and move to accept broker implementation, they will be able to accept various cryptocurrencies, while keeping the same benefits of privacy and transaction speed.

Wallet Apps

We finally redesigned the app downloads page on our website, so now it’s easier to find all our apps, including wallets, and their releases for various mobile and desktop operating systems: iOS, Android, Windows, Mac OS X, and Linux. In recent wallet releases, we fixed some bugs and added new configuration options. The upcoming wallet release will support purchases with real time authorizations using full supernodes (currently it supports a limited version of RTA on testnet only).

CryptoFind App

As our app for discovering and listing crypto-friendly merchants is gaining more popularity among crypto enthusiasts, we periodically release new features and bug fixes. In recent CryptoFind version, in addition to bug fixes, we added a possibility to take a picture of the GRAFT sticker on the merchant’s window so the users can earn better bonuses.

Happy Grafting!

New Element of GRAFT Ecosystem – Payout Token

Designing Payout Tokens and Real Time Decentralized Exchange

As we’re working on the design and development of the features defined in the original GRAFT white paper, we are monitoring industry trends, listening to the community, and constantly looking for new ways to enhance and extend functionality of GRAFT network and its applications. Currently, we are in a process of refining several sections of the white paper, adding new features that will help GRAFT become an even more comfortable place for both merchants and buyers. In order to do that, we are designing two very important ingredients: a payout tokens and a real-time decentralized exchange. These two new features will enable optimal flow of funds, either crypto or fiat between GRAFT users on both sides of retail payment transaction. We will publish information about those new elements of GRAFT ecosystem in this blog, in two different posts, before it goes to the next version of the white paper. The first article below describes payout tokens, and the second one, which will be published soon, will describe real-time DEX using atomic swaps on network of GRAFT supernodes. The product roadmap will be also updated along with the publication of the updated white paper.

GRAFT Merchant Token Platform:

Introducing Payout Token

Although recent version of the GRAFT white paper provides pretty detailed definition of merchant token concept, it does not contain (yet) some important details which are described in this article. In addition, we introduce a concept of payout token – a special type of a merchant token that will be used to facilitate merchant payouts in local fiat currency. Before we move to payout token definition, let’s refresh our memories to recollect the concept of a GRAFT merchant token, which is a foundation of GRAFT payout token. Here is the definition from the GRAFT white paper:
In addition to fast and inexpensive transactions, merchants place high value on customer loyalty and branding. This functionality will be enabled by the token layer of the GRAFT currency. The token represents domain (merchant) specific GRAFT use, and offers smart contract-backed functionality like loyalty point accumulation and use, reward points, sale discounts, spending discounts, competitor discounts, coupons and store credit. Merchant token is a predefined smart contract that allows creating a private token that belongs to its owner. Unlike some other smart contracts and token platforms, creation of GRAFT merchant token does not require any programming and can be done by anyone.
Note that merchant tokens are not equivalent to “open” smart contracts: we do not try to build another Ethereum platform. Unlike Ethereum-like smart contracts that can be unpredictably customized through programming, flexibility of merchant tokens is limited to their necessary features, which makes them simple and inexpensive but powerful tool accessible to a merchant of any size – from individuals and small businesses to large retail chains. In addition, the main features of each particular merchant token type will be supported by supernode DAPI and GRAFT wallet and point of sale apps. Thus, those features are going to be available for merchants and buyers “out of the box”.

Stable Value

Since Graft tokens (GRFT) are tradable, when they are used for merchant payouts directly, volatility may become a problem. We cannot ignore the fact that many merchants would like to be able to accept cryptocurrencies but prefer to get paid in their local fiat currency. This is their reality: merchants still need to pay for restocking, utility bills, and employee salaries in fiat. At the same time, they don’t want to be involved in cryptocurrency exchange business, and they need to be isolated from the financial details of the crypto business. In order to finally fill the gap and connect the two worlds – cryptocurrency transactions and fiat currency merchant operations – we have created a concept of a payout token, which represents a local currency and can be transacted on GRAFT blockchain in real time using the supernode tier of the blockchain. Payout token is based on GRAFT merchant token technology, similar to gift, rewards, and other merchant token types.


