I find it best to almost completely forgo all preconceived notions of “crypto” projects when learning about Quilibrium. Start from scratch, and thank me later.

It’s still “crypto”, but doesn’t have a blockchain.

It has a token, but it isn’t just a ledger.

It builds upon previous work, but is unforgiving in its particular feature set.

To me, Quilibrium is a return-to-form movement for cypherpunks. Its goal is to build the rails for the internet as they ought to have been built in the first place:

• Permissionless
• Unapologetically private
• Cheap
• Fast
• Regionless
• Composable
• And scalable to massive size

The problem that the project has faced thus far is that it can get in its own way. There’s a lot of tech-heavy concepts that underpin the protocol, and proponents of the project tend to focus on explaining these technologies instead of focusing on what the everyday user cares about - the capability unlocks.

So today, we’re going to be diving into Quilibrium. Its mission and its proposed solutions - all in the lingo your dad could understand.

The need for something like Quilibrium

You know me, I love me some financial applications. But, for a moment, let’s think a bit bigger. Do you like the fact that just about every website and application is hosted on a centralized cloud computing provider? Or how about how your internet traffic is not only visible, but openly collected by anyone that wants to listen?

Isn’t it crazy that we have all of these cryptographic primitives at our fingertips, yet no one has found a way to uproot this glaring problem? Enter Quilibrium.

Just to give you a taste of what I mean, take a look at what applications you use today. On Quilibrium, you could build:

1. Messaging apps that are end-to-end encrypted, by default. These are unbreakably secure channels where individuals and businesses could converse with anonymity guaranteed.
2. Social apps that hold privacy above all else. Personal details are kept out of the prying eyes of tech companies and data doesn’t accidentally leave your specified bubble of influence.
3. Decentralized file storage where you alone have the keys to decrypt/use your data. Files are sharded and secured by multiple nodes in the network to ensure resilience.
4. Video streaming and web hosting is possible, and completely permissionless. The high-bandwidth network allows for this type of application, where blockchains have traditionally choked.

Anything you could build on the internet, you can build on Q (it’s based in Go, after all). Not to mention that all of these can be interwoven with financial services, since any data can be instantly tokenized on the network. Want digital collectibles available in your messaging app or to tokenize files in your file storage app? All of this comes baked-in.

The limitations of existing decentralized systems

While Bitcoin introduced the concept of a decentralized ledger, its utility is limited to being a digital commodity. No easy way to introduce applications on top of it without op code changes, which will still be cumbersome at best.

Ethereum broke this mold, introducing smart contracts and built-in logic to tie to the transfer of value. But this still has its limitations. Privacy is not baked into the protocol and scalability is the eternal hindrance for the network to grow anywhere close to internet-scale. Ethereum and other Layer 1 chains are necessarily bridled to the blockchain, constrained to focus on financial applications and use cases.

This groundwork of cryptography-ladened protocols opened the door to others looking to move all apps into this new paradigm. The most notable among them is Dfinity/ICP (Internet Computer Protocol), whose clunky design and god awful token distribution have stifled adoption.

Where others have struggled, Quilibrium looks to step in. For the first time, we get a design that sloughs off the constraints of the blockchain, freeing the architecture from a financial pigeonhole, while maintaining the permissionlessness and censorship resistance we’ve come to demand.

Quilibrium’s architecture, from a high level

Too often, crypto infrastructure is a solution looking for a problem. And guess what? Blockchains are not the solution to 99% of problems humans face on a day to day basis. So, why do we keep doing this? Well, because crypto infrastructure (chains, bridges, oracles, peripherals) makes investors rich.

But while we’ve been arguing on the twitter timeline about whether monolithic or modular blockchains will lead us to salvation, Quilibrium started from scratch.

If we want to host applications, financial or not, and have it compete with the clearweb of today, blockchains aren’t gonna cut it.

The end product we’re aiming for is the love child of AWS and Ethereum, with some genetic mutations (from cryptography and database theory) that produce a bedrock of the future internet.

If you’ve ever attempted to navigate the project’s documentation, I commend your efforts. In an attempt to convey the general architecture without requiring some college classes, let’s go through the points I think are most crucial.

Structure of the network

This is where Quilibrium loses the majority of crypto-natives. They start throwing around the term “Oblivious Hypergraph” and most folks scratch their head and walk away.

Instead of having a blockchain where logic is attached to financial transactions and added to a public ledger, Quilibrium is a distributed network that can run and store data in any format.

- Want to host a messaging app? Easy.

- How about storing a database? Sure.

- It’s crypto after all, what about storing public/private key pairs for users? Of course (this is built in).

- You could even host a ledger on it. Yes, you could even host a Bitcoin fork on Quilibrium if you really wanted to.

