Syscoin is building Web3 on the security of Bitcoin with smart contracts like Ethereum and Rollups to scale entire smart cities.
Hi, folks. Sherpa here with another dive into scaling solutions & specifically, Syscoin. This is a pretty common theme in my articles, because scaling is one of the hardest problems any company, chain, or project has to tackle.
Syscoin’s Rollux Suite is a multi-directional approach to scalability that addresses both on-chain and off-chain scaling solutions and introduces Optimistic and later zk-Rollups to the Syscoin Ecosystem. You might remember us discussing optimistic & zk-Rollups back in December 2021, but Syscoin is attempting something a bit more holistic.
If you read my recent article on the Ethereum Merge, you’ll recall my distaste for the direction Ethereum was heading, because of several reasons I didn’t get into at the time. Foremost, security, and my belief that Proof of Work is just a better model for ensuring the security of a Layer 1.
Secondly, I’m of the opinion that a better approach would be incentivizing the migration of dapps, defi, NFTs, and other ‘heavy’ execution functions to rollups and L2s, and utilizing the PoW layer primarily for settlement & confirmation.
Thankfully, it seems like the Syscoin team is very much on the same page. They’ve very cleverly managed to take the choicest parts of several chains & add them à la carte into their architecture for a “best of both worlds” design.
Let’s take a quick look at the features Syscoin inherits & builds upon from both Bitcoin & Ethereum.
Syscoin Native Chain (Layer-1, UTXO)
- UTXO chain with UTXO assets (Syscoin Platform Tokens, or SPTs) integrated following Bitcoin policy rigorously with daily updates.
- On-chain scale using ZDAG (unlocking double-spend detection), with 90% of the code being in-line with Bitcoin’s, developers on the utxo chain can leverage these improvements while enjoying up-to-date Bitcoin technologies like LN and Taproot.
- Asset Notarization — Essentially, this allows for opt-in regulatory compliance on the native utxo chain by allowing assets to be given specific rulesets & a notarized flag, which allow token creators to maintain compliance while not oppressing the greater ecosystem with region-specific rulesets.
- Chainlocks — Because of merged-mining with Bitcoin, Chainlocks are used to protect Syscoin from 51% attacks and other issues by superseding the ‘longest chain’ rule with Longest Living Masternode Quorums (LLMQs) that come to consensus on the validity of blocks, and coupled with ZDAG finality
- Masternodes are full nodes that are financially incentivized to stay online 24/7 with seniority incentives that increase the reward the masternode is paid out, per its position in the queue.
Rather than attaching penalties & assuming malicious node operators, operators have been incentivized to stay honest & online for long periods of time (years) in order to achieve maximum profitability for their nodes. Dishonesty risks an interruption of that streak and the associated bonuses, rather than more direct punishments for proposing bad blocks like slashing.
- Syscoin is merge-mined with Bitcoin, producing a hybrid consensus model that leverages the security of Bitcoin’s Proof of Work, without any additional power consumption, to reinforce the security provided by LLMQ consensus. Finality is assumed after the next block once LLMQ consensus is reached, and in the unlikely case of the LLMQ being unable to reach consensus, it falls back to Bitcoin’s longest chain rule.
This means that in order to accomplish 51% or other selfish mining attacks, the attacker would need to control not only 60% of the masternodes, but also 50% of the hashrate being Merge-mined with Bitcoin, and coordinate everything perfectly.
NEVM (Layer-1) & Rollux (Layer-2)
With the introduction of NEVM, Syscoin added the full potential of Ethereum coupled with all of the innovations of the native chain via a trustless bridge.
When you think of bridges to most L2s, they’re communicating, but as we covered in our article on Bridge Hacks & Exploits, there is always some concern about miscommunication.
Syscoin’s NEVM & rollups are naturally interoperable and bridged trustlessly & seamlessly, though, with burn and mint functions happening in parallel on both ends utilizing dual smart contracts and SPV Proofs, meaning assets can be transferred 1:1 with full confidence & functionality.
As I mentioned at the beginning of the article, Syscoin smartly incentivizes the use of the layer one NEVM as a settlement layer for the rollups or a modular framework for smart contracts, by keeping the block time slow (2.5 minutes).
This helps guarantee stable finality using the masternode network, but it also incentivizes users & dapps to utilize the rollups for their increased speed, which keeps the bloat off L1.
Through the inclusion of EIP-1559 and having Sys function as a gas token, Bitcoin miners are further incentivized to lend security to the consensus layer.
Rollux helps scale this functionality in a number of ways. Let’s go over a few of them in brief, and dive a bit deeper in a future article, as they’re some pretty big concepts.
- Rollux Layer-2 Suite – An NEVM-based rollup suite for scaling smart contracts and financial transactions to meet real-world demand, initially this will consist of Optimistic rollups, but will expand to zkru’s, with both benefiting from the security of settlement on Syscoin’s Layer-1.
- Proof of Data Availability (PoDA) – Data Availability on Layer-1 is required for rollups to be secure enough for financial instruments, but it also contributes to expense & bloat. Syscoin’s PoDA separates proofs from archival, and stores a pruned & more succinct proof of data to Layer-1 while the raw data is available for six hours, with the assumption being that if retention is necessary, at least one honest party will retain a copy of the raw data, or repost it every six hours if necessary – which opens up potential markets for retention/reposting of data.
- DAOSYS – This is essentially a total reimagining of how we think of DAOs, with self-sovereign treasury management, and bonded capital allocation to Interest-Backed Tokens among other improvements. Honestly, it could be an article unto itself, as it takes community innovation, governance, and the idea of Defi itself to an entirely new level.
When you add in asset notarization for regulated assets, it isn’t hard to imagine a more mature ecosystem where secured or regulated assets can coexist with unsecured or unregulated assets, with users opting in to more disclosure or KYC if they want to interact with the regulated side.
I’m excited to see where this leads, as more concerns mount of censorship on Ethereum, I can’t help but wonder if there isn’t a freer future elsewhere. With the rollout of Rollux, that future certainly seems more scalable.
I’ve linked documentation throughout the article if you’d like to dive deeper, and you should. As always, trustless and verify.