Everscale, a trailblazing blockchain in the technology industry, has a fascinating history that spans several years. Starting from the idea put into it by its creators and the community, it continues to develop and move toward the implementation of large-scale solutions that will solve the existing problems in the crypto industry. In this article, following in the footsteps of Herodotus, we have collected the most important moments in Everscale’s history and share plans for where the network will go and what it will eventually become.

Everscale Blockchain Evolution

Phase I “Chameleon” — At this stage, Everscale initiates decentralized messaging for users through the implementation of REMP and protocols for secure private communication, alongside censorship-resistant anonymous messaging. This process amplifies user privacy and reinforces freedom of expression within the network.

Phase II “Synchronized Swans” — Development and integration of TVM (Threaded Virtual Machine) compatible systems on Everscale, utilizing its multi-level blockchain architecture, which includes Masterchain, Workchains, and Shardchains, and features sharding and multithreading. This approach ensures seamless interoperability with Ethereum’s EVM networks and expands the capabilities of decentralized applications across both platforms while enhancing scalability and performance.

Phase III “Programmatic Economics” — At this stage, Everscale achieves the ability to launch programmable economies on separate Workchains, which are necessary to support Metaverse projects, stablecoins, and autonomous ecosystems.

Timeline:

May 7, 2020 — A group of professional validators and developers, including the EverX team (which developed the operating system on top of TVM), as well as the Broxus, Everstake, IT Gold, Korean, and Vietnamese teams, launched the blockchain platform Free TON as a community driven blockchain without any ICO/IEO. Start of EverOS Development. Zero block.

The blockchain development concept contained the idea of the meritocratic distribution of project tokens through contests initiated by the users themselves and aimed to improve the network and introduce new solutions. Source.

June 16, 2020 — Magister Ludi Game to select the best validators for the Free TON network. Source.

September 15, 2020 — DeBots Presentation. DeBot is a smart contract of a special kind that can be executed both on the blockchain and locally. When executed locally, DeBot ensures the operation of user interfaces, such as encryption, signatures, coding with parsing and generating a JSON interface, working with graphQL, reading, searching, sending requests, and obtaining information about accounts, transactions, and blocks. Source.

October 12, 2020 — Launch of the TIP3 token standard, which describes the basic principles for building token smart contracts. It allows users and developers to create their own tokens, like ERC20 on Ethereum. Source.

2020–2021 — Active development by teams of engineers and developers, who worked tirelessly to build the core infrastructure, refine the codebase, and ensure the robustness and scalability of the blockchain platform. Comprehensive technical documentation was created to outline the project’s architecture, functionality, and features, providing clear guidance for developers and contributors who wish to join the ecosystem and build upon the Everscale (ex-Free TON) blockchain.

Throughout this period, the Everscale core teams conducted extensive testing and optimization to identify potential bottlenecks, vulnerabilities, and areas for improvement, which allowed them to fine-tune the performance of the platform.

September 7, 2021 — Everscale broke its own record and reached 64,000 TPS on the main network. Source.

November 3, 2021 — TON Labs (EverX) Launched the ChessNFT marketplace with FIDE partnership. Source.

November 8, 2021 — Following a community-driven decision, Free TON was rebranded to Everscale. The rebranding process was initiated by a proposal from DAO members, who recognized the need for a fresh identity and direction for the project. After careful deliberation and discussion within the community, a majority consensus was reached, and the members voted in favor of the rebranding. In addition to the rebranding, the community also decided to burn 3 billion tokens, demonstrating their commitment to enhancing the value and long-term sustainability of the Everscale network. Source.

March 11, 2022 — The DeFi Alliance launched the new EverDAO voting platform. Decisions began to be made by the main holders of the network. Source.

26 March, 2022 — Everstart launchpad launch. The QUBE utility token was launched via the first Everscale launchpad — EverStart. Source.

April 5, 2022 — A report providing an overview of the ecosystem was published by the Cointelegraph Research team. Source.

May 7, 2022 — Launch Everscale-powered DeFi portfolio tracker designed for users to manage their assets. Source.

May 10, 2022 — Launch of Git Open Source Hodler (GOSH), based on Everscale technology in partnership with Docker. Source.

June 10, 2022 — The Evercash processing tool, mobile wallet, and crypto exchange were launched. Source.

June 29, 2022 — NFT SDK release. NFT SDK is a compilation of tools for creating, managing, and performing various operations with NFTs, such as ownership transfer, burning, and breeding via the wizard or command line. It is a must-have for every developer working with NFTs on Everscale. It’s easy to choose a template in the SDK and then use it while adding other methods. The result is quick NFT creation for games or other needs. Source.

September 2, 2022 — Launch of the Qamon decentralized mail service in Korea. Source

September 16, 2022 — A report giving an overview of the system was published by the analytical platform Messari. Source.

October 11, 2022 — Liquid Staking token launch. Source.

October 26, 2022 — LEVER token launch. Source.

November 2, 2022 — Everscale-based decentralized name system launch — Evername. Source.

December 2, 2022 — The Tokstock NFT Marketplace was launched. Source.

Q1 2023:

January 12, 2023 — Everscale was added to BitGo. Source.

January 14, 2023 — Launch of the Flex decentralized order book exchange. Source.

January 31, 2023 — The Venom Ventures Fund, a Web3 and blockchain innovation fund managed by Abu Dhabi-based investment fund manager Iceberg Capital, announced its strategic partnership with and investment in Everscale. Source.

March 3, 2023 — Everscale was listed on ByBit. Source.

Q2 2023:

April 23, 2023. Dynamic gas fees — Dynamic gas fees are an important part of the architectural vision and the only way to protect the network against a transactional DDoS attack. They are a mechanism that can trigger splitting of the Workchain. Source.

April 24, 2023. Gravix launch — Gravix is a derivatives trading platform where users can trade a wide range of assets. It allows users to open long and short positions with up to 200x leverage, and do it all directly from their crypto wallet in a decentralized manner. Source.

Q3 2023:

August 8, 2023. Nümi Metaverse launch — Nümi is an anime metaverse that allows use Nümi via VR, desktop, web, and mobile. The metaverse’s economy is NFT-based, allowing users to exchange their gaming assets and receive rewards for their progress and achievements. Source.

August 18, 2023. Octus Bridge — added Klaytn blockchain network support. After this update, Octus Bridge supports: Ethereum, Binance Smart Chain, Fantom, Klaytn, Polygon, Avalanche and Solana blockchains. Source.

Future Plans

EverLend — lending/borrowing protocol — This protocol is yet another fragment in Everscale’s DeFi mosaic and will make it possible to create more complex financial dApps and unlock a multitude of new use case scenarios for traders and investors. Decentralized loans, Maker-like CDPs, derivatives — all this can be built using the lending/borrowing protocol.
Status: In active testing

Algorithmic & crypto-backed stablecoins platform — This is platform for stablecoins that maintain stability through algorithmic or cryptocurrency reserves, providing a less volatile alternative for transactions
Status: In development

SolElector and SolConfig — SolElector will support cross-Workchain messaging and will make it possible to establish fast communication between multiple Workchains. Along with the new DePools 2.0 contract, it will be launched again on the testnet in preparation for the big mainnet update.
Status: In development

Slashing for lazy validators — This type of slashing is required to avoid malicious behavior by validators and to ensure the integrity of the consensus.
Status: In development

Private Workchain — Private Workchains are Workchains with their own sets of validators and rules, predetermined before the launch, which makes them attractive for commercial use. This is a fundamental release for the network, as it will provide the opportunity to compete on an equal footing with the likes of Hyperledger, Carda, or VeChain. Corporations aren’t our main focus at present, but in order to become a worldwide decentralized operations system, we have to provide tools for all kinds of users, including commercial entities.
Status: In development

EVM-compatible Workchain — As a unique Everscale feature, it will be possible to call smart contracts from an EVM-compatible Workchain to other Everscale Workchains and vice versa, creating a homogeneous environment for smart contract execution and enabling real EVM integration into Everscale, as well as making it possible to create synchronous, asynchronous, and combined applications within one blockchain or to extend existing ones. This will open up incredible prospects not available in any of the solutions currently existing on the market.
Status: In development

DriveChain

“DeDrive” — The DeDrive stage focuses on creating a cost-effective, decentralized, and secure storage solution, utilizing a specific chain of validators and their nodes to form a separate Workchain called a “DriveChain.” Validators contribute disk space for data storage, while files are written to hard drives in predefined chunks. The consensus mechanism, based on an extended Merkle Grid, ensures data availability, integrity, privacy, and verifiability. This stage balances cost-efficiency and security to provide users with a robust decentralized storage option.

SMFT

Stage 1. Blockchain trilemma solving. Everscale implements a version of the Proof-of-Stake consensus model called the Soft Majority Fault Tolerance (SMFT) protocol.

To prevent the spread of false blocks, the SMFT protocol requires verification of each block sent to the network:

• First, the flow collator, i.e. the validator offering a new block, sends it to all nodes of the Workchain.
• Next, some nodes of the Workchain, called Broadcast Protectors (BP), make sure that the block has been sent to at least 51% of validators and send this information to the Masterchain.
• Then, among the Workchian’s validators, verifiers are randomly selected who must verify the correctness of the block and then also send proof to the Masterchain.

All malware trying to disrupt the network can be financially punished for its actions at any stage: the collator may lose its share for sending an invalid block and the validators may lose their share for not sending proof of receipt of the block, while the verifier may lose part of its share for not sending a verification message.

To perform a successful attack, most nodes would need to be malicious, because it is impossible to calculate which node will become the verifier. Therefore, the best strategy for all verifiers who want to keep their share intact is to remain honest. The security of the SMFT protocol is thus better than that of Bitcoin. Source.

Stage 2. Slashing for lazy verifiers — As stated above, this type of slashing is necessary to prevent verifiers from being lazy and to maintain consensus integrity. Source.
Status: In active testing

REMP

REMP stands for Reliable External Messaging Protocol, and it’s a major technological milestone for Everscale. It makes it possible for dApp developers to use optimistic finality at the front-end to make applications respond faster for users and makes the network more reliable. Let’s try to give REMP an overview, so we can understand how important it is for the network:

In Everscale, messages deliver information and instructions from one smart contract to another, or from a user to a smart contract. Messages initiate transactions, which are executed by smart contracts.

There are two types of messages in Everscale:

Internal — a message from one account on the blockchain to another that can carry information about a transaction. These don’t require a cryptographic signature.

External — a message sent and received from an external source outside the blockchain, usually from the user’s device. External messages need to be signed with the user’s key.

In other blockchains, external messages can be a problem, as there’s no way to define a strict queue, order, and priority. That’s why blockchain users have to deal with frontrunning, when messages they send with trading orders for DEXes are of lower priority than frontrunners’ orders. REMP solves this problem and makes Everscale the only blockchain in the world that guarantees a strict order for message execution.

The main purpose of REMP is to guarantee that messages are delivered from any network participants in a particular order within a sub-second timeframe.
Status: In active testing

Ever SSI

Ever SSI is the self-sovereign identity (SSI) framework for the Everscale blockchain.

Self-sovereign identity (SSI) and decentralized identity refer to a user-centric approach to digital identity that gives individuals and organizations full control over their data.

In the Everscale network, as representation of passports, ID, or login/password, users would utilize the digital wallet app to store their credentials and personal information securely. When they need to access a service, they would use a unique, self-owned identifier called a decentralized identifier (DID) to prove their identity. The service provider would verify their DID and grant access based on the information shared. Venom users have full control over their credentials and personal data, which means they decide who can access their personal information, to what extent, and when.

Everscale ID employs a wide range of standards to leverage identity in digital transactions, preserving privacy, guaranteeing authenticity and integrity, and securely combining user anonymity in the decentralized domain with regulatory requirements of state-backed identity.

The Ever SSI framework will offer its services for Everscale-based developments, such as:

1. Enablers for Web3 user agency, components of a digital twin:
1.1 User state both in custodial and sovereign secure user data vaults (“wallets”)
1.2 User behavior in trusted code (smart contracts)
2. Decentralized identification framework and utility services, both off-chain and on-chain.
3. Decentralized authentication and authorization frameworks and services, including Soulbound tokens facility as one of the possible representations.
4. Applied frameworks and identity-related user applications: KYC, reputation and attestation, etc.

The development of the Self-Sovereign Identity (SSI) framework for the Everscale blockchain ecosystem will undergo five key iterations, progressing from a Minimum Viable Product (MVP) for Soulbound tokens (SBT) to a fully-fledged SSI framework suitable for Central Bank Digital Currencies (CBDC) and other blockchain government applications.

Iteration 1 — MVP for Soulbound Tokens (SBT)**: The first iteration will focus on developing a minimum viable product for Soulbound tokens, providing a basic decentralized authentication and authorization framework. This MVP will establish the foundation for user agency and demonstrate the potential of SSI within the Everscale blockchain ecosystem.

Iteration 2 — Expansion to Decentralized Identification: Building upon the MVP, the second iteration will expand the framework to include decentralized identification, utilizing decentralized identifiers (DIDs). This development will enable users to create and manage their digital identities without relying on centralized authorities, improving privacy and security within the ecosystem.

Iteration 3 — Integration of KYC, Reputation, and Attestation Services: The third iteration will focus on incorporating Know Your Customer (KYC) procedures, reputation systems, and attestation services into the SSI framework. These additions will facilitate compliance with regulatory requirements and enable users to build trust and credibility within the Everscale blockchain ecosystem.

Iteration 4 — CBDC Components Development: In the fourth iteration, the SSI framework will be extended to include components necessary for a Central Bank Digital Currency (CBDC) solution. This development will enable central banks and other financial institutions to leverage the SSI framework for secure, transparent, and efficient digital currency operations.