The main goal for creating payout token is providing an easy and reliable way for merchants to get paid in stable local fiat currencies while avoiding usage of centralized payment processors. Payout tokens are issued and maintained by responsible token underwriters (such as banks). When someone (payout broker, for example) is buying payout tokens from the token underwriter, the company generates a necessary amount of tokens and transfers them to the buyer in exchange to an equivalent amount of fiat currency. When someone (merchant or payout broker on behalf of merchant) is selling payout tokens back to the token underwriter, the company destroys the tokens and pays an equivalent amount of local fiat currency to the seller. Thus, payout token is always backed by sufficient amount of fiat currency, and its price always remains the same and equals to the corresponding fiat currency float. For example, 100 USDG can be always bought or sold for US$100. Payout tokens will be issued by licensed token underwriters only in exchange to equal amounts of fiat currency. Furthermore, the rights to handle particular payout tokens can be delegated (licensed) to local commercial banks or even national governments. At this point, we’re open to partnership inquiries from financial institutions interested in underwriting payout tokens tied to the local currency. Please email info @ or contact us through other means if you represent an organization that wants to get involved.


VChain name for all payout tokens is always “GRAFT”. Each payout token subtype matches a particular local fiat currency. For example, GRAFT.USDG token (ticker: USDG) matches US dollar. Payout Token Naming Format GRAFT.[Currency Ticker]G Examples:

Vlog Version

Special shout-out to Jose D for making this wonderful video version of this important blog post, making our ramblings little easier to digest. Thanks Jose!!!

How we priced GRAFT ICO

  We get a lot of questions about the ICO pricing, including “Why GRAFT ICO is so expensive”. What follows is an attempt to explain how we arrived at the ICO pricing and what all contributed to it.  

Not All Altcoins Are the Same

There are two types of altcoins (aka tokens) out on the market today – one that sit on top of another blockchain (like Ethereum), and others that implement their own blockchain. The ratio of derivative tokens to custom blockchain ones are roughly 100:1.   It is a lot easier to do a derivative token based ICO – you just write a small amount of code in  Solidity (if Ethereum) – and you have a token you can sell. Doing or modifying a blockchain on the other hand involves a very substantial amount of engineering efforts – the team has to figure out the math and economics behind the blockchain, implement additional capabilities, secure that new functionality, create API’s, in many cases create applications like a wallet, etc. They also have to create a whole new network complete with node installation procedures, upgrade processes, and many other considerations. GRAFT is the latter of the two – while leveraging CryptoNote protocol which addresses privacy, decentralization and fungibility as well as  great work that Monero team has done to improve scalability among other things, GRAFT is having to implement a new communication protocol that allows instant authorizations, a distributed API (DAPI) that allows connections from the POS and other applications, and a set of reference applications for the point of sale  and the wallet – just to name a few high-profile tasks.    

Derivative Tokens Cost More

Tokens run on top of another blockchain (say Ethereum), so purchasing a token is not sufficient to run the application that the token represents – you also need to purchase “fuel” (which is the underlying coin/token). The amount of fuel depends on the amount of transactions that the token application represents. Compare this to the blockchain like GRAFT which encompasses the value of entire transaction. As you can see, the cost of a token is more than meets the eye, in some cases much more.  

