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Chia Network: Reducing Costs and Improving Efficiency in DeFi Transactions

Chia Network: Reducing Costs and Improving Efficiency in DeFi Transactions

Chia Network is a blockchain aiming to significantly reduce the electricity needed for transactions and payments in DeFi, thus minimizing costs and improving efficiency.

The Chia project seeks to offer a more secure, regulatory-compliant, and environmentally sustainable blockchain infrastructure. It focuses on innovation and blockchain technology adoption in various sectors, including government, businesses, and application development.

Chia Network has its own token called XCH. But what exactly is its purpose, and what are its advantages and disadvantages? This article provides all the details.

What is Chia Network and How Does the Protocol Work?

Chia Network, launched in 2021 by American programmer Bram Cohen, who also founded the renowned BitTorrent network, is a Layer 1 blockchain.

Chia aims to transform the cryptocurrency ecosystem by establishing a protocol that uses storage space to replace blockchain miners/validators. It has its own programming language called Chialsip, and it is based on Bitcoin’s UTXO model developed by Satoshi Nakamoto.

Chia Network operates through an innovative system called Proof of Space and Time (PoST), combining Proof-of-Space (PoS) and Proof-of-Time (PoT). The Proof of Space mechanism involves farmers allocating a portion of their hard drive storage space to validate blockchain blocks. On the other hand, Proof of Time requires timelords to prove the execution of a sequential function for a certain amount of time.

Unlike most other Layer 1 blockchains, Chia Network is not governed by a decentralized autonomous organization (DAO) but follows a traditional corporate structure. Its intended use for enterprise purposes and plans for listing on the NYSE and NASDAQ contribute to this decision.

Chia Token Creation (XCH)

The XCH token is a utility token designed to reward network participants for securing the Chia Network. It is marketed as a “green” cryptocurrency due to its low energy consumption during creation. Chia Network established a significant strategic reserve of 21 million XCH tokens at the launch of its blockchain.

The Issue with Pre-Generated Tokens

Pre-generated tokens often receive critiques from cryptocurrency enthusiasts for philosophical and ideological reasons:

  • Centralization and control
  • Equity and distribution
  • Market manipulation

While there may be practical justifications for pre-generated tokens, they often contradict the fundamental principles of decentralization, equity, and transparency cherished by the crypto community.

Halving and Supply of Chia Network

The maximum supply of XCH in circulation is slightly over 30 million tokens. Chia Network does not have a pre-defined maximum amount. The Chia Network whitepaper details the creation of new tokens, with different quantities being generated every ten minutes over the years.

How to Farm Chia (XCH) Tokens?

To start farming Chia cryptocurrency (XCH), it is recommended to use a hard disk or SSD with a minimum of 1.5 terabytes of storage space, which may increase over time. The following are the steps:

  1. Download and install the Chia blockchain client software on your computer.
  2. Create a Chia wallet to store your XCH coins.
  3. Initiate Chia farming to allocate unused space on your hard drive and create plots.
  4. Connect your plots to the Chia network to start farming XCH.
  5. Ensure your computer remains connected to the Chia network to validate transactions actively.

The more storage space allocated, the higher the chances of earning XCH rewards. Plot creation may take several hours depending on the allocated space’s size and your computer’s processing power. Once created, plots can be used indefinitely as long as the hard drive remains in good condition.

Unlike other cryptocurrencies, mining XCH does not require specialized hardware but requires sufficient processing power and a reliable internet connection. Operating multiple plots simultaneously can strain your CPU, so it is advisable to use a computer with a powerful processor.

Does Chia Farming Damage Hard Drives and SSDs?

There are concerns regarding the impact of Chia farming on hard drives, especially SSDs. The Chia farming process involves intensive data writing activities that may potentially reduce their lifespan. SSDs, in particular, have a limited number of write cycles before they start failing.

Although the initial plot creation phase in Chia demands extensive disk writing, subsequent farming activities are much less intensive and have a minor impact on the drive’s lifespan. The impact on hard drives varies based on the type of disk used and how it is utilized for Chia farming. Users should be aware of these risks and consider using disks designed for high workloads or take measures to minimize their wear and tear.

Where can you Buy XCH Tokens?

As XCH has a significant market cap, most centralized platforms allow the purchase of this cryptocurrency. It is listed on platforms like KuCoin, OKX, MEXC, and others. Only the purchase fees and platform security may vary.

There are multiple ways to acquire XCH tokens, such as through bank transfers, credit cards, or exchanging other cryptocurrencies like Bitcoin.


Chia Network presents itself as a secure and reliable blockchain. Its low energy consumption is crucial for adoption and the democratization of its ecosystem. While Chia Network strictly adheres to its roadmap, traditional institutions still exhibit considerable skepticism towards crypto companies. This skepticism could pose a risk to Chia’s introduction on the stock market and its overall ecosystem and sustainability.

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