Iteration 5 — Full SSI Framework for Government Applications: The final iteration will involve refining and optimizing the SSI framework to cater to a broader range of government applications. This full-fledged SSI framework will enable seamless integration with various blockchain government use-cases, such as land registry, voting systems, and public services.
Status: In active testing

More About the Everscale network:
Website | Twitter | Whitepaper | Github | Telegram Ann | Telegram | Discord

Everscale History: Beginning, Achievements, Evolution was originally published in Everscale on Medium, where people are continuing the conversation by highlighting and responding to this story.

This is the third and last article where we analyze Ethereum’s ‘’three transitions’’ (the term coined by Vitalik Buterin in his eponymous article) against Everscale’s tech stack. In the previous two, we dealt with scalability and account abstraction (AA). For the purposes of this article, we are going to be focusing on privacy.

It should be mentioned from the beginning that both networks do not have a ready-made solution ensuring complete data privacy yet. Currently, work is underway to equip both Ethereum and Everscale with such functionality, with two protocols in active development. For Ethereum, it is stealth addresses, while Everscale views zk-SNARKs as the most viable solution.

Before switching to the intricacies of the two protocols, we will start by explaining why data privacy in blockchain is a necessity. Also, to paint the full picture, we will touch on some basics about transaction processing and examine the modus operandi of two existing privacy-enhancing solutions used in the blockchain industry. These are crypto mixers and anonymous blockchains like Monero.

The case for blockchain data privacy

Data privacy does not merely refer to transaction privacy (although we will cover that as well), meaning transferring coins from one wallet to another. Data privacy is actually much broader in scope. It refers to the confidentiality of any data registered on a public blockchain.

The reason being is that blockchain technology has rapidly evolved from a pure cryptocurrency solution to a promising technology with widespread applicability in the heavily regulated enterprise sector. For instance, the General Data Protection Regulation (GDPR) in Europe states that everyone has the right to withdraw their consent at any time and permanently delete any personal data that they have previously shared.

Note: The only difference between private and public blockchains lies in access permission. Private blockchains can be accessed by invitations whereas public blockchains can be accessed by anyone.

Here’s an example. The Patientory blockchain company has created a solution for real-time storing, transferring and accessing patient healthcare data on the PTOYMatrix blockchain. This system provides data interoperability and gives medical professionals access to medical data from various repositories. This is done with the consent of patients.

But what if they suddenly change their minds? This is not consistent with the irreversible recording of information in the blockchain. According to law, EU citizens can legally revoke the right to use such information. Despite the fact that Patientory uses a private blockchain, it is still impossible to erase data if it is already recorded on a blockchain.

Here is another example. The University of Nicosia in Cyprus has become the first educational institution to accept payment of tuition fees for online courses in bitcoin. Interestingly, the first such payment was processed in 2013, at a time when blockchain technology was considered no more than a fad with no prospects of adoption in real sectors of the economy.

Since then, the list of universities accepting crypto payments has expanded. Nowadays, there are dozens of such universities. Moreover, the University of Nicosia went even further. It now provides a solution for storing certificates of course completion on the blockchain. Now graduates can provide anyone with a hash (ID) of their certificates to prove that they successfully completed a course. To prove that the graduate is an actual owner of the certificate, they will have to hash a test message with the private key used to hash the certificate.

This is quite an effective solution, ridding people of the need to exchange files over email or track down transcripts from their universities. However, the construct of most blockchains is such that everything that is entered into it once will remain there forever. For instance, if you share the hash of your diploma with a prospective employer and then later want to prohibit them from viewing this data you will not be able to do so.

The text above leads us to the conclusion that the only way to deal with data management in a compliant way is to make it private.

The animation below highlights the differences between private and non-private transactions.

Blockchain transactions: how public and private keys work

Since each record in a blockchain, be it a transfer of tokens or a record of a medical certificate, is a transaction, let’s see how they work in practice.

At the core of any digital asset is a digital signature algorithm where each user has two keys: one public and one private. This algorithm ensures all transactions processed on a decentralized network are correct without having to resort to any third party. That is, if user A sends a certain amount of tokens to user B, the entire network is sure that user A did indeed send the amount in question.

Transaction information is signed with a private key and the signature can be verified by means of a public key. Both the key and the signature are small sets of bytes. If the signature verification fails, in most cases, it means that the message is forged or damaged. In this case, the initiated transaction is simply reversed.

Each successful transaction within the network is ultimately stored in a block (a sequence of blocks creates a blockchain) that stores detailed information about a set of transactions. The blocks are created by blockchain nodes. They provide the computing power necessary to ensure the functioning of a network.

Prior to a transaction being included in a block of a blockchain, it is verified. The verification logic varies from network to network. For instance, in the bitcoin blockchain there are three criteria to be considered: double spending (checking whether the sender has not spent the funds before), fees (incentives for miners to add transactions in blocks) and size limits of blocks (no more than 1MB).

Basically, it works like this: before a transaction is included in a block, the node first verifies through the blockchain whether the sender’s balance is enough to make such a transaction, then it prioritizes transactions offering more fees and includes them in blocks with some spare space left.

Otherwise, even if the node that is the miner in Proof-of-Work (PoW) networks approves the transaction and there is something wrong with it, the block will be discarded by the rest of the network participants. In the case of PoW networks, mining resources will be wasted, while in Everscale, which is a Proof-of-Stake (PoS) network, the node’s stake will be slashed.

How transactions are processed in the Everscale blockchain using the Threaded Virtual Machine

In Everscale, which is an asynchronous blockchain, transaction validation (verification) and execution processes are much more complex. For the former, there are validators with a twofold task: to propose candidate blocks and to vote on blocks proposed by other validators. Once a certain voting threshold is reached, the proposed block is published on-chain. The latter will be examined in action.

The animation below starts with a smart contract. In this case, it is a user’s crypto wallet address or account (remember, in Everscale everything is a smart contract, even your crypto wallet). The wallet address (smart contract) gets a number of messages, then it processes these messages in the Threaded Virtual Machine (TVM) which changes its state (smart contract properties, in this case the balance).

The execution of the smart contract code creates a transaction, which, along with transactions from other smart contracts in the shard, is put into a shard block. As the smart contract executes its code it can generate outbounding messages (up to 255 at a time) and send them to other smart contracts to initiate the execution of their code.

Blockchain transaction privacy: how private is bitcoin

With bitcoin and most other blockchains, digital asset transactions are made available by means of cryptography. Owning a digital asset means owning a set of keys that total several kilobytes. This is just a small file, thanks to which the crypto wallet application opens the necessary account and allows users to make transfers.

The bitcoin blockchain does not disclose recipient and sender identities. Despite this, it is considered non-anonymous. This is due to transactions being visible to all network participants, as they are included in the blockchain. Namely, each transaction within the bitcoin network can be traced and viewed with the help of blockchain explorers which are available to everyone.

Transaction information includes the addresses involved (sender, receiver), amount, timestamp and other information. This makes transactions in the bitcoin network extremely vulnerable to analysis. Knowing the address or transaction identification (hash), you can see both its source of funds and the addresses to which the funds are sent.

In the animation below, we depict the processing of a transaction on the bitcoin blockchain. You can see how it is signed and verified as well as the way it is included in blocks where the information about it can be viewed by anyone with an internet connection.

Common options to ensure blockchain data privacy

The time has come to answer the question: how does blockchain support data privacy? The easiest option that comes to mind in order to ensure data privacy is that users should receive each payment at a new address. Unlike a bank card, which represents a unique bank account, a crypto wallet can generate an almost unlimited number of addresses. However, this is just a half-measure that does not provide complete privacy, because when analyzing the blockchain, anyone can see all the addresses of wallets from which funds are further sent to.

Mixers, like Tornado Cash mentioned by Vitalik Buterin in his ‘’Three Transitions’’ article, are another option capable of hiding the source of transactions (to a certain extent). They work as follows: a mixer, which is a smart contract, receives some funds from the user, makes a large number of transactions with it, dividing them into smaller and more difficult-to-track pieces, and then sends them back to the user’s other addresses.

Although such a technique can potentially mislead some observers, there are blockchain tracking and analytics services that can potentially detect the real source of funds. Let us explain how this works in practice.

Let’s say Alice wants to make a donation to Anthony (in USDT) to help him pay for his drug addiction treatment without anyone knowing it.

With Tornado Cash, there are several steps before the money can reach Anthony’s wallet address.

First, Alice has to deposit the USDT in Tornado Cash. For this, she sends the USDT and the hash of the secret and nullifier. Let that be 0x563.

The USDT and the hash are kept in a smart contract. The hash will be required for the withdrawal of the USDT deposited in Tornado Cash.

Caution! There is a wrong way to withdraw funds from Tornado Cash. If Anthony provides the secret and nullifier, the Tornado Cash smart contract will be able to verify that there is such a hash in its storage which will deanonymize him.

Why is that?

We know that Alice provided the hash 0x563 to the smart contract. Later, Anthony appears, providing the secret and nullifier, which hashes into 0x563. Since the hash function is a one-way function, this means that the only person who knows the secret and nullifier that hash into 0x563 is Alice. This is how the user’s identity is revealed when withdrawing funds.

The right way to make an anonymous transaction with Tornado Cash

To keep the transaction truly private, Anthony has to prove he knows the secret and nullifier so that the hash (secret, nullifier) finds itself in the Tornado Cash smart contract. He should do it in such a way as not to reveal the secret and nullifier. For this, he sends proof to the smart contract demonstrating he knows the secret and nullifier.

The smart contract, in turn, checks whether the proof is valid. Importantly, the smart contract would not be able to know whether the proof is intended for 0x563 or 0x564 or 0x565, which are also stored in the smart contract. In other words, the proof provided would not reveal the identity of Anthony. This solution is enabled by technology called zk-SNARK (we will discuss it in detail later).

What is the nullifier?

Some hackers may attempt to send the same proof many times to get the USDT (or any other token). Therefore, in order to prevent such an outcome, when Anthony sends the proof for token withdrawal, he will also need to send a hash of the nullifier inside the proof. Thus, the following has to be verified inside zk-SNARK:

• That the hash (secret, nullifier) is in the smart contract;
• The fact that the hash is from nullifier == hash(nullifier).

After checks are successfully completed, the smart contract will release the USDT and record that the withdrawal of tokens has been made.

The animation below demonstrates how the transaction described above is processed in practice.

The third and more sophisticated option is provided by anonymous blockchains, the most prominent of which is Monero. The main solutions enabling transaction anonymity are ring signatures, ring confidential transactions and stealth addresses to provide anonymity. Thanks to this amalgamation of technologies, Monero achieves a much higher level of privacy compared with that provided by mixers. Analyzing the Monero blockchain, it is impossible to trace the sender, recipient or even the amount transferred.

Monero: key features of the anonymous cryptocurrency, explained

The creation of a Monero account requires three things:

1. A public address to receive transactions.
2. A private view key that shows incoming transactions of an account.
3. A private spend key to send transactions.

The spend key and view key, in turn, are used to create a Monero blockchain address. All this is accomplished by the software and does not need any interaction from the user.

Since the solutions enabling transaction privacy in the Monero blockchain are quite complex, it is better to look at how they work in action.

What are Ring signatures in Monero?

Ring signatures make blockchain transactions untraceable. They utilize account keys and a set of public keys (outputs), which are randomly taken from the blockchain via a complex cryptographic method. Instead of explicitly indicating the source transaction, they enable the inclusion in the signature of a group of random transactions that are not related to a particular transfer. Thus, an outside observer will not be able to guess from which source transaction the coins actually come.

The only thing that is known is that the sender has proved their ownership of one of them. Such mixed transactions are called decoys and their number is determined by the so-called anonymity set. This way, ring signatures ensure that transaction outputs are untraceable.

Ring Confidential Transactions (RingCT) are mechanisms that facilitate the hiding of transaction amounts in the Monero blockchain. Let’s see how it works in the animation below.

Ethereum’s take on transaction privacy

Ethereum sees stealth addresses as the most effective option for tackling the transaction privacy conundrum. The protocol behind them is based on the concept of meta-addresses. It makes hiding transaction recipients possible. With the implementation of stealth addresses, Ethereum will basically replace its usual “one user ~= one address” model with a new address for each new transaction model.

Stealth addresses in Ethereum: key components

Let’s define some terms to better understand everything:

• stealth meta-address — a public key used to compute a stealth address for a given recipient.
• spending key- a private key used to spend funds sent to a stealth address.
• viewing key — a private key used to determine whether the funds sent to a stealth address belong to the recipient who controls the corresponding spending key.
• shared secret — cryptographic data that is only known to the parties involved in a secured communication.
• key blinding mechanism — a pair of algorithms used to combine the shared secret with the root spending key.

How stealth addresses work

Imagine Alice wants to send Bob some Ethereum tokens. Bob values his privacy and does not want the whole world to know that it was he who received the funds. The current construct of most blockchains, however, is based on transparency and makes transaction hiding impossible. Stealth addresses are capable of breaking the established blockchain construct and providing transaction privacy on the recipient side. Let’s see how they actually do it.

For convenience, let’s further call Alice the sender and Bob the receiver.

The recipient generates a usual ethereum address which they provide to the sender. The sender, in turn, performs some computations with it to generate the stealth address. Afterwards, to complete the transaction, the sender has to simultaneously perform two operations: to send the ETH they promised and publish an ephemeral public key on the network. To gain control of the newly generated stealth address, the receiver has to scan the chain and find the ephemeral key. The newly generated stealth address can be managed only by the recipient.

The animation below illustrates the workflow we just discussed.

