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smart-contracts

The Future Of Bitcoin Upgrades: Off-Chain Contract Execution

12/01/2021 by Idelto Editor

Taproot is currently the most likely next upgrade for Bitcoin. It is one of a few upgrades that are currently being worked on that users and developers would hope to eventually see activated on the network. 

All of these upgrades share a general theme that will likely be the theme of many future upgrades as well. This theme is making contracts unicast, or more simply put, moving contract logic off-chain, and leaving it up to the user, instead of the network, to validate and enforce their contract. Moving to a more unicast system will make Bitcoin much more private and scalable while still keeping Bitcoin’s more important properties intact.

These types of upgrades and systems are perfect for Bitcoin. Bitcoin is simply a monetary network, not a computation network. Being a monetary network, its primary function should be to validate that its monetary system is being correctly enforced. In Bitcoin terms, checking that users correctly signed the transaction and that they did not violate the monetary policy should be the primary function of the system, and anything more should be moved to higher layers and only done between the users that are using Bitcoin for more than financial settlement.

MuSig And Unicast Contracts

MuSig is one of the best understood applications of moving contract logic to be unicast. MuSig allows users to make a multisig output look like a standard user’s single sig output. This is done by having users construct keys and signatures off-chain and having them do some cryptographic operations that result in a single public key and signature. This is a huge improvement compared to a normal multisig, where the users need to broadcast all of their public keys and signatures. By doing a normal multisig, the users offload their contract validation to the network, requiring it to validate and store it indefinitely. Instead, with a MuSig, the users do the enforcement themselves by constructing signatures between themselves resulting in a single final signature that can only be valid if the correct amount of parties were honest, thus only requiring the network to validate and store a single signature.

Moving contract logic to be done in a unicast manner makes Bitcoin more private. Today, most contracts have their spending logic explicitly in the transaction’s output scripts. This means that an outside observer is able to see what the user’s exact spending conditions are. Having the user reveal their exact spending conditions not only harms the individual user but also affects the rest of the users on the network. By revealing all available spending paths, a user not only outs themselves as using them, but also reveals that they are not using other spending conditions. This seems obvious but has important implications. Because a user is revealing that they do not have certain spending conditions, it excludes them from sharing an anonymity set from users that use the other spending conditions. This means that the other users will not have our user in their anonymity set, giving them a smaller crowd to hide among. If the user moved their contract enforcement off-chain, then the user could make their transactions and outputs look the same as a standard user’s and thus share an anonymity set with a larger set of users, helping themselves as well as the other users.

Not only does making contract execution unicast make Bitcoin more private, it also makes it more scalable. Moving validation and execution logic off-chain, to be done by the individual users in the contract, ensures that they no longer need to broadcast their entire contract to the entire network. By doing so, the network will then no longer need to do the actual verification of what could be a complex contract and instead only do the minimal verification, likely being only a single signature check. Since the contract is no longer being broadcast to the network, the network will not be storing the required data for this contract either. Because of Bitcoin’s block weight limit, reducing the data needed for any transaction is a boon for the network as it will directly increase transaction throughput, allowing more to be done with the same amount of resources.

Tradeoffs

Removing the need to verify and store contract data can have significant impacts on how users use Bitcoin. With any Bitcoin transaction, the user will need to pay a miner fee to be included in a block. This miner fee is directly correlated to the resources needed to verify and store the transaction. Knowing this, we can conclude that users are disincentivized to use complex scripts and spending conditions. This can have bad implications — for example, a user who is trying to enhance their security by using something like multisig to distribute their keys is now being punished by the network for doing so by having them pay higher fees. Any improvements that can be made to this should be prescient to Bitcoin users and developers.

Using unicast-like contracts includes some other tradeoffs as well. Because the user is no longer offloading their contract validation and execution to the network, they will instead be required to do this themselves, or rather, the software they are using will be. This generally means that the user will need to send and store more data between their counterparties. Doing so requires more complex software and protocols for the user. It can make backups more critical and harder to do; if the user loses this data, their counterparty may be able to violate their contract or, at the very least, the user might not be able to execute their contract without their counterparty’s cooperation. However, these are well understood problems and clever solutions are being proposed to make loss of data safer and to even create ways to hide from a counterparty that there was a loss of data.