Pay Attention to Valuation, not Token Cost

Valuation (or capitalization) follows a simple formula: (Number of tokens or coins) x (Price of the token / coin). It’s natural for people to think that smaller price of the token represents a bargain, but the critical piece in this equation is the number of coins or tokens that are being issued. For example, which is less expensive (has higher valuation) – 1 billion tokens at $1, or 10 million tokens at $10? It is as you could calculate the latter, with corresponding valuations of $1B vs $100MM.  So when you buy a $10 token from a 10 million token pool, you actually end up with a significantly (10x) larger piece of the pie than if you buy the same amount of the $1 token in a 1 billion token pool. Most token ICO’s are not burdened by emission math (the formula that guides how the coins are mined, making the later mined coins harder to mine than earlier mined coins), so they issue a very large number of tokens (often in 100’s of millions or even billions) and then pricing the tokens low for the perception of the low entry cost. Top 10 Derivative tokens (illustrating circulating supplies differences)  

GRAFT Valuation is 1/40 of Dash

GRAFT’s total final emission (the number of coins to ever be minted) is roughly 18 million (18,446,744 to be precise). We’re pre-mining certain number of coins (45%) to cover the ICO, marketing, reserves, and incentives. This is it. We will never be able to add or pre-mine any more coins!  We have also decided not to siphon off any fees from the transactions to fund the development like some of the other blockchains are doing.    As such we have to make sure that whatever we raise now will be sufficient to sustain GRAFT project until no further development or support from the core team are required (we estimate that to be roughly 7 years with the overall team growing to 30-40 people). This is roughly $25MM.   Now, we also have to account for additional unexpected expenses, crypto-currency fluctuations at the time of the raise, and potential taxable events. This means that we need to need to double the $25MM getting us to $50MM. Since the ICO represents 25% of the total coin supply, the $50MM has to be equal to 25%, which brings the valuation to $200MM, and subsequently the price of the coin to roughly equivalent of $11 USD.  


When evaluating GRF pricing, it’s really important to compare apples to apples in terms of:
  1. size of emission (or the number of tokens available)
  2. type of a token/coin – a blockchain or a token on top of another blockchain
  3. valuation which is a product of number of tokens multiplied by price
If you do such comparison, you will see that GRF token ICO compares very favorably against other blockchains on the market:
Current circulation Price Market Cap / Valuation
Bitcoin 16,678,650 $6,100.00 $100,000,000,000
Ethereum 95,715,037 $310.00 $29,500,000,000
Ripple 38,622,870,411 $0.20 $30,000,000,000
Litecoin 53,819,707 $60.00 $3,250,000,000
Dash 7,687,407 $340.00 $3,200,000,000
Monero 15,345,839 $118.00 $1,800,000,000
Graft (after ICO) 100,000,000 $.32 $32,000,000 (numbers are approximate)


We have made couple of changes to the ICO and token structure since the article was first written:
  1. decided to lower our ICO hard cap to 5% of the total emission (or around $11,000,000 in USD), down from 25%,  and keep the rest of the coins slated for ICO in reserve for subsequent raises as needed.
  2. Do a 1:100 split, multiplying the total emission by 100
These changes doesn’t really change any of the math, just help us improve usability of the coin at pont of sale, and address some of the perceived value concerns.

MVP Development Status Update

We would like to update the community on the status of Graft blockchain development. We have made a lot of plans and promises, and now it’s time for our dreams to start coming true. In order to achieve our ambitious goals, we have put together an efficient team of very talented and experienced developers. Two of them came from Monero project, which is very important for us as we forked the blockchain from Monero, and there will be many blockchain protocol changes.

Network Node, Testnet, and Blockchain Explorer

As an important milestone, we have finished some initial blockchain code modifications which allowed us to set up a public testnet with the first Graft block explorer.

While the testnet is open for access from the Internet, we have not published yet any information on node/supernode setup, configuration, and connectivity since we are still frequently updating it, and we would like to make sure it is stable enough to be open for public view and alpha testing. We will notify everyone once we publish the instructions so anyone will be able to connect and test the basic network.


The majority of the work, however, currently is concentrated in supernode code which is — unlike network node forked from Monero — being designed from scratch. The proof of concept supernode was written in Python for the sake of rapid prototype development. After thorough review, the team decided to refactor the supernode code in C++ in order to keep a single technology stack and optimize the development process and network performance. Although the supernode and network node are based on the same technology stack now, the supernode is still deployed as a separate process (daemon), and we intend to keep it this way, at least for the near future.