The shared secret and key blinding

The mechanism of stealth addresses in Ethereum demonstrated above is enabled by two cryptographic algorithms which are required to generate a shared secret. The first uses the sender’s ephemeral key and the receiver’s meta-address while the second uses the receiver’s root spending key and the sender’s ephemeral public key.

Unfortunately, such a mechanism can not rely on a shared secret only. Since there is just a private key generated from the shared secret, it creates a situation in which both sender and receiver will be able to control the address. To avoid this situation, a key blinding mechanism was introduced. It works as follows:

There is a pair of algorithms enabling both the receiver to combine the shared secret with his root spending key and the sender to combine the shared secret with the receiver’s meta-address. The whole thing is realized in a way that allows the sender to generate a stealth address for the receiver and the receiver to generate the spending key for that stealth address. Importantly, the key blinding mechanism does not create any associations between the stealth address and the receiver’s meta-address or between one stealth address and another.

According to Buterin, with some work done on the wallet side, stealth addresses could be implemented right away on Ethereum. However, notwithstanding their advantages on the privacy side, they introduce a significant concern — the difficulty of social recovery. In practice, social recovery will require either the loss of privacy or a delay in the recovery of transactions (Buterin claims it could take two weeks). Later on, as the stealth addresses protocol progresses, the social recovery issue will probably be removed. Most likely, this will require relying on protocols such as Zero-knowledge (ZK) proofs which we will examine next.

Zero-knowledge proofs: Everscale’s take on data privacy

Everscale sees zero-knowledge (ZK) proofs as the most viable solution for enabling privacy in a blockchain network. Simply put, this is a cryptographic technique to prove that you know something without revealing what exactly you know. In the context of digital assets, this can be illustrated, for instance, by checking whether a user has funds for a transfer, while not revealing to other network participants who this user is and how many tokens they have in their wallets.

Let’s consider a classic zk example.

We want to convince a blind person that we can distinguish colors. The blind person (the Verifier) takes two squares: one red and one purple. He raises one of the squares in front of you and asks you to remember its color. Then, he hides both squares behind his back and either shows you the same one or the other one. If you name the color correctly, the Verifier is 50% sure you can indeed distinguish colors. Not 100%, because you might have guessed. Another 10 successful tests follow, which according to the probability theory, gives us a 99.90234% chance the statement is indeed true. This in itself is not sufficient to ensure that a system will always operate smoothly. Therefore, there are twenty more tests, which, if all are passed, provide a probability of 99.99999990686774%.

This is an interactive solution, which, logically, can not be applied to high-load services handling thousands of transactions per second. Therefore, we need a non-interactive and rapid solution, which is provided by zk-SNARKs.

Meaning of the “SNARK” abbreviation in zk-SNARK

Note: zk-SNARKs are not embedded in the Everscale protocol yet. However, work is underway to do so.

We already know what “zk” means. Let’s now see what SNARK stands for:

• Succinct: a zk proof must be verified quickly. Thus, it should be short and easy to verify — no large statement proofs.
• Non-Interactive: The Verifier does not have to interact with the Prover to confirm the zk proof.
• Argument: The proof will confirm the validity of zk encryption and uses limited calculations.
• Knowledge: A proof cannot be constructed without access to a witness (private data needed to prove a claim).

Private data transfers with zk-SNARKs

The protocol consists of three algorithms: generator (G), prover (P), and verifier (V). To send data in blockchain privately, we need to abstract the direct asset transfer and transform it into an interaction with the generator algorithm of the protocol.

The Sender uses a utility function to be sent to the generator algorithm: C(x, w).

The function returns True only if x equals w.

Where:

x is public and is calculated as x=hash(w)

w is private

The function is then sent to the generator algorithm, which is governed by a trusted party.

As the generator accepts function C, it returns two publicly available keys — prover key (pk) and verifier key (vk).

The sender uses the prover algorithm to generate a proof of their making a transfer:

proof = P(pk, x, w)

The proof can be used by the recipient to check that the concealed transaction has been actually finalized.

The recipient uses the verifier algorithm to check the proof of the sender’s transaction:

proof = V(vk, proof, public)

Thus, both parties are sure that the transaction was made without interacting with each other and without revealing any information on the transaction, their addresses or the amount. The transaction is fully concealed as its public part is hashed with the sender’s private key.

Please see in the animation how zk-SNARKs work in practice.

Privacy-enhancing solutions are a powerful upgrade to blockchain protocols. This is. especially the case if they aim to host CBDCs and enterprise-grade business solutions, which fall under heavy government regulation, including the requirement for data privacy. Although zk-SNARKs do require some more complex cryptography compared to the implementation of stealth addresses, they offer considerable gains in terms of scalability, which is of the utmost importance for a blockchain like Everscale with an architecture tailored to accommodate a billion or more users. On top of that, Everscale has all the tools necessary to efficiently embed zk-SNARKs into its core protocol.

Everscale Deep Tech: How blockchains support data privacy: Ethereum vs. Everscale was originally published in Everscale on Medium, where people are continuing the conversation by highlighting and responding to this story.

Note: CBDCs constitute a new form of money made possible by the evolution of decentralized technologies. CBDCs can be launched via different technological and architectural constructs, including completely decentralized solutions and hybrids (mostly chosen by central banks) with some centralized elements. Each kind of approach has various implications for a country’s financial system and overall economy. Due to Everscale’s cutting-edge technical stack, it can serve as a platform for CBDCs irrespective of both the design choice approved by a central bank and the size of the population being served. To illustrate the case for the Everscale blockchain as a platform for issuing, managing, transacting and removing CBDCs from circulation (yes, money is sometimes withdrawn from the system), we will be launching a series of three articles on the subject.

Since the most important characteristics a CBDC platform must provide are security, scalability and flexibility, our first article delves into two technological solutions that allow the Everscale blockchain to succeed at providing all three with maximum efficiency.

Since the Ethereum Enterprise and Ripple’s CBDC platform have been chosen by several countries (Sweden, Norway, Australia, Israel, Montenegro) as the technological providers for their CBDCs, our next article will compare and contrast how Everscale, Ethereum, and Ripple tech stacks up in terms of CBDC application and technological readiness.

Our last article will be experimental in nature and simulate in detail a hypothetical case, where a country X with a population of 100 mln launches its digital currency on the Everscale blockchain. We will show how all kinds of payments — from buying a cup of coffee to making a cross-border transfer — can potentially work on an Everscale CBDC platform.

How the traditional payment system works: The advantages of CBDCs

Prior to CBDCs, there were two forms of money: cash and electronic (bank accounts).

Cash

Payments go directly from one person to another. No third-party actors such as payment providers are required to settle such transactions. However, even if there is no payment provider, still there is the need for an institution to issue and distribute cash. In most countries, these functions are undertaken by central banks.

Electronic payments

Technically, the quickest and easiest electronic payment processing happens when both buyers and sellers are customers of the same bank. In this case, payments are processed by simply deducting the required amount from account A and crediting it to account B.

Things get more difficult when purchasers and sellers have accounts in different banks. In this case, payment settlement requires a third-party financial infrastructure, which plays two important roles. First, it communicates transaction information between the parties involved. Second, it transfers the amount required between different banks. In most cases, these actions are performed by a clearing organization.

The animation below illustrates what a payment workflow involving a third-party infrastructure looks like.

There are several actors:

Bank A — where the purchaser has an account

Bank B — where the seller has an account

Clearing organization — the entity facilitating the exchange of information between banks

Settlement system — the infrastructure provided by a central bank where all banks have accounts

The purchaser initiates a payment by instructing his bank to transfer 100 currency units to the seller. The funds must be moved from Bank A to Bank B. For this, the purchaser’s bank sends the payment information to the clearing organization. Once the information has been processed, instructions are sent to the settlement system where the final transfer of money between Bank A and Bank B is made. A confirmation of the transfer is sent to Bank B via the clearing organization, after which Bank A credits the seller’s account in Bank B and informs their client that the money has been received. To settle the payment, there are three commission fees charged: the purchaser’s bank fee (the smallest in most cases), the seller’s bank fee (the highest in most cases) and the clearing fee.

What is a CBDC?

A CBDC is a new form of money made possible by the advancement of decentralized technologies. It’s worth noting that, in terms of money functions such as medium of exchange, unit of account and store of value, the three forms of money are equal. In the past few years, there has been a great amount of research conducted by both public and private actors which eventually transformed a promising but rather limited (in terms of applicability) blockchain technology into a secure and efficient platform capable of hosting large customer bases in a trouble-free manner. Everscale has played a big role in this respect, succeeding in achieving several important milestones (scalability, programmable accounts), which have given the blockchain the ability to host a CBDC system for any country in the world.

As its name suggests, a Central Bank Digital Currency (CBDC) is issued, managed and guaranteed by a central bank. By issuing we mean that the bank decides on the number of currency units to be minted. That’s due to most banks opting for third-party CBDC infrastructure providers rather than designing their own CBDC platform from scratch, which is not an easy endeavor. Building a green field platform could take years to design and fully launch.

With a CBDC in place, payments will be much cheaper and faster, particularly in countries with underdeveloped payment systems. The introduction of this new form of money will also create the necessary conditions for reductions to payment commissions. This is due to the fact that increased competition always leads to price drops. At the same time, it will diminish the dependence of users on individual payment providers and increase the stability of a country’s overall financial system.

In recent years, in most countries, the use of electronic payment systems has been growing exponentially. In light of this, CBDCs can become a new convenient means of payment for both buyers and sellers, including in remote, sparsely populated and hard-to-reach territories where access to financial systems and even the internet is limited. Thanks to CBDCs, access to affordable, high-performing and efficient financial services will increase, improving people’s quality of life.

For citizens, transactions will be similar to those they already do with the bank applications currently in use. CBDC transactions could potentially be carried out both online and offline. For the offline mode, that is to say, if there is no internet connection, users will be able to make payments by connecting their CBDC account to a SIM card equipped with NFC technology. In practice, it works the same way as pre-reserving a certain amount of funds in your account, just as you now take cash with you when traveling to places where payment cards may not be accepted.

The animation below illustrates how a hybrid CBDC payment system will work in practice.

Note: The high-level architecture of the CBDC platform demonstrated in the animation below is indicative of the kind of architectural construct preferred by most central banks around the world.

CBDCs, in addition to the actors mentioned above, include a new one — a CBDC platform where commercial banks have accounts.

Buying e-ticket with digital currency

Swap digital currency

Deposit digital currency

Everscale tech stack

There are two unique technical solutions embedded in the Everscale blockchain core protocol that make it suitable for hosting CBDCs — even for counties with populations over 100 mln people. These are Horizontal Scalability and Programmable Accounts.

Horizontal scalability

The key to the trouble-free operation of a CBDC platform is scalability. This is due to a large number of transactions being initiated each second, especially in countries with large populations. Currently, there are few blockchain platforms that are capable of handling such a high workload. The Everscale blockchain is one of them due to horizontal scalability which is achieved via the network’s unique sharding design. Generally speaking, sharding involves the splitting and distributing of one data set between multiple nodes (servers). In the case of a CBDC, sharding allows splitting large transaction sets into distinct pieces that can be processed in parallel.

Two unique characteristics of Eversale’s sharding mechanism:

First has to do with the fact that the number of shards is not fixed. There is an automatic splitting of shards in two when the workload (number of transactions) significantly increases. For instance, imagine a high-impact event occurs (such as the COVID crisis) which triggers a larger number of transactions due to buying sprees. In this case, shard splitting can continue up to 256 shards, which, in practice, means that an almost infinite number of transactions per second can instantly be processed without the creation of bottlenecks and waiting times. The splitting of a shard starts when certain predetermined conditions are met. There are three: the maximum number of transactions in a block (It), the volume of gas consumed by transactions and the block’s byte size. When a block fulfilling one of the conditions is created the system will react with a want split flag. If a consecutive sequence of 100 such blocks follows, the split event will be triggered.

The animation below illustrates the operation of shard splitting in action.

Second has to do with elasticity. As noted above, the workload, especially in the case of a payment system, is not constant. When it slows down, the shards merge back together. This is the most efficient way to deal with dynamic scaling requirements which, by default, are impossible to predict in advance. There are periods of time when the number of transactions per second (TPS) significantly reduces (such as night time).

Horizontal scalability and CBDC features:

-Faster payments. In the Everscale blockchain transactions are processed in an instant irrespective of both the number of transactions per unit of time and the location they are initiated from. More than that, there are solutions that could possibly enable payments even without a connection to the Internet.

-Cheaper cross-border transactions. International transactions are very expensive. For instance, with Western Union (the top money transfer service) commissions can reach 10% of the amount transferred. A CBDC on the Everscale blockchain can disrupt this market by making cross-border transactions almost free — with an average price of a few cents per transaction.

-24/7 access at the same speed. Existing banking services often take longer on weekends as banks are closed and cannot confirm transactions. With an Everscale central bank digital currency, transactions can take place at the same speed around the clock due to the fact that the processing infrastructure is always on.

Programmable Accounts

The Everscale blockchain has Account Abstraction (AA) functionality embedded into its core protocol. It means that each wallet (CBDC account) of a user (citizen) is a smart contract and therefore can be programmed to perform any logic. For instance, parents can prohibit purchases of cigarettes or alcohol from their children’s accounts. Likewise, a government that launches its CBDC with Everscale can programmatically prohibit sales of cigarettes and alcohol by shops in close proximity to kindergartens and schools.

Similar to traditional accounts, in most cases, a CBDC account will also be opened by commercial banks. Therefore, it will be responsible for programming such accounts at the request of customers.