In conclusion, today, Bitcoin contracts primarily exist as a broadcast system, requiring the network to validate and store everyone’s contract execution logic. Upgrades that are likely coming to Bitcoin are able to give us an outlook that moves contracts to instead be enforced between individual users, since Bitcoin is a monetary network first and should primarily enforce its monetary properties. Things like Taproot, Lightning, DLCs and PTLCs all exemplify this perfectly and show that Bitcoiners are building the ecosystem to enhance Bitcoin’s privacy and scalability.

This is a guest post by Ben Carman. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The post The Future Of Bitcoin Upgrades: Off-Chain Contract Execution appeared first on Bitcoin Magazine.

Filed Under: Bitcoin Magazine, English, musig, smart-contracts, Taproot, technical, unicast contracts

Blockchain Projects Detoken and Anyhedge Launch Bringing Defi to Bitcoin Cash

30/12/2020 by Idelto Editor

Blockchain Projects Detoken and Anyhedge Launch Bringing Defi to Bitcoin Cash

On December 30, the decentralized finance (defi) platform Detoken and the firm General Protocols announced the launch of Anyhedge, the first public defi product built on the Bitcoin Cash network. Detoken users will be able to hedge or long their bitcoin cash and earn a funding premium while holding their keys in a noncustodial fashion.

This week, bitcoin cash (BCH) users will get a chance to leverage the first public defi product built on the BCH blockchain. The team from Detoken and the organization General Protocols recently launched the Anyhedge protocol and Detoken, a noncustodial, browser-based wallet. Essentially, Detoken describes itself as a “trust-less and secure way to access peer-to-peer financial products from anywhere in the world.”

“The first product available on Detoken is the Anyhedge BCH-USD futures contract,” the announcement details. “This is a smart contract which allows users to Hedge or Long their BCH while earning funding premium. Users also retain control of their own money throughout the entire process.”

Blockchain Projects Detoken and Anyhedge Launch Bringing Defi to Bitcoin Cash

News.Bitcoin.com reported on General Protocols in April 2020, when the firm first revealed the blockchain-enforced synthetic derivatives for BCH. The creators of Anyhedge include well known software developers such as John Nieri (emergent_reasons), Jonathan Silverblood, Eric Teng, and Imaginary_username. The Anyhedge protocol is also open source and anyone can access the libraries and documentation.

“Detoken is a noncustodial, browser-based wallet with an Anyhedge custom integration inside it,” the team member’s announcement explains. “In collaboration with General Protocols, Detoken has developed proprietary market making and contract entry systems which allow traders to speculate on the price of BCH completely onchain.”

The launch announcement adds:

Hedge and long positions are made possible by a smart contract on the BCH blockchain, where both parties pay into a Pay-to-Script-Hash (P2SH) address using a custom funding transaction.

The launch has been under construction for quite some time as General Protocols revealed Anyhedge in 2019 at the Bitcoin Cash City Conference. Detoken was created by Semyon Germanovich and the team that developed Cryptophyl, the Simple Ledger Protocol (SLP) exchange. Germanovich decided to retire Cryptophyl so the team could dedicate all of its energy toward the defi project Detoken.

“Bitcoin Cash has huge potential for building cutting edge financial products,” Germanovich stressed during the launch announcement. “Low transaction fees and a simple scripting language bring a powerful toolset to the table. We’ve demonstrated that defi can be done on Bitcoin Cash with this product launch. I encourage everyone to try Detoken and see just how cheap defi can be.”

Germanovich added:

The guys at General Protocols have done a fantastic job. The next step is to allow users to provide automatic liquidity and add transferability to the contracts. I can’t wait to continue working with General Protocols to make this happen. This is just the beginning.

Moreover, in the two hours after launch, Detoken users created more than $10,000 of Anyhedge contracts, all onchain, instant, and with almost zero network fees. Additionally, the contract details are private until settlement due to the built-in privacy of Bitcoin Cash smart contracts. By 8:30 a.m. EST, Detoken stats shown over $30,000 USD of contract value had been traded on Anyhedge.

What do you think about Detoken and the Anyhedge protocol? Let us know what you think about this subject in the comments section below.

The post Blockchain Projects Detoken and Anyhedge Launch Bringing Defi to Bitcoin Cash appeared first on Bitcoin News.

