VSC Proposal - Interim - Bring Smart Contracts to Hive

Greetings HIVE community! We are excited to announce our first DHF funding proposal for the VSC project. This is the first part of a two part proposal, the first proposal will give us an initial burst of funding to build out a basic VSC testnet over the next 4-5 months. Around that same time of the release of the testnet we will put out our second main VSC proposal, which will allow us to continue development for the next year. We'd appreciate the support from the community and we invite you to thoroughly read through this proposal and associated proposal draft (essentially our whitepaper)

For those who don't know, the VSC network is a next generation smart contract system that will power the next generation of HIVE DAPPs. For a very long period of time, HIVE has completely lacked the ability to create, maintain and operate truly open smart contracts either on the base layer or an equivalent L1. VSC aims to completely change that, by providing a universal, composable, and modular layer for DAPPs to customize, create and reuse smart contracts. With the advent of VSC, we could bring HIVE into a flourishing ecosystem of longterm builders and growth.

Additionally and most importantly, VSC isn't just a theoretical project. We've been operating a very basic testnet to demonstrate and experiment with different designs. We already have 10+ community ran witnesses. So far, we've learned a great amount of information about how VSC will look and the challenges ahead of it. We are up for the challenge of this massive endeavor.

The goal

We aim to provide the community with a powerful but flexible system to handle L2 smart contracts. VSC smart contracts will be match and past attempts at bringing smart contracts to HIVE. The time is now to be excited about the future of HIVE.

Aside from addressing already existing concerns, our aim is to also address future concerns of scalable and multi-chain/cross-chain support. Our longterm goals of being scalable require us to use scalable datastructures like CRDTs, DAG, etc and utilize a unique consensus structure to handle the load. Ultimately, this utilizes HIVE as the base layer for communication, providing VSC with lightning fast confirmation times and censorship resistance. We are actively looking into solutions that will help further make both VSC and HIVE more efficient for this type of project.

What you need to know:

VSC Brings:

• Powerful smart contracts
• Ethereum User onboarding
• Wrapping of BTC to HIVE
• Smart addresses - for payment processors and custom payment logic
• Smart Contract Controlled HIVE accounts
• Offchain accounts (DID standard)
• Long term scalability
• Opportunities for DeFi on HIVE
• Aid the development of the SPK network, Games, NFTs and many other projects on Hive.
• Bring HIVE up to speed with the latest technology
• …And more

We will be releasing several blogs over the following months to further clarify each of these points and why they are ultimately important.

For more information about the core of what VSC is, see our website and draft proposal below.

@vsc.network/our-first-dhf-proposal-initial-draft

Why VSC:

https://twitter.com/taskmaster4450/status/1715008177048076697

- taskmaster4450

…along with many others showing their support.

Scope

• Support for offchain accounts (DIDs)
• Minimum scaling capabilities - with room to improve
• MVP smart contract APIs and capabilities
• MVP bitcoin wrapping interface
• No fees
• Demo of VSC multisig & “contract output actions”
• Build out of P2P protocol for mempool & multisig operations
• Minimum security

Core Components

• Development of standards for VSC data formats and underlying structures
• Develop and maintain a full fledged smart contract layer.
• Open and customizable smart contracts
• Graphql Interface
  • Supporting smart contract state
  • Transaction info
  • Node Info
  • Indexed searches
  • Custom models
  • Etc
• Anchor Chain

Witness system

• Also known as validators
• Voted in DPoS style
• Only a single main validator set
• Responsible for the multisig
• Acts as the final arbiter of the network
• Produces blocks, TX validation, helps keep track of global state (anchor chain)
• Very lightweight node operation

Smart contracts

• Javascript/Webassembly based smart contracts
• Provide DAPPs with a versatile and flexible smart contract
• Ability for smart contracts to own on chain funds
• Simple key/value store for storing basic contract state - mimic LevelDB
• TX input options
  • HIVE account
  • Included block
  • Signed by authority

Executor pools

Executors pools are responsible for the sharding & maintainership of smart contracts on VSC. Each pool is a separate set of nodes from other executor pools & the main witness system. This does not mean a node will be excluded from operating in multiple pools, rather the goal is to enforce horizontal sharding as the number of nodes on the network increases with usage.

