Let’s dive into why Syscoin is the most ideal layer 1 settlement system in the world. I will pin this tweet storm for educational purposes:
Syscoin is the only dual chain UTXO / EVM architecture where all of the following characteristics are working in perfect harmony to comprise the layer 1 protocol. Lets start with UTXO chain:
- UTXO chain with UTXO assets integrated following bitcoin policy rigorously with daily updates
- Onchain scale using ZDAG (which is just unlocking double-spend detection while btc doesn’t propagate double-spends w/ non RBF TXs we do, and double the bandwidth costs to account for it).
- ZDAG + LN — Resilient payment system. LN itself has issues on BTC due to flood&loot because of lack of bandwidth so we parameterized Syscoin with enough bandwidth to serve the 7b people in the world doing TXs to settle once in a while to mainchain without loot attacks
- UTXO asset notarization — think walled garden LN where CBDC can issue their currencies and notarize every tx on chain and thus LN can work AS IS without any changes but be completely compliant. Also because its notarized, then the on-chain TXs can offer instant double-spend protection. Think LN using onchain TX as a fallback due to liquidity/routing issues on LN.
- Finality built into protocol — Due to merged-mining we want to solve for the CoiledCoin type attack Luke Dash Jr exposed in 2012 related to AuxPoW systems, where adding finality through our custom BLS quorum system adds finality and removes selfish-mining concerns.
- The master nodes running add seniority for long-term incentive to run full nodes and create this finality. After 1 year you get 35% bonus subsidy and after 2.5 years you get 100% bonus. There is no negative enforcement (slashing or punishment) but only positive re-enforcement in our system, we don’t “hit” we incentivize through positive outcomes.
- Finality is not guaranteed but statistically probable. If consensus on finality not achieved, fall back to longest chain rule of BTC.
On our EVM chain (NEVM):
- Because EVM chains are inherently focused on utility and not SoV we want long term subsidy with a burning model (EIP1559). This is why you cannot do DeFi on Bitcoin itself. We model our inflation based on population growth of ~1% and dropping over time.
- Remember we added finality to solve selfish-mining? It also prevents L1 MEV attacks which is critical to a DeFi system (again why BTC itself cannot serve DeFi)
- We heavily focus our NEVM on being a settlement to rollups or a modular framework for contracts. We disincentivize layer 1 executions for everyday transactions by having a really slow block time (2.5mins) which is used to guarantee stable finality and stable dissemination of blocks/transactions across the network in the most efficient way. Fast block times cause issues and aren’t really useful to a layer 1. A lot of the new research around layer 1 EVM’s are now focusing on either removing execution from layer 1 or somehow penalizing by increasing TX fees for regular TXs compared to rollup TXs on layer 1. Again we do not penalize we enforce through positive actions (simply move to rollup to experience web2 speeds with web3)
- We can keep layer 1 gas limits low enough since most transactions will be from rollup settlements. This will create more efficient fee markets and better full node participation with lower HW requirements long-term.
- The BTC miners earn a static subsidy through EIP1559 so as BTC subsidy tends towards 0, there is a shiny new object earning them perpetual income through the re-use of existing work that will not go away. This makes BTC mining viable long-term and not rely on fee-markets alone.
- We use Proof-Of-Data-Availability (aka blob TX data — see Idealisms post for more information on it) to scale of data availability with layer 1 security for abundant data availability for rollups.
All of these reasons contribute to a cohesive and intricate design that leverages both BTC and EVM gold standards with some interesting token economic features to create the glue necessary for an ideal layer 1. More details on the idealisms outlined with some of these concepts here: https://jsidhu.medium.com/blockchain-idealisms-b61c5781ddc3