Not being tied to a blockchain frees Quilibrium to scale far beyond the limits of today’s L1s and into the range of centralized providers like AWS.

The problem with Quilibrium’s messaging so far is that, to a lot of people, it sounds like snake oil. Or at best, an intellectual circle jerk.

No one knows what a god damn “oblivious hypergraph” is. Pick a better name for the newbies. It’s a sandbox where anyone can host any kind of data/application they want. That’s good enough for 90% of readers.

</rant>

Built-in privacy and permissionlessness

This is where the “crypto” (meaning cryptography) starts kicking in.

You may have heard of the term end-to-end encryption when talking about messaging apps like Signal, where the system/intermediary (Signal’s servers, in this example) has no way of reading the messages sent between two people. If a message were to be intercepted mid flight, it would read as scrambled nonsense.

By combining an advanced version of this idea with a distributed internet network similar to Tor’s onion routing, we get Quilibrium’s basic privacy stack. In practice, this means that even though several nodes in a network may be storing/sending data on behalf of others, they have no means of deciphering that data. It’s only available to the users/apps that need it.

And similar in nature to the public blockchains we’ve come to know and love, Quilibrium is an open network, where anyone can access no matter their location or jurisdiction, as long as they have an internet connection (which, ironically, might also not even be necessary).

Token economy

Yes, friends, there’s a token. It’s called $QUIL and it is native to the Quilibrium network as both its payment/gas and reward token.

QUIL is distributed only to node operators, who contribute their computing and storage to the network. There are no allocations set aside for team members nor investors. The only way to earn QUIL directly is by running a node.

The emission schedule of QUIL is (surprise, surprise) unique to the project in that it depends on the pace of adoption, intending to scale with the protocol itself.

Complex math aside, here is how the emission of QUIL changes when you start tweaking different levers within the network:

• As the network size increases (in terms of GB of data), more token rewards are set aside, incentivizing more nodes to join and contribute.
• The other side of the coin is that there is no need for infinite redundancy in data storage/hosting. It’s great that your photos are being stored on 5 different nodes, but 500 nodes is probably overkill. As new nodes join and store the same data, they earn a diminishing emission.

QUIL is burned as a storage rent as well as for code execution on the network, offering a sink to the token.

This design is meant to keep the network dynamic, unlike most crypto projects.

Picture this, you design a lending market. How long does your liquidity mining program last? 1 year? 10? 100? Well, it should probably depend on your rate of adoption. Need to incentivize liquidity now but your emission schedule is already locked in? Sorry, bud, you’re shit out of luck. A design like Quilibrium’s (could) fix this.

The drawback of this design is that there’s no clear answer to “what’s the Fully Diluted Valuation?” or “what’s going to be the emission rate in 2 years?”. It depends. Which is a tough sell for many crypto natives. But, if the market can accept Ethereum’s source-sink dynamic, maybe Quilibrium’s is not beyond the pale.

Community and team members have run their own predictive analysis and have arrived at the emission schedule below. It is only an educated guess, and depends on network and node growth, but at least gives you an idea in case this is a showstopper for you.

In this simulation, the circulating supply tops 1B in mid-2025 and approaches 2B far into the future state where the network surpasses 75TB of size. Today, the supply of tokens is approximately 560M QUIL, for reference.

The team themselves set up a bridge to Ethereum, allowing folks to ramp from native $QUIL on Quilibrium to a wrapped version ($wQUIL) on Ethereum. You can track some $wQUIL metrics on this Dune board by @cincauhangus.

Where the projects is today, and where it’s going

Quilibrium’s ramp up comes in a few phases:

1. Dawn. This is the first stage of mainnet launch and it is where the core components of the network are first introduced. Nodes are public, there’s a primitive storage layer, and the consensus layer is live.
2. Dusk. This completes the initial features for mainnet launch. This phase introduces the mainnet database structure (the so called “oblivious hypergraph”), so applications can now be hosted. In addition, nodes and all activity on the network is now private.
3. Equinox. Adds some high level primitives that give greater degrees of performance. This includes support for large file formats, key management services, and (probably) native parallel processing (known as Metavirtualization).
4. Event Horizon. Adds support for media files (image/video/audio), as well as provenance tracking and task scheduling.

We’re currently in the Dawn phase, and Dusk appears to be coming soon™. And while all four stages are proposed to be slated for this year, software development is notoriously prone to delays, so don’t be surprised to see this spilling over into 2025.

In the current state, there’s not a whole lot to do on the network besides run a node and earn network rewards. Apps can start going live once we “go dark” in the later phases.

Bull Case for QUIL

Perhaps the best question to ask when presented with a new piece of infrastructure is, “why would anyone want to build on it?”. It seems like there are new blockchains popping up each week, how does Quilibrium stand out to both web2 and web3 developers?