CBDC accounts on the Everscale blockchain: Common features

-More efficient government payments. Governments with an Everscale blockchain-based CBDC will be able to instantly send any payments to their people. These can be tax refunds, unemployment and child benefits or even one-time payments such as those distributed by most countries during the COVID crisis. Recall the mess around COVID payments when a big chunk of government bureaucracy had to be involved to figure out a mechanism for different groups of people to be able to receive the payments they were entitled to. With an Eversclale CBDC, such payments can be programmed into the smart contract which, in an instant, will distribute the payments to those citizens that the government promised to pay.

-Support for the unbanked population. There are a few countries in the world where 100% of the population has access to banking services. In some countries up to a third of the population consists of unbanked people. As a result, citizens of countries with poor financial infrastructures have to pay expensive fees for different banking services. With CBDCs, the unbanked population will be able to have full control over their money and benefit from financial services without having to pay excessive fees charged by the many intermediaries.

-Fighting corruption. Thanks to blockchain transparency and account programmability, an Everscale-based CBDC will be a significant step in the fight against corruption. For instance, an account of a municipality can be programmed to be able to spend funds only for certain predetermined purposes. That is to say, if the respective municipality receives some funds from the central government to build a school, an account can be programmed to spend the funds only for building materials and whatever else is needed to build the school. All other payments from that account can be prohibited.

- Payment scheduling. With traditional forms of money, you must manually make a payment each time it is due. These are, for instance, utility bills, rent payments, subscriptions and many other regularly made payments. With an Everscale CBDC account, it is possible to set up automatic payments, ensuring the electricity bill is paid on time, the landlord receives the rent on time or a subscription never lapses. This will revolutionize subscription-based services, providing a seamless payment experience for all.

-Multi-signature CBDC account. This allows multiple trusted parties to control a single account, providing additional security and control. This is particularly useful for organizations or families, where decisions must be made collectively. For instance, a family could possibly want a big ticket purchase to be approved by all its members. An Everscale CBDC account could be programmed to require the signature (approval) of all those enlisted. Practically, when such a purchase is initiated, each family member will receive a notification on his mobile application and will be able to either approve or reject it.

-Quantum computing. There is a lot of discussion about the advent of quantum computers capable of compromising blockchains. In Everscale, smart contracts can enable CBDC accounts to align with changing quantum requirements because they are upgradeable. Due to this, there will be the possibility to design and deploy secure and quantum-resistant signature algorithms.

ANY OTHER LOGIC CAN BE IMPLEMENTED IN AN EVERSCALE BLOCKCHAIN-BASED CBDC ACCOUNT. THE POTENTIAL IS LIMITLESS!

Everscale Deep Tech: The Everscale Blockchain’s Advantages as a CBDC Host was originally published in Everscale on Medium, where people are continuing the conversation by highlighting and responding to this story.

With numerous blockchain networks emerging, cross-chain communication has become crucial for enabling interoperability between them. Private and application-specific blockchains are some of the main narratives in the industry, as well as infrastructure and solutions for facilitating communication between different chains. Gathering all ecosystems together is one of the hottest topics on the agenda.

A new integration within the Evercale network is Asterizm, a plug-and-play cross-chain infrastructure for solutions designed to seamlessly connect different blockchains and dApps. One such solution powered by Asterizm is Chainspot, which aims to improve cross-chain UX and streamline users’ liquidity flow by allowing them to acquire gas for 11 blockchains with a single transaction, with even more features on board.

We spoke to Artem Avdeev, co-founder of Asterizm and founder of Chainspot, about the growing trend toward multichain applications, the significance of cross-chain infrastructure, privacy and security in dApp communication, and the Asterizm protocol itself: who the team behind the project is, what Asterizm itself is in a nutshell, the protocol’s use cases, and more.

Who is the team behind the Asterizm protocol?

Artem Avdeev, Co-Founder, Product Owner, brings over eight years of experience to the team. He is an alumnus of Techstars London 2023 and has a strong track record in the crypto industry. Artem served as a portfolio manager at Warp Capital, a DeFi hedge fund, and operations manager for the Everscale DeFi Alliance. He also held positions as COO at Indacoin, specializing in crypto and online payments, and was co-founder and PM at Webstoryz, an e-commerce SaaS platform. Artem has successfully launched several IT and crypto startups, including a VPN service, a p2p exchange, and a payment service.

Denis Polulyakhov, Co-Founder, CBDO, CMO, has more than 13 years of experience to contribute to the team. He is also a Techstars London 2023 alumnus and co-founded Chainspot.io. Denis has been an IT entrepreneur since 2010 and possesses extensive knowledge of the blockchain industry. He founded Carbyn Group, a crypto VC studio, and has been a public speaker at over 50 crypto conferences, including prestigious institutions like Harvard and Columbia Universities. With his in-depth understanding of the market, Denis plays a crucial role in the team as chief business development officer (CBDO) and chief marketing officer (CMO).

Alex Gotovets, Co-Founder, CTO, has accumulated over 15 years of experience in the field. Like his fellow co-founders, he is a Techstars London 2023 alumnus. Alex served as CTO of Chainspot.io, overseeing the development of the cross-chain aggregator and router. He has held various technical leadership positions in companies such as PointPay and Indacoin, specializing in crypto and online payments. Alex also played a key role as a tech lead at the e-commerce SaaS platform Webstoryz. Throughout his career, he has successfully managed multiple high-load projects in payments, crypto, e-commerce, and m-commerce.

Dmitriy Meshkov, Chief Scientist, brings 14+ years of experience and holds a Ph.D. in Physics. He is an accomplished author of research papers in areas such as cryptography, distributed systems, and computational complexity theory. Dmitriy has made significant contributions to the Ergo and Waves platforms through his work as a researcher at IOHK. His groundbreaking concepts have also found application in Facebook’s Libra project. Additionally, Dmitriy is a co-founder of the Ergo platform and is the founder and CEO of Circlegain.

Collectively, the team currently consists of 12 highly experienced professionals with expertise in a diverse range of areas, including blockchain development, product management, business development, marketing, technology leadership, and scientific research.

What is Asterizm in a nutshell?

Asterizm is a blockchain interoperability solution for enterprises and Web3 protocols that allows them to operate seamlessly across various public and private VM-based networks. In simple terms, it aims to be truly blockchain agnostic.

With Asterizm, Web3 developers and corporate clients can build cross-chain dApps and leverage the perks of different blockchains while saving money on transactions, staying compliant with regulations, and avoiding risks of data leaks.

What are some use cases of Asterizm?

By far the most relevant use cases today are:

• Building a bridge to move tokens of the project: cross-chain DEX, cross-chain lending protocol, and cross-chain yield farming strategies.
• Building NFT bridges: cross-chain NFT marketplace, cross-chain domains.

Tokenization of assets and the creation of a protocol for moving these assets from private to public networks is popular among enterprise players. For example, let’s say there is a bank that issues a digital asset on its own private blockchain in a regulated jurisdiction. To gain access to the DeFi ecosystems of different blockchains, the bank launches a bridge to move assets from its private blockchain to public blockchains (Polygon, Ethereum, BNB chain, and others). In this way, the bank’s clients get high returns on DeFi markets while remaining in the legal field. And in this case, Asterizm is a perfect solution for creating such a bridge.

How does Asterizm ensure robust cross-chain communication, security, and privacy of data transferred between chains?

It all boils down to the architecture of our solution:

1. On-chain transaction validation and data integrity checks: Asterizm implements these mechanisms on-chain, which means cross-chain transaction validation and data integrity verification occur on-chain, within the source and destination networks, so there is no off-chain consensus. This approach eliminates the need for a separate network of validators and avoids tokenized economies, streamlining the process and enhancing security.
The validation mechanism itself is based on the hash function of the transferred data on the client contract extended from Asterizm contract abstraction (we, as a provider, do not see the transferred data at any stage) and a unique identifier, which is created on the contract at the moment of cross-chain transaction initialization.

2. Our plug-and-play client-server software: Asterizm’s solution includes plug-and-play client-server software that ensures the privacy of the data transmitted between chains. This means sensitive information remains secure and protected during cross-chain transactions at the transport level. The solution can be easily integrated into the security loop of our client’s infrastructure.

Cross-chain communications could require numerous transactions and instances of gas usage. How does Asterizm mitigate any excessive spending on fees?

Great question! The fee for a transaction executed on the destination network is covered by our client on the source network, and the cost of such fees is calculated on the client’s server using a query to the special API.

Also, to save money on transactions, Asterizm provides the ability to pack a lot of actions into one payload, so you can send and execute multiple transactions on the destination chain with only a single cross-chain transfer from the source chain.

For instance, in the case of the Chainsport Gas Charger product, multiple transactions across different destination chains are consolidated into a single cross-chain transaction.

Who are your main competitors, and what are the advantages of Asterizm’s solution?

I’d say that the main competitors of Asterizm today are LayerZero, Axelar, ZKBridge, and Paloma Chain. But before highlighting the differences, I’d like to give a bit of backstory.

A solution to the problem of seamless communication between different networks has long been overdue, and it boils down to ensuring the most secure data transmission channel from Network 1 to Network 2.

This means ensuring the security of the intermediate off-chain layer (which must be present for the transfer of information).

Based on the above, all existing protocols can be compared based on their approach to securing this channel in the most commercially efficient way. There are thus two types of providers:

1. Providers relying on off-chain consensus (meaning consensus at the intermediate layer) and integrating all the cross-chain transaction validation logic into the layer of servers that transfer data from Network 1 to Network 2.

Cons: legal issues, processing speed, complicated emergency recovery model, cost (all participants of the network need to be paid), problems with data privacy (each participant of the network can see the data).

Also, encryption is only possible from the outside — this limits use cases.

Pros: quick connection to any network supporting multi-sig functionality, often cheaper gas cost (although this advantage is outweighed by a substantial fee for services).

These are, for example, Axelar, Paloma Chain, deBridge, etc.

2. Providers relying on on-chain consensus: transaction validity and integrity checks are performed on smart contracts in Network 1 and Network 2.

Cons: due to the specific functions for checks on smart contracts, it takes longer to connect non-EVM networks and to integrate such solutions. To fully benefit from this approach, it is usually necessary to run a relayer server.

Pros: operation speed, flexibility in integration into existing security loops, possibility to ensure the privacy of transmitted data, cost of transactions (mainly gas costs, but in new networks, it is almost free), easier recovery mechanism, no need to trust DAOs, and the impossibility of a 51% attack. Additionally, a faster response time in critical situations since there is no need to wait for a certain number of signatures, etc.

Examples: LayerZero, Asterizm, ZKBridge.

Asterizm differentiates itself from competitors such as, for example, Axelar and deBridge, by offering a set of advantages. Its fully on-chain transaction validation and data integrity check mechanism (for which we are currently in the process of filing a patent) eliminates the need for a network of validators and tokenized economy. Additionally, our plug-and-play client-server software ensures the privacy of the transmitted data. This approach results in cost-efficient, rapid, and secure cross-chain transactions, making Asterizm a solid solution in the blockchain interoperability market.

What are Asterizm’s current integrations/partners?

At this point, we can’t disclose all of them, but I can name Zunami Protocol, Chainspot, MetaTrace, Plearnyx, UFarm.digital, DeGuard VPN and Megadev.

What are the average numbers, metrics, current status of the roadmap, and plans for Q3-Q4?

Our traction to date:

• graduated from the Techstars London accelerator powered by Polygon (May 2023);
• passed the security audit from HashEx (June 2023);
• integrated 10 EVM and two non-EVM networks (on testnet of TVM-based Everscale and Venom) — more in the pipeline;
• released documentation for developers;
• launched Asterizm on mainnet (end of June 2023);
• seven clients are building their products on top of Asterizm;
• launched the first B2C cross-chain product based on Asterizm called Gas Charger (gas.chainspot.io). It already works and shows the transaction flow;
• 40–70 cross-chain transactions per day are performed through Asterizm;
• Negotiations with three Tier-1 enterprises are underway.

Here is an overview of our roadmap:

1. Update the Relayer module of the servers, enabling third-party companies to act as relays,
2. Release Asset Bridge templates,
3. Release NFT Bridge templates,
4. Integrate TON, SUI, ZKSync, and several other active blockchains,
5. Subsidize the development of cross-chain projects for fintech applications.

What is the current adoption of blockchain and cross-chain technologies in terms of businesses? And what are your estimates for the next five years?

Numerous enterprises, governments, and central bank digital currencies (CBDCs) are implementing blockchain solutions (on both public blockchains and over 500 private ones). The growing demand for secure and efficient cross-chain transactions, combined with the need for data privacy and compliance with the new data privacy regulations, presents a significant market opportunity for Asterizm.

Neobanks and crypto-fintech companies are moving toward launching their own state-regulated stablecoins based on private chains, so they need a solution for moving capital and interacting with public networks.

Even such giants of the classical financial industry as SWIFT are looking into interoperability protocols for cross-chain transactions.

As for the prospects for the next five years, I think that we will see the first pilot projects among CBDCs, neobanks, and fintech companies implementing projects that facilitate the transfer of value in the form of digital assets or information from one private blockchain to another, as well as from private to public blockchains. Tokenization and utilization of classic financial assets on both public and private blockchains will gain significant traction.

Moreover, the establishment of cross-chain protocols that provide comprehensive solutions for the seamless transfer of data and assets is highly likely. This development is anticipated to revolutionize the way blockchain networks interact with each other and foster greater interoperability in the digital asset space.

Privacy of transferred data and the ability to control key nodes and functions of the infrastructure for cross-chain operations will be at the forefront of considerations when choosing cross-chain solutions. It will be essential to find the optimal balance between decentralization and the security of the company’s business processes.