Filed Under: Anyhedge, Anyhedge Protocol, BCH Network, Bitcoin Cash, Codebase, contracts, Cryptophyl, decentralized finance, Deravitives, Detoken, English, Futures, General Protocols, hedge, hedging, News Bitcoin, Noncustodial, Open Source, oracle, Semyon Germanovich, Short, smart-contracts, Software, technology, White Paper

Bitcoin Defi: Smart Contract Platform RSK Integrates ETH-Based Stablecoin DAI

09/10/2020 by Idelto Editor

Bitcoin Defi: Smart Contract Platform RSK Integrates ETH-Based Stablecoin DAI

On October 6, 2020, the RIF (RSK Infrastructure Framework) development team announced that the Makerdao project’s DAI stablecoin is now available via the smart contract protocol RSK. According to the software engineers, RIF developers leveraged the RSK-Ethereum token bridge and individuals can now utilize the Ethereum-based stablecoin across a myriad of decentralized applications (dapps).

The Bitcoin (BTC)-backed smart contract protocol RSK has been steadily moving toward the decentralized finance (defi) space during the last seven months. News.Bitcoin.com reported on RSK’s defi efforts and a number of RSK-based defi projects already in the wild. On Tuesday, software engineers announced that the smart contract project now supports Makerdao’s DAI stablecoin. RIF developers believe the newly added support will bolster defi services on the BTC chain.

In order to execute the DAI stablecoin support, RIF engineers utilized the RSK-Ethereum token bridge. Now that DAI is integrated with RSK, the stablecoin can be leveraged for BTC-backed defi services like borrowing, lending, liquidity pools, and staking. Rune Christensen the cofounder of Makerdao and the Maker Foundation explained that the new DAI integration adds more accessibility to defi.

“RIF integrating DAI creates a new world of opportunity for the bitcoin community to participate in defi,” Christensen said during the announcement.

According to the RIF development team, a slew of dapps are already leveraging the stablecoin via BTC-backed and ETH-backed defi services. This includes projects like Rskswap, Aave, Sovryn, Avaldao, and Chainlink. The Rskswap creators have invoked liquidity pools for RIF-DAI and RBTC-DAI and claim people can transact with the stablecoin for 1000x less than using the Ethereum chain. Rskswap is a fork of the popular Ethereum-based decentralized exchange (dex) Uniswap.

Iovlabs, the parent company of Bitcoin smart contract platform RSK and its Infrastructure Framework (RIF), thinks the DAI integration will bolster defi growth on the BTC chain. Iovlabs cofounder and CEO, Diego Gutierrez Zaldivar, stressed that “DAI integration is another key step towards Bitcoin defi adoption.”

“We are confident the growth of the Bitcoin ecosystem and its defi opportunities has only just begun, with much more to come,” Zaldivar added.

According to the RIF team, the Bitcoin-Ethereum bridge has been reviewed by the Maker Foundation Integrations Team.

“The interoperability bridge locks the original token such as DAI on the Ethereum blockchain while minting an ERC777 ‘side token’ that can move freely on the RSK network,” the RIF software engineers conclude. “This maintains the existing supply of tokens while allowing them to be distributed between chains.”

What do you think about RSK integrating the stablecoin DAI? Let us know what you think in the comments section below.

The post Bitcoin Defi: Smart Contract Platform RSK Integrates ETH-Based Stablecoin DAI appeared first on Bitcoin News.

Filed Under: /r/btc, Bitcoin, Bitcoin (BTC), Bitcoin-Ethereum Bridge, BTC, DAI, Dai Stablecoin, decentralized finance, defi, diego gutierrez zaldivar, English, ERC777, ETH, Ethereum, Maker Foundation, makerdao, News Bitcoin, RIF, RSK, Rune Christensen, smart-contracts, technology

A Model for the Next Generation DEX, TitanSwap Will Be a Dex With Better User Experience

02/10/2020 by Idelto Editor

TitanSwap is using the renBTC protocol to implement cross-chain operations. Compared with the currently more common custodial cross-chain solutions wBTC and tBTC, the renBTC smart contract is a non-custodial access mechanism. Its core is the RenVM virtual machine, a decentralized network mainly composed of thousands of “dark nodes” Run on. Therefore, TITAN’s solution is more decentralized and practical.
In addition, under the AMM model, price discovery and the risk of liquidity providers are largely determined by the Bonding Curve.