• One of many pools for scaling
• Higher node requirements per node
• Maintains the state of smart contracts
• [Research] Joining smart contracts
• [Research] Shuffling pools
• [Research] Fraud requests / Fraud Proofs

Standardized smart contracts

• Development of common use case smart contracts
• Ownership/ledger contract
• Token contract
• NFT contract
• DEX contract for both NFTs and tokens
• Bitcoin chain relay
• (More will be added in the future)

Decentralized Bitcoin wrapping

Aside from VSC bringing smart contracts to HIVE, VSC also plays an important role in making wrapped Bitcoin a reality on HIVE. Due to the nature of VSC smart contract scalability, VSC contracts are a perfect fit for the data intensive task of handling cross chain wrapping. To do this, we've created a technology called the "chain relay." The easiest way to explain is it's essentially a compressed copy of the Bitcoin blockchain into a relatively light weight smart contract. This contract gives us the ability to prove or disprove wrapping operations on the Bitcoin mainnet. Handing out wrapped Bitcoin or slashed collateral where needed.

The chain relay can also do more than just wrapped. It enables dapps to create arbitrary functionality reliant on something happening on the Bitcoin mainnet. For example a VSC smart contract using the chain relay, can help coordinate a swap of a Bitcoin Ordinal between a seller and buyer.

We will ultimately need to build:

• Collateralization of wrapping providers - redeem or slash
• Bitcoin price oracle.
• Indexing of wrapping providers
• Health checks and balancing collateral distribution.
• Bitcoin chain relay (currently being built/in testing)

User facing Applications

As a few of you already know, we are in the process of building a specialized frontend for handling the wrapping/unwrapping of Bitcoin. The frontend would not only handle wrapping, but also trading between HIVE/HBD, not unlike tribaldex/simpleswap. However, we have a lot more planned for what this will ultimately turn into, so stayed tune for a release date and our future plans. You will not be disappointed.

• “VSC Tokens” Portal
  • Ability to wrap BTC into HIVE from web app
  • Trade wBTC against HBD/HIVE/Other supported tokens
  • Simple interface for handling wrapping, trading and other standard DeFi features
  • Send / receive wBTC
  • ..longer term plans will be released at a later date.

Name Subject to change

Research

To assist with the future development of the VSC project. We have established multiple research projects that we will pursue to guide the subsequent phases of VSC development. These may or may not be worked during the timeframe of this proposal, but our goal is to work on them. Additional development of these goals will mainly be placed on future proposals.

• Fully trustless L1 < — > L2 bridging
• Fully trustless L2 < - > L2 bridging
• Research and partial implementation of “sharded proof of stake” consensus (SPOS)
• Research and partial implementation of improved cryptographic formats for higher efficiency consensus and lower storage impacts of consensus.
• Research Smart contract inheritance - Allows smart contracts to inherit properties from standardized smart contracts. Example usecase: token contract with a custom burn function.
• Fraud proofs & security measures to accommodate for smart contract state sharding
• VSC specific functions & Various data types

Budget

We are asking for $55,491 over the next 4 months. This will serve as a transformational phase between now and the testnet we will release in around 4-5 months, along with setting the vision for what VSC will ultimately look like. While this might seem like a relatively small amount, we will need your continuous support on this proposal and future proposals to ultimately build out this project.

Thank you for letting us be part of the HIVE community.

Timeline

• Initial DHF funding Proposal
• Proof of concept Bitcoin Wrapping Demo
• Testnet Release 3-4 months from now
• “Production” release of Bitcoin Wrapping
• Mainnet around end of 2024

Subject to change due to unforeseen challenges or new scope

Team

• @vaultec - Founder
  • The founder of VSC and proven web3 developer. Originally joining Hive in 2018, he has a long history of working with web3 technologies and platforms. Currently building SPK, 3Speak and VSC
• @platinium - Core Contributor
  • Fullstack developer with a strong interest in web3 and blockchain technology. He has been working in his free time on core VSC features such as the accounting system.
• @piyushjha - Frontend Developer
  • Frontend developer intern recently started with the VSC project. He is currently building the bitcoin swap UI.
• @manuphotos - Community Manager / Social Media team
  • Founder of HiveCuba | Photographer | Community Manager of Hive Keychain | Developer
• We will expand the team where needed.

Socials

Website: https://vsc.eco

Twitter: @vsc_eco

Hive: @vsc.network

Github: https://github.com/vsc-eco

Repo: https://github.com/vsc-eco/vsc-node

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