In this regard, Asterizm stands out as a perfect choice. Each of our clients operates its own server, which actively participates in cross-chain operations, transmitting and executing payloads directly. Our Relayer servers operate as a protective layer without accessing the transmitted data in case a client-server gets hacked. This setup ensures that clients retain full control over their data and operations while maintaining a high level of security and privacy during cross-chain transactions.

Summary

In the coming years, the blockchain industry will continue to move toward simplifying interactions not only with businesses but also with the end user. Additionally, there will be a fundamental redesign of the user experience — everything will be done in just a few clicks, and AI assistants will likely manage your funds and interact with various applications on your behalf. That may sound a bit cyberpunk, but it’s more than possible.

Asterizm aims to become one of the most trusted providers of seamless blockchain communication technology for both established Web3 market players and classic businesses entering this promising market.

About the Everscale network

Everscale is one of the most technologically advanced blockchain networks, incorporating all of the blockchain innovations and concepts of recent years. Its versatility gives it the potential to become a decentralized hub for lots of blockchains and resource-demanding applications such as GameFi, DeFi, supply chains, etc. Due to its dynamic multithreading and sharding technology, there’s always more room to add new nodes and shards to handle any load — and that’s something that no other blockchain can offer yet.

Everscale has powerful developer tools, such as compilers for Solidity and C++, SDK and API, client libraries ported to more than 20 languages and platforms, and a range of decentralized browsers and wallets.

More About the Everscale network:
Website | Twitter | Whitepaper | Github | Telegram Ann | Telegram | Discord

Asterizm — plug and play cross-chain infrastructure — Interview with the team was originally published in Everscale on Medium, where people are continuing the conversation by highlighting and responding to this story.

Recently, we hosted an AMA session with Sergey Shashev, co-founder of Broxus, and Vyacheslav Belenko, head of Everscale node development.

In this article, we would like to recap the AMA and discuss recent updates in Everscale’s technical and business development.

The current state of business and tech

In May 2023, the latest EVERPOINT event concluded. The conference brought together ecosystem teams, investors, and partners and featured different panel discussions related to Everscale, Venom, the synergy between networks, and the future of TVM blockchain technology.

Everscale is strengthening its position in the Korean market, and EVER has been listed on the major Korean exchange Bithumb. As Bithumb is one of the largest exchanges in terms of active accounts and users, this listing holds substantial weight in establishing EVER’s presence in the market.

Touching on Everscale’s tech stack, a recent update to the node mitigates potential vectors of attacks via malicious smart contracts. With the cooperation of all development resources from the EverX and Broxus teams, the developers are concentrating on shipping the latest Everscale innovations.

What is Everscale’s main business model?

The Everscale business model operates on a transactional basis, meaning more transactions, more gas usage, and so on. It implies new projects launching their tokens and adding liquidity into pools, farming incentives, etc. Essentially, it’s vital to comprehend that Everscale functions in the open blockchain market, vying with other open blockchains like Ethereum, Polygon, Polkadot, and more. The selection of companies and projects to be launched on a specific blockchain is determined by the customers. Our role is to deliver the best tech and to explain why Everscale is better, as we are currently doing.

Cooperation between Everscale and Venom

Venom is the first regulated blockchain that has an ADGM license, requiring strict regulatory policy for projects to be launched. If any projects are waiting for regulatory approval, they can easily be launched on Everscale first, and then they will already have been battle tested in a live environment with real users.

What’s the main value of Everscale compared to other TVM chains?

It doesn’t matter if 20 more TVM chains appear — it will not negatively affect Everscale. First of all, Everscale is a public network that’s already been live for three years, and it’s ready for launching any products and experiments.

We don’t need to think about other TVM chains as competitors. On the contrary — Ethereum is so popular because of other chains. The more TVM chains are launched, the stronger initial TVM chains will be.

What about FlatQube integration with Venom? Will there be a QUBE/VENOM pair and others?

There are no obstacles to stop us doing this after the Venom mainnet goes live.

Everscale DeFi Alliance expenses reports — will there be any reports this year?

Definitely. We will continue sharing all the expenses of the Everscale DeFi Alliance with the community. For now, all the expenses are in USDT, but not in EVER, except for market makers and listings, as only these things use EVER liquidity, and everything is locked on the exchanges and fully transparent for EverX and the Everscale DeFi Alliance.

What are the plans to increase the number of developers in the Everscale ecosystem?

One of the obvious things to consider is that developers come to ecosystems that have budgets, and that’s why increasing the market cap of EVER is the first area to work on.

A second point is corporate training, and that’s what is currently ongoing in the United Arab Emirates and Korea. Basically, these are new companies starting to build solutions on Everscale. They are not in community chats, but they ask questions in tech chats and on the direct line with Broxus technical support, and if there’s not enough assistance, EverX helps with issues.

Will there be guides and instructions on how to launch a local Everscale network?

There is a public repository with a script to launch a simulation of the network within one machine. It’s a simple script that can be modified, but it’s a basic starting point. If the community has any ideas about what things could be added, we’re always ready to extend the functionality — we just need specific feedback from the community.

There are several products in the ecosystem that are self-funded by the community. What about the funding for such products, dev tools, etc?
If there are some tools that ease the workflow of developers, and there is a community who’s using them, we’re ready to support this. We need feedback from people who are using them, and then we can propose them on EVER DAO and discuss the proposals. There is an audience, and we’re ready to support it.

Technical updates, featuring Vyacheslav Belenko, lead of Everscale node development

About one month ago, we had an Everscale strategic meeting between EverX and Broxus to decide what the main tasks and priorities were. We identified the task to reduce time-to-finality, because it’s a very important parameter from the point of view of network usage.

Time-to-finality is a critical parameter for any user. It’s a high priority task, and at the strategy meeting we decided to decrease it as soon as possible. Regarding the other features on the roadmap, their priority got lower obviously, but that doesn’t mean we won’t be delivering them.

The SMFT protocol is the consensus that is going to replace the current one — BFT. We need to reduce the time for reaching consensus between validators. Ideally, it should be reduced to less than seconds, compared to a few seconds at the current time. SMFT is currently being tested — the testing started at approximately the end of February. There is an internal network for that, and we’re doing tough experiments to check stability and battle test the consensus.

However, time-to-finality and consensus are different tasks, and that’s what we are doing right now. It’s a preliminary stage for the consensus to be working properly, so we will be shipping it anyway.

Roadmap status: REMP

REMP is a protocol, or family of protocols, that delivers users’ messages with a higher guarantee and builds a sequence of these messages to make sure each one is executed and doesn’t get lost. REMP is important for users and business applications. At the current time, it is at the stage of final testing.

We started testing REMP at the beginning of the year. It has been deployed in the Devnet for a couple of months, and developers are welcome to try it out.

Roadmap status: Drivechain

This is a solution that will make it possible to store a lot of data, not all of it directly on-chain, but mostly relying on the blockchain’s technology. It’s currently been solved at prototype level, but we have higher priorities on other tasks and have postponed Drivechains to a later point in time.

Roadmap status: Workchains

To improve the overall capacity and performance of multiple Workchains, we’ve been researching a new scheme this year that changes the way messages are exchanged between Workchains. It’s not public, but we will share it in the near future. It’s not included in mainnet of course, as it’s a prototype for now.

Roadmap status: EVM Workchain

The EVM Wworkchain is not a high priority task at the moment and it has been paused currently.

Roadmap status: Optimistic finality

We’ve made a breakthrough on this feature: we reached experimental proof that our expected numbers are reachable, so now it’s a question of how stable and secure it is for the network. It’s a technical task requiring time for testing it out.

Ecosystem product updates

FlatQube: Current status
The first upcoming update to FlatQube is limit orders, and it’s currently live in beta. The next feature we’re testing is liquidity being on different shards, which will make FlatQube super fast, especially with the new time-to-finality.

Octus Bridge: Current status, BRIDGE staking

The BRIDGE DeFi token model hasn’t proven itself, as interest rates are now quite low and it doesn’t cover the risks. A new staking model is being researched, and it will be possible to consider several options for sustainable staking after deployment on the Venom mainnet.

Everlend: Current status

This project turned out to be much more complex than planned, and it has been actively developed. Everlend is a part of the Blockchain Family company and the project is getting ready for launch in the near future.

About the Everscale network

Everscale is one of the most technologically advanced blockchain networks, incorporating all of the blockchain innovations and concepts of recent years. Its versatility gives it the potential to become a decentralized hub for lots of blockchains and resource-demanding applications such as GameFi, DeFi, supply chains, etc. Due to its dynamic multithreading and sharding technology, there’s always more room to add new nodes and shards to handle any load — and that’s something that no other blockchain can offer yet.

Everscale has powerful developer tools, such as compilers for Solidity and C++, SDK and API, client libraries ported to more than 20 languages and platforms, and a range of decentralized browsers and wallets.

More About the Everscale network:
Website | Twitter | Whitepaper | Github | Telegram Ann | Telegram | Discord

AMA Recap with Sergey Shashev: the current state of Everscale’s tech and business was originally published in Everscale on Medium, where people are continuing the conversation by highlighting and responding to this story.

Fungible Tokens on the Everscale Blockchain: Exploring the TIP-3 Token Standard

The adoption of EIP-20 (Ethereum improvement proposal) in the Ethereum network paved the way for implementing various fungible tokens built on the standard architecture. New kinds of tokens came in use for various purposes — voting in DAO, stablecoins, paying for the services of L2 solutions and simple transfers of value.

The architectural solutions applied in the ERC-20 standard, nonetheless, resulted in challenges that the Ethereum team is struggling to cope with. For example, every ERC-20 smart-contract stores information about every holder of the token, which can result in unconstrained growth to the user hashmap. This data must be stored in the blockchain where every action is paid for by blockchain actors.

The animation below demonstrates the unconstrained growth of the ERC-20 token holder hashmap:

Note: Throughout the article we interchangeably use two terms, smart-contract
and account, which mean the same thing. This is due to the fact that each account in Everscale is a smart contract.

Also, to fully understand the article, please familiarise yourself with the following terms:

TokenRoot — a smart-contract storing the basic data of TIP-3 tokens. The contract is used to generate TokenWallet contracts.

TokenWallet — a smart-contract generated on the basis of the TokenRoot code. The contract is used to store TIP-3 tokens and transfer them between other TokenWallet contracts.

acceptMint() — a method of the TokenWallet contract to accept TIP-3 tokens minted by the TokenRoot owner. The method is mainly used to transfer initially minted tokens to an account of TokenRoot owner to enter tokens into circulation.

acceptBurn() — a method of the TokenRoot contract facilitating the reception of TIP-3 tokens from a TokenWallet contract and the subsequent burning of them, thus removing the burnt tokens from circulation.

burn() — a method of the TokenWallet contract to decrease the amount of TIP-3 tokens on its balance and to call the acceptBurn() method of the parent TokenRoot contract.

requestUpgradeWallet() — a method of the TokenRoot contract that is to be called by the TokenRoot owner to initiate an upgrade of the smart-contract logic.

setWalletCode() — a method of the TokenRoot contract that applies the changes, sent by the TokenRoot owner to the code of the TokenRoot contract.

upgrade() — a method of the TokenRoot contract to initiate actions in the Threaded Virtual Machine that result in adding new code to the new version of the TokenRoot.

Distributed Token Architecture in the Everscale blockchain and Venom blockchain: TIP-3

Everything is a smart-contract in Everscale and Venom and other Threaded Virtual Machine blockchains. Transactions generated by one smart-contract are bound to be validated in a shard (thread), which the smart-contract belongs to.

If fungible tokens in TVM-compatible blockchains had had a design similar to ERC-20 tokens, the processing of crypto transactions would have been limited to processing by one node from a group of validators responsible for validating the shard. That would have reduced the blockchain scaling potential, intrinsic for TVM (Threaded Virtual Machine) blockchains, literally to zero.

The animation below shows the 3-step interaction between the sender wallet, ERC-20 token smart-contract address, and the recipient wallet. In case a user of Ethereum blockchain wants to send some USDT to other address, this transaction will be bound to invoke USDT ERC-20 contract:

The mechanism granting almost infinite scalability to Everscale is called sharding. Sharding involves splitting a set of smart-contracts comprising one shard into two shards each validated by its own group of blockchain nodes. In order to make TIP-3 token operations scaling-ready, token operations must be distributed among several smart-contracts and should not have one mandatory node of interaction, like an ERC-20 smart-contract in the Ethereum network. Ideally, each smart-contract wallet, storing this or that token on its balance, must be a separate actor (smart-contract).

This is the design implemented in the TIP-3 token standard. Currently, Everscale recommends building TIP-3 tokens in accordance with the Broxus realization.

The TIP-3 token standard includes two types of smart-contracts — TokenRoot and TokenWallet. Looking further forward, the number of TokenWallet contracts existing in the blockchain is unlimited, which translates to unlimited blockchain scalability. First, let’s take a look at the TokenRoot contract.

TokenRoot: the Core of TIP-3 Fungible Tokens

In the TIP-3 token standard, TokenRoot is the main token contract. It bears similarities with the ERC-20 token contract, but there are also some differences based on the distributed nature of the standard.

Like in Ethereum, TokenRoot stores information about:

• Token name;
• Token ticker;
• Size of the decimal part;
• Address of the owner of the TokenRoot;
• Total number of tokens that are currently in circulation.

The TokenRoot contract also has its own methods. Some of the methods can be called only by the TokenRoot owner. Calling constructor requires indicating the address of the TokenRoot owner smart-contract.