TitanSwap proposes the TITAN Adaptive Bonding Curve, which automatically adapts to different bond curves for different asset types, which will bring greater liquidity and a perfect combination of better price discovery mechanisms to ensure that users can obtain Smaller slippage, lower costs, and more systematically provide greater liquidity.

TITAN believes that the main reason for impermanent losses is price fluctuations, especially violent fluctuations.

TitanSwap’s solution is to dynamically adjust the curvature of the Bonding Curve to make the curve steeper when the price fluctuates sharply, thereby reducing the profit margin for arbitrageurs and making the price return to the normal price more quickly and at a lower cost.

TitanSwap will determine whether it needs to dynamically adjust the curvature based on Realized Variant and the way of VPIN. This scheme is similar to the implementation mechanism of Bancor V2, but Bancor V2 requires price oracle recognition, and there may be cases where the oracle fails.

A previous report by Huobi Research Institute showed that regardless of the sharp rise or fall in the price of digital assets, VPIN’s predictions will often increase substantially. It has a certain predictive effect and can be regarded as a leading indicator of volatility. Options trading, market makers’ provision of liquidity, and exchange risk control management are of guiding significance.

When discussing how to deal with extreme challenges such as network congestion, the Layer 2 support solution proposed by TitanSwap is also very interesting.
When considering the use of Layer 2 technology, TITAN hopes to achieve exponential improvements, and TITAN considers using state channels or unmanaged side chains. TITAN believes that its Layer 2 support solution is more suitable for using Optimistic Rollup. TITAN will gradually realize the support of this solution on the Ethereum official network in the process of cooperation with Optimistic Rollup.

From the perspective of transaction fees and transaction delays, Layer’s solution exploration will greatly enhance the user experience. Odaily Planet Daily believes that the sooner players who land on the application will be the first to get a considerable first-mover bonus in the DEX market.

TITAN wants to provide participants with new opportunities for liquidity mining.

In addition to the trading function, another major aspect of the current DEX is the liquidity mining.
No matter CEX or DEX, all exchange relies on market makers to provide liquidity and depth to the platform. However, the market makers of traditional centralized exchanges need to play a professional role, and it is not possible for all ordinary users to participate in the work of market makers.

The reason why the AMM-based DEX can emerge is also because it removes the professional threshold requirements for market makers, and anyone can inject liquidity into the pool and obtain benefits.
TITAN hopes to provide liquidity providers with a feast of profit. The current income composition of liquidity providers on TITAN includes AMM fee income, liquidity distribution under the corresponding weights of different trading pools TITAN, stable currency Compound Pool lending rates, and stable currency Y Pool loan interest rate, Synthetix Pool reward, Ren Pool reward, etc.
However, more often, the hidden rule of liquid mining is that only big players can become the final winners, and small money holders are almost unprofitable.
How to balance the relationship between large liquidity providers and ordinary liquidity providers, so that ordinary participants can participate fairly has become a big problem.

Under the AMM mechanism, liquidity depends on the amount of funds. If the purpose of DEX is to provide users with better depth, it must not exclude larger liquidity providers. The larger the funds enter the pool, the better user trading experience can be achieved.
TitanSwap hopes to provide users with better depth and achieve a balance between liquidity providers of different sizes.

TitanSwap revealed that TITAN will hold some special events that emphasize the balance of revenue and profitable for small and casual users. In the short term, it will encourage more people to participate in DEX, hoping that more people can experience the operation process of liquid mining.

DEX is not just a train to casinos, DEX itself also has a strong wealth effect.

On September 17, Uniswap announced the launch of the governance token UNI, and then airdropped 150 million UNI to nearly 50,000 addresses that had invoked Uniswap V1 or V2 contracts. We joked that “an iPhone 12 was allocated to everyone.”

TitanSwap also designed the governance token TITAN, with a total amount of 1 billion. At present, the main way for users to obtain TITAN is trading and liquidity mining. Holders have the right to propose and vote, and can jointly determine part of TITAN’s future governance rights.

In terms of distribution, TITAN promised to release 90% of TITAN tokens through liquid mining. The team has no pre-mining and no reservation. 10% of the tokens are sold to investors as start-up capital, after which the TITAN project becomes a true decentralized community project. This ratio is already much higher than most DEX projects.

However, DeFi and liquid mining have indeed pushed DEX into the mainstream ahead of time. When DeFi is no long popular, how much market space will remain for DEX?

