What is Internet Computer (ICP)?

The Internet Computer, often called ICP after its token, is a blockchain designed to host entire applications, including their websites and data, rather than only financial transactions. It is developed by the DFINITY Foundation, a not-for-profit based in Switzerland. DFINITY released the network's source code on May 10, 2021.

What are canister smart contracts?

On the Internet Computer, a smart contract is called a canister. The documentation describes canisters as programs that run WebAssembly code, keep their own state, answer web requests and pay for their own resources. A canister's memory carries over between runs and upgrades, so an app does not need a separate database.

Canisters pay with cycles, a unit of computing fuel. On many blockchains the user pays a fee for each action. Here the canister pays for computing, storage and bandwidth, so people using an app do not need to hold tokens. This is sometimes called a reverse gas model.

The network is split into subnets, groups of nodes that each run their own share of canisters. It can grow by adding subnets and, the documentation says, upgrades its protocol without forks.

What is the ICP token used for?

The documentation describes two assets. ICP is used for governance and transfers. Cycles are the stable-priced fuel that canisters burn. ICP is converted into cycles at a rate pegged to a reserve unit called the XDR, with one trillion cycles equal to one XDR. The ICP used is burned.

New ICP is also minted, to pay the independent node providers who run the hardware and to reward people who vote in governance. Whether total supply rises or falls depends on how much computing is used compared with how much is paid out.

How does Internet Computer governance work?

The network is run by the Network Nervous System, or NNS, a set of system canisters that decides on protocol upgrades, new subnets, approved node providers and economic settings such as the ICP to cycles rate.

To vote, holders lock ICP in a neuron. Locking for longer, up to two years, gives more voting power. Neurons that vote earn rewards that start at about 10% of total supply a year and fall toward a lower rate over time. Individual apps can set up their own governance through a separate system called the SNS.

How does ICP connect to other blockchains?

ICP uses chain-key cryptography, a form of threshold signing, to interact directly with Bitcoin, Ethereum, Solana and other networks. It issues chain-key tokens such as ckBTC and ckETH, which are meant to be one-for-one representations of those assets. This is part of the wider Web3 idea of apps that do not depend on a single company's servers.