Via the TokenRoot contract the owner can mint tokens, enable and disable, pause and resume, as well as burn tokens. Calling acceptMint() or acceptBurn() methods will increase or decrease the amount of tokens on the selected TokenWallet smart-contract owned by the TokenRoot owner. This mechanism allows orchestrating the total circulation of the tokens according to, for example, decentralized voting, which results in economic implications affecting all token holders.

TokenRoot contracts also facilitate easy upgrades to their logic. Upgrading TokenRoot code requires calling the following methods: requestUpgradeWallet(), setWalletCode(), upgrade(). Needless to say, the methods can be called only by a smart-contract with the address of the TokenRoot owner.

Another method built in the TokenRoot contract is deployWallet(). This method is public, i.e. can be called by any smart-contract. The method creates a new smart-contract capable of holding the TokenRoot contract tokens (e.g stEVERr) on its balance and transferring them to other TokenWallet contracts. The method can be called only by an internal message.

If an Everscale blockchain user wishes to own TIP-3 $USDC tokens, they actually invoke the following algorithm in the network:

1. The wallet application sends an external message to the TokenRoot contract.
2. The method deployWallet() of the TokenRoot contract is called. The parameters of the method include the user’s crypto wallet address.
3. The deployWallet method combines the TokenRoot address and the address of the user’s wallet and calculates an address for the user’s $USDC TokenWallet contract.
4. Now, every other $USDC TokenWallet contract recognizes the user’s wallet, as the address of the TokenRoot is hashed in its address. If the transferToWallet() method is used from a non-USDC wallet, the message will be declined by the USDC account.

In the animation below, you can see how TokenWallets are created by sending messages from user accounts, as well as TokenWallet-to-TokenWallet interactions to transfer TIP-3 tokens. Sending tokens between wallets does not require interactions with the TokenRoot contract:

TokenWallet: Interactions Independent from TokenRoot

Now, as we have numerous smart-contracts that are used as a storage for TIP-3 tokens, we no longer need to interact with TokenRoot to transfer tokens to each other. Every $USDC TokenWallet recognizes other $USDC TokenWallets as they share the same parent code — $USDC TokenRoot transformed to their addresses by means of hashing. If someone tries to send you, say, $USDT, your TokenWallet will not accept the transfer as $USDT and $USDC have different TokenRoot contract addresses.

Moreover, having a discrete smart-contract for each user facilitates the transfer of tokens from different shards, which is the recipe for the Everscale blockchain’s infinite scalability as well as that of the Venom blockchain.

The animation below demonstrates the process of token exchange between several TokenWallet contracts during low network workload and high network workload conditions. When the workload is low, all the contracts are validated in a single shard. When the workload is high, smart-contracts can be allocated between several shards when the split mechanism is triggered in the network:

Low workload

High workload

As you can recall from the TokenRoot section, the parent smart-contract does not have a token holder hashmap. The TokenRoot smart-contract simply has no need to store the balance of each TokenWallet. Every TokenWallet contract is responsible for storing information on its balance. This resolves the issue of token holder hashmaps growing astronomically.

However, if there is an unlimited number of blockchain smart-contracts, at least one smart-contract for one user and one TIP-3 token, wouldn’t the network be even more congested in comparison to EVM-compatible blockchains? It actually would not. Each smart-contract pays a storage fee for blockchain data storage. If a user becomes inactive in the blockchain and abandons their smart-contract with some fractions of tokens, a process of smart-contract deletion is set in motion. Every second of storing a bit of information will consume $EVER and once the $EVER balance of a TokenWallet reaches -0.1, the smart-account gets frozen and later erased from the network state. The animation below demonstrates how it actually works in one particular shard.

It may seem frustrating, but storage fees are minimal and have very little effect on active users. What is more important is that the storage fee eliminates potential situations when current active users pay to store data belonging to long-abandoned accounts. Moreover, there is no opportunity to pile excessive amounts of unused data inside the blockchain.

If you look through the TokenWallet code, you might be wondering why a contract that is designed to transfer and accept tokens would have acceptMint() and burn() methods. The answer lies in the parameters of the TokenRoot contract. It has no balance, which means that the developer of the TIP-3 token cannot store initially minted tokens inside the TokenRoot. Even the TokenRoot contract owner needs to deploy their own TokenWallet and orchestrate circulation using a discrete wallet. Of course, any crypto wallet address that shares the same TokenRoot can serve as a recipient for newly minted tokens, which can be convenient for, say, conducting airdrops.

As we can see, the TIP-3 token standard is a realization of a new vision of token architecture, powered by the willingness to address the challenges of older blockchains and take advantage of the capacity of the Threaded Virtual Machine.

Fungible Tokens on the Everscale Blockchain: Exploring the TIP-3 Token Standard was originally published in Everscale on Medium, where people are continuing the conversation by highlighting and responding to this story.

CBDC latest news

In his latest post, Atakan Kavuklu’s has provided an overview of the progress of different CBDC projects around the world as of July 2023, as well as updates to the CBDC tracker project. We will focus on the most important points, but first of all, we will start with the latest CBDC statistics.

The number of central banks interested in exploring “some form or another” of a central bank digital currency (CBDC) has risen to 93%, according to a survey conducted by the Bank for International Settlements in 2022 and released just recently. 86 banks responded to this BIS survey. At the same time, a June study conducted by the Atlantic Council showed that about 130 countries are exploring the possibility of creating a central bank digital currency.

WealthRocket has released the results of a survey of 1,500 Canadian adults about their attitudes toward retail central bank digital currencies (CBDC). More than half of those surveyed said they were more or less willing to use a CBDC. Of these, 43% are ready to some extent, 11% are very ready and 5% are extremely ready. On the other hand, a quarter of the respondents said they did not want to use a CBDC in Canada at all. And 16% said they don’t understand enough about the issue to make a decision right now.

Ripple has expanded into Colombia, where it will offer the Ripple CBDC platform based on the XRP Ledger (XRPL). The launch of the Ripple CBDC platform follows in the wake of the recent Southern District of New York hearing, which concluded that the distributions of Ripple’s XRP token to individuals do not constitute illegal offers and sales of securities. However, institutional sales of XRP violated US securities laws, meaning the company is not quite out of the woods yet.

The Swiss National Bank will issue a digital swiss franc on the SIX exchange, likely as part of the project Helvetia. This project also tested transactions with tokenized digital assets, which means that the wholesale franc can become the basis for the development of intra-European digital asset markets, after the adoption of MiCA.

In Thailand, a retail digital baht was launched based on Giesecke + Devrient Filia platform solutions. The project will last for three months starting in June, and the same provider will presumably provide launch options for the digital currency in Swaziland.

Nigeria is trying to save the eNaira project by opening up the possibility of transfers from abroad. International Money Transfer Operators (IMTOs) will be required to apply for a one-time “no objection” certificate and open merchant wallets through a central bank in order to offer customers the ability to use eNaira for cross-border money transfers.

Iran and Russia are expected to issue a gold backed crypto, and Zimbabwe has already confirmed the issuance of gold backed crypto in the coming days to provide investors with a platform to save, invest and trade in gold. People will be able to purchase gold cryptocurrency for $10. On July 13, the Duma of the Russian Federation adopted a law on the russian digital ruble, and the confirmation of the law by the Federation Council at this stage is considered to be a formality.

Zoltan Pozsar joined the Odd Lots podcast for the first time since leaving Credit Suisse. “Instead of one reserve currency, we’ll get a lot,” and as cross-border payments revert to something more akin to the 17th-century London market, he expects “gold remonetization” to be inevitable. This echoes the sentiment behind the rise of gold backed crypto and the implicit pegging of the E-Yuan to gold via the Shanghai exchange. Zoltan considers it unlikely that the dollar will be replaced by bitcoin, but the revolution in international finance will at least involve cryptocurrencies: “CBDCs, stablecoins and tokenization all have a role to play. CBDCs,” he said, “will provide the infrastructure rails to accelerate the de-dollarization process.” According to Pozsar, they will replace the network of correspondent banks that support the dollar system with a network of “correspondent central banks.”

Finally, the IMF presented a vision for a competitive solution compared to BIS projects. The fund proposed a new class of platforms designed to ensure the compatibility, efficiency and security of cross-border payments and domestic financial markets. These kinds of platforms would have a single settlement book and all settlements would be carried out in a safe asset, possibly in the form of a central bank digital currency (CBDC). Governments would retain the right to restrict user transactions in foreign currencies and introduce financial integrity checks. The use of distributed ledger technology (DLT) was rejected because it has “significant limitations” in terms of validator costs, security, efficiency and privacy. The organization is also working on linking the world’s central banks via a CBDC mutual settlement system. At a conference with representatives of African central banks in Rabat, Morocco, IMF Managing Director Kristalina Georgieva argued, “CBDCs should not be disparate national offerings… For more efficient and fair transactions, we need systems that connect countries: we need interoperability.”

Tokenization news

Concerning tokenization, two significant reports have emerged that focused primarily on the issuance of bonds.

The Bank of England outlined how a traditional bond issue compares with a token issue in detail. Their report focuses on the tokenized stocks, bonds, loans, illiquid assets (such as real estate) and derivatives.

The report includes blockchain securities (securities issued natively on blockchains), as well as “hybrid” models. The potential benefits of tokenization include increased operational efficiency (such as instant settlements), access to new asset classes (through tokenization of traditionally illiquid assets), lower transaction costs, lower asset servicing costs, and the ability to better manage certain risks, such as counterparty risk (thanks to immutable data and programmable smart contracts).

The ETC Group analyzed the release of on-chain assets (on public and private blockchains). In January, the Goldman Sachs Digital Asset Platform (DAP) was launched on the Canton blockchain. The platform allows Goldman to issue, settle and hold tokenized assets.

The first institution to use the platform was the European Investment Bank (EIB), which issued two-year digital bonds worth €100 million on the platform. Issuers such as Ondo Finance, MatrixDock and Maple Finance are issuing ERC-20 tokens on the Ethereum platform that are fully backed by the underlying assets. Ondo products dominate the tokenized asset space with a market value of $110 million and hold a nearly 50% market share.

Moody’s followed in the steps of the Bank of England and published an informative report on digital bonds. They list the same benefits as the other report, but the release and its table of platforms are quite illustrative of the current situation.

Chile is preparing to use tokenized assets. Last year, Chile’s Central Securities Depository (Depósito Central de Valores, DCV) upgraded its legacy system to the Nasdaq CSD platform. It now plans to integrate Nasdaq digital assets capabilities to support the issuance, registration and settlement of digital securities and is considering using smart contracts to automate bond interest payments and other life cycle events.

Namibia has just adopted a law that paves the way for trading in tokenized assets.

Blackrock director Larry Fink said in an interview that

If we can create more tokenization of assets and securities… it could lead to a revolution in… finance.

Stablecoin news

The company has currently filed with the SEC for a Bitcoin-backed exchange-traded ETF product and has led a chain of re-apply decisions from a dozen other investment firms.

Among stablecoins, TrueUSD is being closely monitored after it unpaired with the dollar due to the bankruptcy of the PrimeTrust custodian. TUSD hit a low on June 28, 2023, of 80 cents USDT. According to CoinGecko.com, TUSD ranks fifth in terms of crypto market capitalization ($3.1 billion vs. $83.4 billion for Tether and $28.2 billion for USD Coin). The situation in many ways recalls that of USDC when the SVB bank went bust.

JP Morgan, which led to the JPM Coin launch in 2019, has started working with transactions in euro stablecoins. The first payment in euros on the platform was made by the German company Siemens AG. JPM Coin can only be used to transfer money between JPM branches or other JP Morgan clients. Therefore, the bank has called this solution blockchain bank accounts. JPM Coin is a small part of JPMorgan’s payments business. Since the jpm coin launch, the bank has used it to process about $300 billion worth of transactions, while in total, the bank processes about $10 trillion daily.

SEC Crypto Regulation

The SEC has been on a regulation push in 2023. We have already mentioned the news regarding the SEC vs Ripple case, but another interesting event happened in July. The Commission provided a perfect example of crypto compliance: Prometheum. Prometheum claims to be the first FINRA member in the cryptocurrency space to be registered with the SEC as a broker-dealer. But what is Prometheum? It’s a digital asset exchange with no assets to trade as it only plans to support SEC-approved tokens. One of the company CEOs drew public scrutiny after testifying before Congress that the crypto community was complaining for nothing, considering that all the rules were clear and the issue was just that the companies did not want to follow them. Gary himself last week on CNBC praised Prometheum, toting it as an example proving that the SEC is not targeting cryptocurrency projects.

via Twitter

The Organization for Economic Cooperation and Development (OECD) has published a new CBDC and crypto taxation system. The New Crypto Asset Reporting Framework (CARF) was developed as a result of the 2014 revision of the Common Reporting Standard (CRS) to eliminate loopholes related to the taxation of digital currencies in various member countries of the organization. Under the new structure, tax information on transactions with digital currencies will be automatically exchanged on a uniform basis in accordance with existing rules.

July 2023 Crypto Revue was originally published in Everscale on Medium, where people are continuing the conversation by highlighting and responding to this story.

Meta description: Learn about the revolutionary Everscale blockchain powered by the Threaded Virtual Machine (TVM) and the actor model. See how its asynchronous architecture enables unmatched scalability and solves key issues faced by synchronous blockchains like Ethereum. Explore Everscale’s unique ecosystem development and a wide range of ready-made solutions, making it a powerful contender among blockchains.

Everscale Deep Tech: The Threaded Virtual Machine as the basis of an asynchronous blockchain

In previous articles, we covered some of the key features of the Everscale blockchain. Today, we will be diving a little deeper into Everscale’s blockchain mechanics and how its asynchronous nature has led to its unmatched scalability. By comparing Everscale with the synchronous Ethereum we will highlight the issues that can be solved with asynchronous programming. Additionally, we will also describe the peculiarities of Everscale ecosystem development.