The official TitanSwap team stated that the distribution of TITAN will be consistent with the growth process of the entire network. As the network transaction volume increases, the liquidity of TITAN token distribution will increase, so that when TITAN is used more, there will be more users holding TITAN tokens.

This design is actually to keep the tokens from being concentrated in the hands of early large liquidity providers as much as possible.
“In this way, the annualized rate of return may be relatively low, but TITAN pays more attention to the long-term incentives rather than short-term. We don’t want to leave the market with a mess.” Ghughur said.

At 8pm on September 24, Huobi launched TITAN together with a “new coin mining” event for TITAN. This event will provide 4 million TITAN tokens as a reward for participating in the new coin mining activity for the lock-up users, with the total lock-up limit of 8 million HT.
The birth of TitanSwap brought a more interesting arbitrage tool to this game of DEX.

We believe that DEX and CEX would coexist for a long time in the future, but the future DEX will definitely move towards integrating more CEX functions. TITAN is likely to use its first-mover advantage to become a breaker in the future DEX ecosystem. Whether it will break through the current dominance of Uniswap or bring new wealth to the market, TitanSwap is worth looking forward to.

Press Contact Email Address
[email protected]

Supporting Link
https://titanswap.org/#/


This is a press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.

The post A Model for the Next Generation DEX, TitanSwap Will Be a Dex With Better User Experience appeared first on Bitcoin News.

Filed Under: Bitcoin, Blockchain, CEX, cryptocurrency, Decentralized, DEX, English, News Bitcoin, Press release, RenVM, smart-contracts, Titan, TITAN Tokens, TitanSwap

Survey: Large Number of Yield Farmers Can’t Read Smart Contracts Despite High Risk

23/09/2020 by Idelto Editor

Survey: Large Number of Yield Farmers Can't Read Smart Contracts Despite High Risk

A new Coingecko survey has found that a large number of yield farmers do not know how to read smart contracts despite claiming they understand the risks that come with such investments.

According to the survey, which polled 1,347 people, around 40% of decentralized finance (defi) users cannot comprehend the smart contracts they use for farming. Some 33%, it says, have never heard of ‘impermanent loss’ – a temporary loss of funds that occurs when providing liquidity.

This “implies that they (farmers) don’t know their real return on investment (ROI) and are extreme risk-takers for the sake of the high returns,” concluded Coingecko, a data aggregator for the crypto industry.

Smart contracts are at the heart of defi protocols. Through them, investors can move their assets across different protocols looking for the best possible return in a process that has become to be known as ‘yield farming’.

Some of the most popular farming pools include compound (COMP), balancer (BAL), yearn.finance (YFI), curve.finance (CRV) and sushiswap (SUSHI). As of September 21, a total of $9 billion of value was locked in the entire defi market, up 300% since July, figures from Defipulse show.

Per the survey, more than half of farmers put up under $1,000 in capital to farm – but the returns have been astounding, as high as 500%. About 93% of respondents said they have earned as much profit from their ‘meager’ investment capital. For Coingecko, this was not unexpected.

The result is not a surprise find as many of the current new pools provide insanely high APY of over 1,000%. Our opinion is that these high yields offered are not sustainable as it comes with high risk, and the spike in gas fees will be a barrier to entry and exit for farmers.

Coingecko observed “a behavior where farmers would ‘farm and dump’ after accumulating a substantial amount of reward tokens in the pool, which indicates that yield farming tokens are not being held long-term.”

Around 68% of users claimed they do not leverage their positions to minimize risk, and 49% said they would not invest in unaudited protocols, instead, relying on auditors to check the safety of the smart contract.

The majority of yield farmers hold ethereum (82.7%), with bitcoin accounting for 74%. Farmers holding chainlink reach around 26% with litecoin, polkadot, and tron each accounting for between 15% and 20%.

What do you think about yield farmers failing to interpret smart contracts? Let us know in the comments section below.

The post Survey: Large Number of Yield Farmers Can’t Read Smart Contracts Despite High Risk appeared first on Bitcoin News.

Filed Under: balancer (BAL), CoinGecko, compound (COMP), curve.finance (CRV), Decentralized finance (Defi), defipulse, English, News, News Bitcoin, smart-contracts, sushiswap (SUSHI), yearn.finance (YFI), yield farmers

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