What is Helium (HNT)?

24.05.2022

Intermediate

#Helium (HNT)#Internet of Things (IoT)

Key points

Helium is a decentralised wireless network built with a blockchain. It provides internet access for a range of “smart” devices. The project pitches a cheaper, more stable alternative to traditional wireless networks, satellite equipment and mobile internet.
The Helium network comprises several hundred thousand devices worldwide that act as wireless access points and are combined into “The People’s Network”.
The network is integrated with the Helium blockchain and its native cryptocurrency, HNT, which is needed to pay for data transfer and to reward hotspot owners. Some devices on The People’s Network also serve as validator nodes.

Who created Helium?

The project is run by Helium Systems, a firm founded in 2013 in San Francisco (USA) by Shawn Fanning, Amir Haleem and Sean Carey. The original goal was to build a global, decentralised network for devices that could exchange small data files with a remote centre. In many ways the founders anticipated the rise of the Internet of Things (IoT).

The company is now led by Amir Haleem; the other founders have left. Another key executive is chief technology officer Mark Nijdam, who has more than 25 years’ experience at major IT companies.

Since inception Helium Systems has conducted several funding rounds, raising roughly $365m. The latest round took place in early 2022 and included Pantera Capital, FTX Ventures and Munich Re Ventures.

What is in the Helium network?

The wireless network runs on specialised modems using Helium LongFi, which combines the LoRaWAN (Long Range wide-area network) protocol with a blockchain.

As of May 2022, The People’s Network includes more than 820,000 hotspots (one hotspot equals one modem) across over 62,000 cities and 173 countries. About 60,000 new hotspots are added each month. Coverage is strongest in urban America, as well as in Europe and eastern China.

The Helium network lacks the bandwidth for video streaming or gaming. It does, however, provide a reliable channel for devices that regularly transmit small data packets.

Helium counts more than 60 companies as clients developing or using internet-connected devices. Examples in the Helium ecosystem include:

Awair — devices for monitoring air composition and quality.
Barnacle — parcel trackers.
CareBand — smart wristbands that track the location of elderly people and those with dementia.
Kooler Smart — systems for monitoring cold-storage facilities.
Enica — sensors for water-supply systems.
Bolero Wireless — equipment for loading operations and commercial-transport logistics.

Use cases vary. In April 2022, for instance, trackers connected to The People’s Network helped a California entrepreneur cut the cost of crab fishing.

Since 2021 Helium has been developing a 5G wireless standard, with several firms pursuing projects. Dish, for example, plans to deploy a 5G mobile network in the United States based on The People’s Network.

Helium LongFi provides roaming (handing off a device’s data from one hotspot to another) and supports microtransactions for fast payments. Clients pay only for actual network use to transmit their data, with no subscription fees and no need to deploy gateways or network servers.

How does the Helium blockchain work?

The Helium blockchain launched in summer 2019 and initially used a unique consensus algorithm, Proof-of-Coverage (PoC). Hotspots on The People’s Network are randomly assigned “challenges” that require responses from nearby hotspots. This verifies that devices are physically where they claim to be and genuinely provide internet access.

In 2021, to reduce load on hotspots, the Helium blockchain moved to a hybrid model by adding Proof-of-Stake with the HoneyBadgerBFT consensus algorithm. Dedicated validator nodes took on the most resource-intensive tasks, such as storing blockchain copies and producing new blocks.

Each block takes 60 seconds to create. Every 30 blocks a new epoch begins, and rewards are paid to hotspot owners and validators. From the overall validator pool, a group of several participants is randomly selected to reach consensus. The group’s composition is refreshed by 25% each epoch.

What is the HNT token for?

Helium (HNT) is the native cryptocurrency of the eponymous blockchain. The asset was issued alongside the project’s mainnet launch in July 2019.

HNT supply is capped at 223m coins. Initially, issuance was 5m HNT per month, but on August 1st 2021 it was halved to 2.5m HNT per month. Thereafter issuance halves every two years, with all HNT to be mined by 2070.

HNT has several uses:

staking;
paying rewards to hotspot owners and validators;
issuing Data Credits.

Data Credits are needed to pay fees for using The People’s Network. Their price is fixed at $0.00001 per credit. They can be bought with fiat money or by burning HNT.

How to mine HNT

To join The People’s Network, buy a modem that supports the Helium LongFi protocol, connect it to the internet and link it with other hotspots and client IoT devices. Depending on the model, devices may be installed indoors or outdoors.

As blockchain load increased, Helium hotspots became overloaded and dropped offline. In response, in spring 2022 developers introduced Light Hotspot technology. In essence it is akin to a light client that can transmit data over The People’s Network but does not participate in blockchain synchronisation—validators handle that. Light Hotspot is still being tested and has not been implemented in the mainnet protocol.

The official Helium website lists 26 manufacturers and distributors from whom LoRaWAN devices can be purchased. A “home” modem typically costs a few hundred dollars.

To ensure continuous coverage, Helium offers incentives to create regions with a high density of hotspots. Rewards for hotspot owners may rise or fall depending on various factors—for example, the number of neighbouring hotspots, the number of devices connected to a modem or the volume of data transmitted.

There are online calculators to estimate HNT mining income for a planned hotspot. You can also check a specific hotspot’s earnings in the Helium block explorer.

Other ways to earn HNT

Large HNT holders can run a Helium validator node and earn rewards. The minimum validator stake is 10,000 HNT (about $80,000 at end-May 2022). You can withdraw coins from the stake in roughly five months.

Coinbase Cloud and several other cloud services offer quick validator deployment. In May 2022 the Helium network had more than 3,600 validator nodes, staking over 36% of HNT in circulation. The effective staking yield is 5.25% per year. Validator rewards are paid every epoch, that is, every 30 minutes.

How is Helium developing?

The project’s developers plan to focus on 5G using the blockchain in partnership with FreedomFi, which is developing 5G stations capable of mining cryptocurrency. The minimum price of a device is $1,000.

Owners of such hybrid hotspots will be able to earn HNT by providing users with mobile connectivity and internet access. The goal is to create a global 5G network owned not by a single operator but by users themselves. At launch, Helium 5G will be available only in certain US cities.