Everscale is an asynchronous blockchain primarily due to its use of:

1. The Threaded Virtual Machine (TVM);
2. An actor model.

Actor model architecture

The parallel computing model, devised by Carl Hewitt in 1973, has been utilized in many parallel computing systems, for example, email. The author of the model was inspired by LISP and the Simula programming language. After the model was introduced, it laid the foundation for designing new languages like the scala programming language and the Erlang programming language.

In the actor model, an actor is the main and only computing unit type that is capable of sending and receiving messages, and changing its state according to the messages received. Actors can also create other actors. In Everscale, every unit of the blockchain is a smart-contract. As actors in the actor model, smart-contracts can interact with each other by sending and receiving internal messages, can interact with off-chain applications by receiving external messages and can deploy new smart-contracts by sending internal messages to other smart-contracts. And of course, the smart contract state can change after a message is received.

The animation below demonstrates some of the scenarios of actor-to-actor interaction in the Everscale blockchain:

1. A smart-contract sends an internal message to convey tokens to another smart-contract;
2. A smart-contract calls the method of another smart-contract and then receives the results of the executed code;
3. A smart-contract deploys a new smart-contract with a particular state.

Threaded Virtual Machine

The Threaded Virtual Machine is responsible for processing the smart-contract code in the Everscale network. This virtual machine is based upon The Open Network Virtual Machine devised by Nikolai Durov.

The animation below shows how the virtual machine treats smart-contracts: as smart-contract 2 receives a message from smart-contract 1, the code is executed and the second smart-contract state is updated.

The Threaded Virtual Machine is the key to Everscale’s asynchronous architecture, which is completely different from that of EVM-based blockchains, in which state is updated synchronously.

In EVM-based blockchains, the state is updated through the execution of a function that is called by a user or a smart-contract. The data required for the calculations is present in the state prior to the function call. That is why the finalization of a single block cannot be shared among several blockchain nodes.

In TVM-based blockchains, state is first updated on the lower level, i.e. every smart-contract has its own state that is changed in the course of contract-to-contract interaction through the sending of messages. The states of all smart-contracts are updated asynchronously. Every time the smart-contract code is executed, a transaction is generated. And the transaction must be validated by one of the blockchain nodes responsible for validating transactions from smart-contracts within its thread.

A thread, to put it simply, is a set of smart-contracts with a group of nodes, dedicated to validating transactions generated by the smart-contracts within the set. If there is a large influx of transactions, each requiring computational resources, the set can be divided into two threads. When the set of smart-contracts is divided into two threads, each thread receives its own group of validating nodes. In addition to that, it is necessary to mention that every action in the Everscale blockchain is a contract-to-contract interaction, and an action that is deemed single and whole for an end-user can consist of dozens of such interactions. As smart-contracts can interact with the contracts from other threads, the load from complex resource-consuming tasks can be divided between several validating nodes, which is the key to the network’s scalability.

The animation below demonstrates how the mechanism of parallel transaction validation is activated: unlike EVM-based blockchains where transactions are batched into a block that is validated by a single node, TVM validators share the workload and broadcast block proofs concurrently.

Blockchain of Blockchains

The threading mechanism described above is now utilized in workchain 0 and masterchain -1. A worckchain is an environment for smart-contract execution and interaction, while the masterchain is used to store the state of the whole blockchain, where up to 232 workchains can exist at once.

Every newly deployed workchain will support asynchronous computation, moreover, all the workchains share the same masterchain, which means that smart-contracts from different workchains are capable of interacting with each other. In addition to that, workchains can be individually tweaked to meet particular requirements.

Stable crypto transaction Fees

According to the EIP-1559, Ethereum gas fees are still subject to fluctuations dependent on the Ethereum block size. But what is a block size? It is the total sum of gas attached to the transactions included in a block. If block size exceeds the target value, the base fee for the next block is increased by 12.5%. The incremental increase of base fees will continue unless the block size value returns to the target value. The described mechanism and the ability of validators to pick transactions with the highest gas attached to them are the reasons why blockchain gas fee spikes occur during high workload periods in the Ethereum network. And the mechanism of block size deterioration cannot be changed, as it prevents a situation from occuring in which less performant nodes dedicated to the validation process become incapable of validating blocks within 12 seconds.

In Ton Virtual Machine (TVM) based networks, workload can be shared among several validating nodes, which means that the mechanism of controlling demand through fee adjustment is redundant.

The animation below demonstrates how workload can affect fees in EVM and TVM networks:

Modular Fees

The nature of asynchronous blockchains and smart-contracts designed as independent computing units has allowed for the implementation of a complex system of network fees that ensures the fair compensation of validation costs and that users only pay for the actions they have committed on-chain. The fee structure is the following (you can read more in the Everscale docs):

• Forwarding Fee: every message (internal/external, inbounding/outbounding) is subject to this fee. It is calculated according to message size and, depending on the message type, it can be further divided and transferred to the validators as compensation for their work or it can be used as a constituent in Total Action Fee calculations;
• Storage Fee: every second of storing each bit of data in a smart-contract is subject to this fee;
• Compute Fee is taken if smart-contract execution commits the work of TVM;
• Total Action Fee: this fee is calculated for every message sent as a result of smart-contract execution. This is equal to zero if no outbounding message is sent.

No uncontrolled redundant blockchain data storage

In one of his articles, Vitalik Buterin drew attention to the issue of storing the whole state of the blockchain, which is resource-intensive and makes newer users pay for redundant blockchain data storage. With the introduction of Storage Fees, TVM-based blockchains have solved this issue. With TVM, used smart-contracts no longer have to continue to pay Storage Fees until their balance reaches -0.1 EVER. After the threshold is passed, the contract is frozen and later erased from the network.

Intrinsic Abstract Accounts

As we noted earlier, everything in Everscale is a smart-contract. As a result, the concept of the Externally Owned Account (EOA) cannot exist in the network. Instead, every account in Everscale is an abstract account. Even a wallet is a smart-contract with a balance that is governed by external messages.

Ethereum is working to integrate abstract accounts into its existing protocol, which is more complicated than account abstraction available right out of the box.

Intrinsic account abstraction enables realization of the following features in Everscale:

• Restoration of access to a user’s balance;

• Flexible limiting of outgoing funds;

• Blacklisting addresses;

• The use of one wallet by several parties.

Flexible tuning of the responsibility for network fee payments

To dive deeper into abstract accounts, it is necessary to specify that the backend of any application can be designed to adapt to specific needs and determine the moment when blockchain network fees are to be paid. As any interaction with a blockchain in the TVM-based networks is initiated with an external message that cannot carry any value, the backend of an application can indicate that the blockchain network fees will be paid from a particular address. Thus, you can create an application, in which the initial user interaction does not require paying EVER to start using an application. The fees will be deducted over the course of the execution of the business-logic on-chain. Moreover, developers will not be required to store some EVER on some smart-contract to cover the blockchain network fees, which eases the support of the application and ensures its continuous service.

Reading the whole state locally

The state of the Everscale network becomes available in one HTTP request. To use read-only methods, you can launch a node locally with Evernode Simple Emulator. After the node is launched locally, you can call any smart-contract method that returns data and use it for your local calculations. In EVM-based networks, reading data read-only methods requires making a separate call to the RPC URL endpoint.

Transparent mechanisms for upgrading smart-contract functionality

In EVM-based networks, upgrading smart-contracts requires adhering to the complicated algorithm that includes the use of delegate calls to proxy smart-contracts. Moreover, there are several standards for upgrading smart-contract code: Transparent Proxy, UUPS Proxy, Multi-Facet Proxy (diamond), and OpenZeppelin framework for secure smart-contract development.

Such code-upgrade mechanisms are quite removed from the practices most backend developers are accustomed to, which consist of two simple steps: uploading a new version of the code to the server and re-deploying the application.

TVM-networks offer a more akin way of upgrading smart-contract logic: new code can be sent in an internal message which is then used to upgrade current code by using setcode opcode.

Upgrading a smart-contract can be done with several lines of code:

 // If owner knows that RootContract has been upgraded, they can
  // request an upgrade for their own contract.
  function upgrade(address remainingGasTo) override external onlyOwner {
    ITokenRootUpgradeable(root_).requestUpgradeWallet{ value: 0, flag: TokenMsgFlag.REMAINING_GAS, bounce: false }(
      version_,
      owner_
    );
  }

  // New version of the code is returned
  function acceptUpgrade(TvmCell newCode, uint32 newVersion) override external onlyRoot {
    if (version_ != newVersion) {
      // Encode contract state into TvmCell + new code version
      TvmCell state = abi.encode(root_, owner_, balance_, version_, newVersion);
      // Set contract to execute new code 
      // from the next transaction
      tvm.setcode(newCode);
      // To set new code in the current transaction, call:
      tvm.setCurrentCode(newCode);
      // Calling onCodeUpgrade with the upgraded code
      onCodeUpgrade(state);
    }
  }
}

// After setCurrentCode is called, only onCodeUpgrade can be
// called in the new contract version.

function onCodeUpgrade(TvmCell data) private {
  // Resetting contract storage to zero 
  // If failed to do so, the storage structure is changed
  // This call does not affect auxiliary attributes 
  // _pubkey, _replayTs, _constructorFlag, 
  // other attributes from temporary register c7 
  // are initialized as zeroes.
  tvm.resetStorage();
  
  // decoding the state 
  (address root, address owner, uint128 balance, uint32 fromVersion, uint32 newVersion) =
        abi.decode(data, (address, address, uint128, uint32, uint32));

  // initializing the state
  root_ = root;
  owner_ = owner;
  balance_ = balance;
  version_ = newVersion;
}

Familiar development tools

The TVM ecosystem offers blockchain development tools that are similar to the ones used for development in EVM-based networks:

• Locklift — similar to Hardhat:
  1) Network management for working with any networks (main, test, local);
  2) Automated contract testing with Mocha;
  3)Keys management;
  4)External script runner that executes scripts within a specified environment.
• Everscale Inpage Provider — similar to web3.js:
  1) API familiar for EVM frontend developers;
  2) Used to develop browser extensions.

Ready-made solutions for blockchain indexing

Unlike Ethereum, where indexing is performed with third-party projects like Infura or The Graph, Everscale offers its own solutions for blockchain indexing.

One way to index and analyze blockchain data is to install a node package with indexer and GraphQL API with public endpoints. This solution is capable of satisfying the needs of both entry-level users and those who need deeper blockchain data scraping.

Another, more flexible, way is to create your own blockchain indexer that will convey the data from the blockchain through Kafka streams to any database of your choice. To do that, you will need a duo from Broxus consisting of Light Node and ton-kafka-producer.

TVM ecosystem

Today, there are more than 40 native Everscale applications built on the model of asynchronous computing and developed with the instruments covered above. Among them, there are a number of solutions that have been operating for more than 3 years that implement the functionality essential for unconstrained use of the blockchain, including:

• Octus Bridge — decentralized bridge (git);
• Ever Name — Everscale based Web3 domains;
• FlatQube — liquid farming and decentralized exchanges (git);
• Gravix — decentralized derivatives trading platform (git);
• TokStock — NFT marketplace;
• Qamon — secure mail service on the Everscale blockchain.

And there are many more! To learn about all the crypto products built on Everscale, be sure to peruse the network’s site.

Everscale Deep Tech: The Threaded Virtual Machine as the basis of an asynchronous blockchain was originally published in Everscale on Medium, where people are continuing the conversation by highlighting and responding to this story.

Meta description: Learn about Everscale’s use of Account Abstraction, accompanied by helpful animations. Dive into Everscale’s implementation of Account Abstraction, including multisignature functions, batch transactions, session keys, and social recovery. Explore the EIP-4337 protocol and its impact on Ethereum’s Account Abstraction functionality. Learn about the transitions from EIP-86 to EIP-4337 and how EIP-4337 upgrades Ethereum and the role of Paymasters in transaction sponsorship.

Ethereum’s three transitions vs Everscale’s current tech. Part two Account Abstraction.

This article continues the analysis of Ethereum’s ‘’Three transitions’’ by examining the long-awaited EIP-4337 protocol which, along with its Paymasters extension, upgrades the Ethereum blockchain with a major part of Account Abstraction functionality and partially achieves one of the transitions outlined by Vitalik Buterin. As for Everscale, Account Abstraction is embedded in blockchain’s core protocol from scratch. Therefore, to fill in the space left, we will supply readers with Account Abstraction most common use cases illustrated with the help of animations and schemes.

Note: There was a long and tedious way involving several EIPs before Ethrereum succeeded to propose a viable solution for Account Abstraction functionality that fits the architectural construct of its blockchain.

Some definitions for a smoother navigation throughout Ethereum’s stages to EIP-4337

Account Abstraction — a new paradigm allowing programming blockchain accounts. It provides something incredibly convenient for the user — a Smart Account.

Smart Account — a type of account that is programmed using a set of rules and conditions. Smart Accounts can perform any programmed actions automatically without the need for human intervention.

EIP — the abbreviation for ‘Ethereum Improvement Proposal’. Each proposal includes the methods according to which updates are made on the Ethereum blockchain.

Nonce — the abbreviation for the ‘number used once’. A randomly generated number proving that a function or value was used only once.

ECDSA signature — the abbreviation for ‘Elliptic Curve Digital Signature Algorithm’. This is a variant of the Digital Signature Algorithm (DSA) which uses elliptic-curve cryptography.

AUTH — an EVM instruction that sets a context variable authorized based on an ECDSA signature.

AUTHCALL — an EVM instruction that sends calls in the same vein as an authorized account.

