As many of you know, Ternio has built Lexicon — the highest scaling blockchain solution currently available. Lexicon is capable of delivering more than 1.2 million transactions per second (TPS), fully decentralized and on-chain. Security firm Null Bash has conducted a third party verification of Ternio’s Lexicon architecture and that report is available on our website. This article explains why it was necessary to build a solution of this scale and why this isn’t the end result, but rather the beginning of something revolutionary. A summary is available by scrolling to the end of this article.
Ternio sits at the apex of two industries — blockchain and programmatic advertising. We have a unique perspective on how both industries function and the opportunity to educate the public on the nuances of each. At blockchain conferences, we find ourselves explaining the inefficiencies of the programmatic advertising market — a lack of transparency, lengthy payment terms, and advertising fraud. When attending advertising conferences, we find ourselves going on about how blockchain will revolutionize the industry by solving these problems. By building a solution to solve problems in advertising, we inadvertently developed tech that can be applied in any industry.
What is Programmatic Advertising?
Most people are familiar with digital advertising because it’s how many websites fund their operation. What many don’t know is that 70% of all digital advertising is bought and sold programmatically. Programmatic advertising is similar to high frequency trading on the stock market. When an advertiser like BMW wants to buy a banner ad on NY Daily News, they don’t contact NY Daily News directly, but instead work through a series of middlemen and intermediaries.
When a web user visits NY Daily News, they generate an ad impression. This impression is then “speed traded” through 20–30 intermediaries who auction it the highest bidder and take a small cut to facilitate the trade. The impression ultimately reaches BMW who purchases the ad spot as the highest bidder. This process occurs in hundreds of milliseconds, behind the scenes, as not to disrupt the NY Daily News visitor.
If you look at the visitor statistics for New York Daily News you can see that over the course of one year approximately 1.2 billion page loads are generated. If each page has two ads then that’s almost 5 billion ad queries for just one website. Consider that 10 intermediaries are in the buying and selling process on NY Daily News. Then multiply that by the number of websites that run advertising.
It’s easy to see how the amount of queries being generated quickly scale to obscene levels. In fact, programmatic advertising has more transactions than Visa and Mastercard, combined. This is why a high transaction per second is so important for programmatic advertising. It needs to support the immense queries per second being generated.
What problem does blockchain solve?
Well, quite a few:
- Lack of transparency — Both BMW and NY Daily News don’t know how many middlemen are involved in the supply chain.This is a problem because approximately 50% of every dollar goes to middlemen.
- Ad Fraud — Ad fraud accounted for $18 billion of the $224 billion spent on advertising in 2017. Fraudsters thrive in the obscurity!
- Lengthy Payment Terms — Publishers wait between 30 to 120 days to be paid and the average is 60 days. This means a publisher delivers an ad impression and isn’t paid until two months later.
We go into greater detail on the issues above on Ternio’s youtube channel as well as the articles found on our homepage. However, the image below should provide an idea of the amount of companies operating in the digital ad space which leads to the inefficiency.
Is 1 Million TPS Enough?
Yes, to start! The biggest ad buying platforms currently generate 11 million QPS across their entire client base. The programmatic ad industry won’t migrate 100% overnight to blockchain. Based on our conversations with the biggest ad agencies in the world, 1 million TPS will be more than sufficient to begin testing. However, we know that once they see the results, the shift will occur rapidly. That’s why we’re ready to go over 1 million TPS!
Our blockchain solution has reached 1.2 million TPS in tests and is capable of scaling to more than 10 million (10x) TPS when required.
Our blockchain solution has reached 1.2 million TPS in tests and is capable of scaling to more than 10 million (10x) TPS when required. We believe our highly scalable solution will revolutionize not only the multibillion dollar programmatic advertising industry, but also other industries — enabling mainstream adoption of blockchain technology. Ternio is focused on the programmatic advertising industry for now. However, we’re happy to support other leading companies with our scalable blockchain solution.
Programmatic advertising generates a tremendous amount of QPS (queries per second) because each URL load generates multiple ad impressions. A URL with four ads on it would generate four unique ad impressions and thus four queries. Middlemen further inflate these queries by facilitating more calls that need to be routed. Ternio records every single query to the blockchain, which requires immense scale to record in a decentralized manner. Ternio’s blockchain solution has reached 1.2 million TPS in tests and is capable of scaling to more than 10 million (10x) TPS if it is required. We believe our highly scalable solution will revolutionize not only the multibillion dollar programmatic advertising industry, but also other industries — bringing blockchain mainstream.