Also, we are working on instructions for miners, including GPU and mining pools. Initially, it will be possible to mine on CPU, so the entire full supernode can be hosted on single machine. That’s how the typical testnet supernode is configured. On the mainnet, however, the network hashrate will grow fast, which will require GPU, then multiple GPU, and eventually mining pools to be set up in order to efficiently mine and maintain the full supernode. We are working on providing instructions for GPU miners as well as creating a first mining pool. The GPU mining machine can be detached from the supernode, which enables a hybrid “on premise/cloud” configuration, where, for example, the GPU mining rig is located at home while the supernode is hosted in AWS.

Mobile Wallet, Point of Sale, and Payment Terminal Apps

Finally, we are working on development of client applications, which include wallet and point of sale mobile apps that should look familiar from the PoC phase, as well as new apps running on payment terminals such as Verifone, Ingenico, Equinox, and AnywhereCommerce. Those new apps are going to be different from our existing mobile apps as they are going to be tailored to particular terminal hardware/OS/API/SDK and mostly integrated with third party point of sale software. The terminal apps are very important as they will open the door to the mainstream merchants including top tier retailers. Here is how the typical terminal app will interact with Graft blockchain:

We are still on initial design phase with those apps, but we believe we will be able to demonstrate the working prototypes before the ICO. Stay tuned!

GRAFT Merchant Tokens: Introducing VChains

Merchant token is a simple smart contract that allows creating a private token that belongs to its owner. Unlike some other smart contract and token platforms, creation of GRAFT merchant token does not require any programming and can be done by anyone.

The business features described below are typically associated with using complex third party service providers and high implementation costs, which makes those services inaccessible for small to medium size businesses and expensive to large businesses. GRAFT Merchant tokens allow any merchant to implement those important business features with minimum efforts and low cost.

Types of Merchant Tokens

Store Credits

Store Credits are typically utilized by merchants for performing purchase returns and exchanges, when return cannot be done using the original payment method, or the merchant’s return policy does not allow the full refund. Store Credit essentially transforms return to exchange, so the merchant does not lose the customer and associated revenue.

Store Credit Token can be linked to the item price in local fiat currency, so the customer can use those tokens during next purchase “instead” of or in addition to the payment with local fiat currency. Store Credit tokens usually either do not expire or have very distant expiration date as they are basically replace the fiat currency.

Loyalty Rewards

Loyalty Rewards is powerful marketing instrument which attracts customers and increases spending. Loyalty Rewards can be awarded with each purchase, or as one-time bonus, or using other models. The rewards than can be used to makes purchases of particular items or all items, or converted to cash. Loyalty Rewards are not necessarily linked directly to fiat or crypto currency as they can be spend to provide discount or buy a special “unique” reward items that are not available for sale using other methods of payment.

Loyalty Rewards usually have relatively close expiration date. This way the merchant “stimulates” earning more rewards and eliminates accumulation of very large amounts of reward points that can become useless.

GIft Certificates

Gift Certificates can be issued by merchant in order to attract customers. In order to increase the effect, gift certificates can be sold with discount (for less than their nominal price). Gift Certificate tokens usually either do not expire or have very distant expiration date as they are basically represent the fiat currency.

Discount Coupons

Discount coupons can be used for one-time or long term promotions. The coupons can be distributed publicly or to individuals, in wallet or paper form. The coupon then can be scanned by point of sale in order to get discounted or even free item.

Transactions with Merchant Tokens


Creating new merchant token (“smart contract”). Can be done using point of sale app.


Renew merchant token (“smart contract”). Can be done using point of sale app.


Add more merchant tokens to the circulation.


Merchant’s point of sale sends merchant tokens to the customer wallet or prints a paper wallet.


Customer redeems merchant tokens at merchant’s point of sale using wallet app or paper wallet.