Benefits to Web2 developers (who build your traditional, non-crypto applications) switching to Q:

• Privacy: end-to-end encryption gives you and your users guarantees far beyond what is possible with tools like AWS.
• Permissionless: there is no way to deplatform your application.
• Regionless: nodes are everywhere. Never again will you have to worry that your local AWS/Azure endpoint crashed and your app went offline.
• Edgeless: you don’t have to split your architecture between edge vs primary region.
• Transparent billing: you can check your costs down to the bit. No more waiting in anticipation for your monthly bill.
• Native tokenization: any bit of data could be tokenized. Not available on traditional hosting platforms.

Benefits to Web3 (crypto app) developers:

• Easy: write in the language you already know (Go). You don’t have to know how the L1/2, oracles, EVM/SVM work in order to build an application on Q.
• Native MPC: get the benefits of Multi-Party Computation without needing to understand it. This unlocks massive use cases for apps, and many current solutions are “MPC in name only.”
• Private: at no layer is there an attack surface.
• Composable: like the “financial Legos” of blockchain, Quilibrium’s design allows for building blocks, but for applications that are not only financial.
• Scalable: costs for storage/computation more in line with web2 vs. storage-focused layer 1s.

In a way, I see Quilibrium as a call-to-action. It’s an open playground for applications to develop and build off one another. Whether that’s messaging, storing, connecting, or transacting, Q can do it all and do it in a way that is completely private. It’s rebuilding internet primitives and encouraging novel applications that either can’t exist on traditional rails or want their building blocks to plug into decentralized infrastructure.

As far as price bullishness, one has to look no further than the still-dominant market cap of ICP and the hype driven to MPC-adjacent projects like Nillion. There is obviously demand for this type of infrastructure. How much demand? We will just have to wait and see.

Bear Case for QUIL

Taking the other side, to simply “build it and they will come” is a flawed strategy. There’s a clear cold-start problem that exists in a landscape without both users and developers. If Quilibrium isn’t able to attract developers to build cool apps on their network, it’s easy to see how this project can struggle.

From the user perspective, I come back to how the project is being marketed. I understand that you must first appeal to builders, but even builders don’t come pre-loaded with the 7 Ph.Ds required to understand the Quilibrium whitepaper (pdf). In my opinion, separate sets of “developer docs” and “user docs” will need to be spun up in order to help with the onboarding (and maybe even have dev docs for both web2 and web3-native developers).

In the end, these are solvable problems. The depressing elephant in the room is, though, “does anyone really care about privacy?”. Sure, you might, I certainly do, but does the average person on the street genuinely care that their internet traffic is being sniffed, organized, and harnessed by tech giants and three-letter agencies?

Within the US, there’s been a minority push to squash the Patriot Act and to have common-sense legislation put into place that would protect individual rights, but it doesn’t make the same headlines as the myriad of other movements happening in parallel. Perhaps, in the end, the general populace is apathetic about their personal privacy, and something like Q would never disrupt the market trend.

Our take on QUIL

I’m honestly a fan of the token design for QUIL. It makes complete sense to map out issuance in terms of key performance indicators instead of some arbitrary token emission schedule. While it may take crypto-natives a while to digest, I see this becoming the norm in the mid- to distant future.

But for Quilibrium to succeed, they need to hone their marketing message. If 9 out of 10 people hearing about the project are confused by the top-of-funnel messaging, you may never reach escape velocity. Focus needs to be on what this framework unlocks for both developers and the eventual end users of the chain. Without this, devs and users will continue to be distracted by whichever VC-funded infrastructure project is paying them the most.

I think the project struggles with messaging due to just how broad their vision is. What can you build on Q? Anything you want.

If you’ve read my previous work, you’ll know that projects looking to solve the big hairy problems are exciting to me. Yes, the market is flush with infrastructure, but a privacy-first and scalable layer 1 that doesn’t limit itself to financial applications has massive potential, especially given its low barrier-to-entry for developers.

Previous notable attempts to enhance user privacy have either been bolt-on to public ledgers (e.g. apps like Tornado Cash on Ethereum), or have sacrificed scalability (e.g. Monero, Zcash). These applications have struggled to achieve adoption, except for users willing to accept these drawbacks (which also attracted some unsavory players).

Quilibrium widens the aperture, peering into how cryptography can build better rails than legacy systems like AWS and Azure. Scalable, private, borderless, cheap, dependable + crypto-native primitives such as tokenization and composability. Where app developers don’t have to constantly juggle user experience and privacy.

What’s not to love?

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Special thanks to the following chads for their feedback on the piece prior to release: CHUNCH and Fitz

DISCLOSURE: The author of this report, 563, has exposure to $QUIL. In case it wasn’t obvious, he is hopeful about the future of the project. Please keep this bias in mind while reviewing this report.