Both AUTH and AUTHCALL — basically delegate control of an EOA to a smart contract.

Paymaster — a special smart-contract that enables a number of use cases, such as, sponsoring transactions for other users or paying fees with any ERC-20 tokens.

The path towards EIP-4337

EIP-86 — abstraction of transaction origin and signature

The first attempt to provide Account Abstraction functionality for Ethereum. It sought to implement a number of changes to abstract out both signature verification and nonce checking. Basically, this allows users to create Account Contracts performing any desired signature/nonce checks. At the time, it was a considerable breakthrough even if it did not provide AA functionality in its entirety. The protocol just offered an alternative to using the already established mechanism hard-coded into transaction processing. Within the realm of this model, all accounts became contracts with the ability to pay crypto gas fees. Also, users were able to adjust the account security and implement their desired signature/nonce scheme.

EIP-2938 — a limited version of Account Abstraction

The second attempt provided for a limited version of Account Abstraction. Namely, it did not succeed in removing EOAs and did not support several important features of Account Abstraction such as nonce abstractions and meta transactions. On the positive side, the proposal allowed smart contracts to function as EOAs, providing them with the opportunity to initiate transactions and pay for gas. To accomplish this, the devs introduced a new type of transaction as well as two new opcodes. Transactions of this type are dubbed “AA transactions” and their payload includes three fields: nonce, target, and data. In this model, data represents all parameters that the account abstraction contract must execute and the transaction must validate, while the target represents the smart contract with the logic to validate transactions.

EIP-3074 — allowing EOAs to delegate control to a contract

The third attempt took a different path compared to its predecessors. Instead of converting smart contracts to EOAs, the proposal tries to adapt EOAs by adding a few changes to make them behave like smart contracts. This is achieved by the introduction of two EVM instructions: AUTH and AUTHCALL. The proposal sought to allow users to hand over control of their accounts to a contract by signing a message with their account. With the signed message and two new opcodes, the target smart contract could initiate transactions in the EOAs instead.

The main focus of EIP-3074 has to do with transaction sponsoring and multicall execution. This would have allowed users with EOA accounts to enjoy the benefits of account abstraction without creating new accounts. The proposal achieved AA flexibility to a great extent. However, it did not eliminate the security concerns. Notably, within the realm of this proposal, users still have to back up their seed phrase.

EIP-4337 — enabling a big chunk of AA functionality

The most recent attempt is a complex structure which succeeds in simplifying the creation and management of Smart Accounts. Contrary to previous proposals, the implementation of EIP-4337 does not require any Ethereum consensus layer changes. Instead, this is realized by the division of the load across on-chain and off-chain infrastructure. The protocol is a U-turn compared to previous attempts and therefore needs to be explained in detail.

Some definitions to understand how EIP-4337 works

UserOperation (op) — an entity describing a user’s transaction intent. It can contain any instructions to execute smart contract calls initiated by the Smart Account. It differs from an ordinary crypto transaction in that it is sent to a separate UserOp mempool and the authentication is programmable compared to signature based authentication (single private key) for ordinary crypto transactions.

Sender (users) — the contract that sends UserOps. It should be mentioned that users refund the Bundler for the gas fee spent. For this, users must have a deposit on the Entry Point smart contract.

Bundler — a node that packs many UserOps and creates an EntryPoint.handleOps transaction. Note that not all network nodes have to be Bundlers.

Entry Point — the contract that executes bundles of UserOps.

Handle Ops — the method that checks whether the crypto wallet has enough funds to pay the max network transaction fee the UserOp could possibly use. If not, then the Op is rejected.

Validate Ops — the method for UserOps validation. Any UserOp that fails validation will be removed.

Execute Ops — the method that tracks how much gas a UserOp uses, then transfers ETH to the Bundler to pay for that crypto transaction fee.

EIP-4337 enables users to send UserOps to a separate UserOp mempool. Bundlers (validators) pick UserOps (bundlers can select and process first those UserOps that offer more gas), pack them into a single transaction and send it to the Entry Point contract. The Entry Point executes the transaction and compensates the bundlers duly. To compensate bundlers, each user must deposit some funds into the Entry Point contract. The animation below illustrates how it actually works.

EIP extension with Paymasters

Paymasters are special smart contracts that extend the Entry Point logic, enabling a number of other use cases. One of them is transaction sponsorship, which allows third party participants to pay for crypto transactions. However, as happens with most technological improvements, there are issues that remain unresolved or, in some cases, new ones are triggered. As mentioned in EIP-4337 documentation, Paymasters have two fundamental limitations:

1. No possibility to accept fees on some ERC-20 tokens at an exchange rate pulled from an on-chain DEX.
2. Significant risks of Paymasters’ exploitation. For instance, users could send UserOps that appear to pay the Paymaster but then change their behavior after a block.

Let’s see how Paymasters can connect decentralized and traditional infrastructures

The animation below demonstrates a scenario where customers want to make purchases on a merchant’s website. They want to transfer 100 dollars but only have ERC-20 tokens (USDC) in their wallets. In this case, a Paymaster smart-contract plays the role of an exchanger. It rids customers of the need to hold native tokens exclusively for paying network gas fees. For this, the Paymaster does the following three things:

1. accepts USDC as network transaction fees from the user

2. pays ETH as transaction fees to the blockchain

3. enables the merchant to receive payment in an ERC-20 token like USDC

EIP-4337 drawbacks

Several technical issues in the application stack still have to be worked through.

Increased vulnerability to DDos attacks: This is due to the verification logic being more complicated than in a regular Ethereum mempool.

Increased gas costs: UserOps require more gas units compared to normal crypto transactions. However, in most cases, this is compensated by batch transactions.

One transaction at a time: Smart accounts cannot queue and send multiple transactions to a mempool. Again, in most cases, this can be compensated by the ability to execute batch transactions.

Backward compatibility: Existing (old) accounts cannot be switched to Smart Accounts.

Everscale’s AA in action

Let’s examine some use cases that offer a unique value proposition for users and can easily be implemented in Everscale.

With Everscale, you can have protection similar to traditional banking or even better

Multisignature is one of the most convenient functions, especially for the management of family funds and business deals. For example, family members decide to set a threshold on purchases. In this case, each purchase above the amount set would require the approval of all family members (you can see how it works in the animation below). Likewise, when a business deal is planned, often it requires the approval of two or more partners. Therefore, you can easily add their wallets to the whitelist and they will be able to approve the transaction.

Smart Accounts expand the possibilities of multi-signature

Smart accounts allow users to adapt security levels according to their needs and use various methods of crypto transaction confirmation.

-Set a daily or any other limit on transfers and automatically block everything that exceeds it.

-Integrate off-chain services for additional protection. For example, if you buy an NFT, use Tokstock or any other NFT marketplace to make sure that the collection is verified before approving the transaction. If the collection is not verified, there will be a request for additional authentication.

-Block transactions with unverified or sanctioned contracts.

-Integrate AML (anti-money-laundering) services to check other addresses to make sure that the recipient/sender has nothing to do with illegally obtained assets.

In the animation below, you can see a daily limit set at 90 currency units.

Batch transactions

When you use dApps based on Ethereum (prior to EIP-4337) and most other blockchains, you need to sign a transaction for every interaction on the network, which is time-consuming, expensive and frustrating. With a Smart Account, you can combine multiple crypto transactions into one (multicall).

For instance, to ensure liquidity on a decentralized crypto exchange, three transactions are usually required: approval of each of the two tokens, and then their deposit. Using batch transactions, you can do this in just one transaction because you get rid of the need for endless approval.

Session keys and subscription payments

Session keys are a breakthrough for UX (user experience), especially for games based on blockchain. They allow users to pre-approve the rules for interacting with a dApp. Session key parameters can include: duration, maximum amount of gas, maximum transaction volume of a certain token, or a specific function in a specific contract. Moreover, session keys are perfectly combined with batch transactions, which allows you to save on gas once again.

You can enjoy using a dApp knowing that your assets are protected because you have predetermined what the dApp can do with them.

Social recovery

The purpose of social recovery is to protect people in case of compromise or loss of access to a Smart Account. Social recovery does this by avoiding seed phrases. Vitalik Buterin believes that seed phrases should be excluded because they are difficult to use, unsafe and are a serious obstacle to mass adoption. With social recovery, if you lose your private key, you can simply authorize the new key as the rightful owner of the wallet. The mechanisms for this can be different. You can choose the recovery method based on trusted contacts (guardians).

You can see how social recovery works in the animation below.

Ethereum’s three transitions vs Everscale’s current tech. Part two Account Abstraction was originally published in Everscale on Medium, where people are continuing the conversation by highlighting and responding to this story.

Pi Union is a licensed fintech platform that offers cutting-edge financial tools to users.

In 2021, it teamed up with Everscale to develop a mobile application that harmonizes both traditional and contemporary financial instruments. This was achieved through European Bank Accounts (IBANs), a card program, and integration with the Everscale blockchain. It enabled community members in the European Union to use the native coin and a mobile banking app simultaneously.

Pi Union also supports the EUPi stableсoin project, which is set to develop further in collaboration with the European Everscale community. Initially, the plan was to operate it within the community before considering expansion.

Furthermore, Pi Union participated in the creation of the Everscale foundation, but this was not fully launched due to certain reasons. Apart from collaborative development, Pi Union also served on the Everscale grant committee that evaluated projects for grants.

An In-depth Analysis of Banking and Fiat Gateways Developed for Everscale and Regulatory Challenges

Pi Union integrated its wallet with the Everscale blockchain, providing an in-built acquiring feature that allowed blockchain users to purchase EVER using bank cards (either MasterCard or Visa).

Due to sanctions, Pi Union was severely affected, leading the project to relocate its base to the Balkans. Cryptocurrency-related operations are becoming increasingly complex in the European Union, largely due to these sanctions, making the Balkan region a seemingly more favorable environment for the business.

Steps to Creating a Crypto Account and Obtaining a Card at Pi Union

To set up a cryptocurrency account, users must complete the KYC (Know Your Customer) process. Presently, to acquire a card, proof of residency within the European Union is necessary.

Investing in Cryptocurrencies via Pi Union Bank: Asset Types and Withdrawal Process

Among its offerings, Pi Union provides the Evercash application and plans to launch two more official white label solutions. While Pi Union supports cryptocurrency as a medium for transactions, it doesn’t engage in cryptocurrency investment projects. Its primary focus is on using cryptocurrency as a payment service. However, the platform can facilitate the buying and selling of crypto assets, with users solely responsible for any investment risks.

Pi Union doesn’t position itself as an investment bank. However, an investment project is currently in development, with details to be announced later.

The Principle of Decentralization in Crypto and Its Impact on Bank Operations

As a licensed platform (CEX), Pi Union’s operations are not influenced by the principle of decentralization.

Measures to Protect Bank Clients’ Accounts with Crypto Assets from Hackers

Pi Union collaborates with trusted entities that routinely conduct security system audits.

Dispute Resolution in Cryptocurrency Transactions: The Role of Bank Support

Pi Union is being reestablished in the Balkans and will resume operations within the European region. Concurrently, Pi Union intends to expand its tech support team and implement a ticketing system.

Addressing a Repeated KYC Process

A repeated KYC process can arise from changes in legislation or sanction packages. It may also be prompted by new information about a customer, such as detection of suspicious transactions or other questionable customer activities.

The Delisting of EUPi from the FlatQube DEX: Restoring Liquidity

Directly related to EVER and Everscale, Pi Union discontinued support for the pair. The current situation is as follows:

Pi Union sold 150,000 EUPi when the pairs were created, receiving 400,000 EVER in return. Pi Union neither withdrew nor spent these, so they remain in the account. However, due to the crypto winter, all liquidity left in the native currency because of EVER volatility. Pi Union is now assisting Everscale in restoring EVER’s value back to the ratio of 400,000 EVER to 150,000 Euro.

Given the circumstances, there are two options: return EVER to the purchasers, or wait for EVER to increase in value and liquidity to recover, before re-introducing the pair to the FlatQube exchange.

The Presence of EUPi Token in the Venom Wallet: Implementation Plans for Cryptocurrency on the Venom Blockchain

Pi Union is considering cross-platform and cross-currency transactions between Venom and Everscale, and between digital dirham and EUPi.

Development Plans for the Next 2–5 Years? Will there be Future Support for Everscale Apps?

Pi Union will persist in supporting Everscale. The plan for the coming years is to adopt the Everscale-native currency as the primary payment, with settlements in the Balkans region.

Pi Union’s Vision for the Future of Cryptocurrencies and Interactions with Traditional Financial Institutions

Modern blockchain technologies are poised to gradually replace traditional methods within the realm of traditional financial institutions. Over time, electronic digital money or other innovative technologies are likely to eclipse older forms of payment. It signifies a generational shift.

We appreciate the community’s attention. Pi Union eagerly anticipates the upcoming AMA session.

About the Everscale network

Everscale is one of the most technologically advanced blockchain networks, incorporating all of the blockchain innovations and concepts of recent years. Its versatility gives it the potential to become a decentralized hub for lots of blockchains and resource-demanding applications such as GameFi, DeFi, supply chains, etc. Due to its dynamic multithreading and sharding technology, there’s always more room to add new nodes and shards to handle any load — and that’s something that no other blockchain can offer yet.

Everscale has powerful developer tools, such as compilers for Solidity and C++, SDK and API, client libraries ported to more than 20 languages and platforms, and a range of decentralized browsers and wallets.

More About the Everscale network:
Website | Twitter | Whitepaper | Github | Telegram Ann | Telegram | Discord

What is Pi Union and its involvement in Everscale was originally published in Everscale on Medium, where people are continuing the conversation by highlighting and responding to this story.