Merchant Token Fees

All the merchant token fees are paid to the current supernode authorization sample.

Merchant Token Transaction Fees

Merchant always pays the token transaction fee, which means the buyer never pays the fee. A regular transaction fee is applied to each transaction with merchant token, including adding, issuing, and redemption. As GRAFT fees are proportional to transaction amount, the fee is calculated based on 1 token = 1 GRF, although it’s not necessarily that the token has any direct link to the GRF or other currency. It’s important to note that GRAFT fees are calculated based on logarithmical formula so there is no danger of paying high fee on large amounts.

Initialization and Renewal Fees

The initial Create transaction implies a special higher fee because it is associated with naming a token. In order to prevent “domain squatting”, the initial fee is set to a reasonable amount that prevents massive abuse. Initialization fee of 5 GRF is required to generate a new merchant token smart contract (Create transaction). The renewal fee is 10 GRF.


VChain allows creating a virtual chain of stores so multiple point of sales can be “connected’ to the same private “virtual blockchain”. Thus, there is a dual meaning of word “Vchain”: virtual chain and virtual blockchain. Vchain creates a private common platform for managing merchant tokens and items catalogue.

Merchants can create their own private vchain which is going to be accessible only by this particular merchant and contain all information about its tokens. Vchain allows connecting multiple points of sale or even creating a chain of multiple stores. Points of sale that belong to the same vchain can issue and accept the same merchant tokens, use the same shared item catalog stored and maintained on the blockchain, generate aggregated transaction reports, and more.

Buyers can use vchain to link multiple wallets so they can manage multiple accounts and move funds between those accounts without paying fees. This feature is useful for family and corporate accounts.

VChain Fees

There is initialization annual fee of 5 GRF for creating a new Vchain smart contract. The renewal fee is 10 GRF. Those fees are required to securely process the smart contract and prevent system abuse. There is a separate annual fee of 10 GRF for adding another point of sale or wallet to the vchain.

All vchain fees are paid to the current supernode authorization sample.

Summary Comparison of GRAFT Blockchain to Other Payment Solutions








Cash, Debit, Credit, Mobile, Bitcoin, or GRAFT?

According to 2016 US Payments study published by TSYS, there’s a distribution of what methods people prefer to use when paying for things: In fact, they tend to use different payment methods in different situations: To understand what people use and under what circumstances, you’d have to consider the pros and cons that each method provides.  Cash for example is very easy to use, it’s accepted everywhere (even if power is out), but it’s subject to theft; debit cards on the other hand provide the convenience of not having to carry cash around and don’t allow people to spend more than they have, but they also don’t provide the fraud protection and require the terminal to be processed; credit cards are great, but allow you to spend too much and carry high interest rates.   So we’ve decided to compare all these methods, including Bitcoin, against GRAFT.  Here’s what it comes down to: GRAFT comparison to cash, credit, debit, mobile, and bitcoin Payment preferences change quickly and are different geographically and demographically, but based on this comparison, we think we’re on the right track!

Since Graft uses CryptoNote protocol, has the Monero community indicated support for Graft?

While Graft supernode code is being written from scratch, the blockchain CryptoNote implementation codebase is forked from Monero. We do not anticipate a direct and immediate Monero community support. However, we believe that our project attracts people from CryptoNote communities as it adds a lot of features that are not available in existing CryptoNote implementations. One example of such a feature is real-time authorization (instant confirmation). Another example is hidden transaction fee amount, which is exposed to public view in all existing blockchains. This table compares Graft with Monero, Bitcoin, Dash, and other cryptocurrencies. However, there are even more important features that are not simply enhancements of the CryptoNote protocol. No one needs just another blockchain, even if it provides better privacy. But Graft is much more than just “another blockchain”. Graft is innovative payment application platform which supports various payment and payout methods, either traditional or innovative. While providing “reference”, default implementations of applications and services, Graft ecosystem is open for any software vendors and service providers. We believe in diversity of payment methods and cryptocurrencies.