Project Research | Scalable PoW EVM Blockchain Syscoin

1. Project Introduction

Syscoin is a full-stack modular PoW blockchain solution merged with Bitcoin mining. Its underlying Syscoin native (UTXO) blockchain network, which provides data availability and finality, runs in conjunction with an Ethereum Virtual Machine (EVM) called NEVM (Network Enhanced Virtual Machine), which provides the Ethereum equivalent , while inheriting this chain to enhance security and provide scalability through Rollup.

Syscoin makes Rollup more secure through Bitcoin merged mining settlement, multi-swarm BLS signature finality, and proof of data availability. As an enhancement on top of the Satoshi consensus, Syscoin adds resistance to selfish mining and maintains the chain’s resiliency in the face of non-final scenarios by enabling the protocol to resolve. Unlike Ethereum’s Casper, in these cases pure Satoshi consensus is achieved, not forks.

Multi-sig and data availability are unique innovations of Syscoin

2. Project Vision

Syscoin’s mission is to build truly scalable Web3 infrastructure and dapps to serve the needs of the global population, leveraging the first modular blockchain with EVM compatibility, anchored in the Bitcoin network, and scalable through Rollup .

Since the launch of Bitcoin, its goal has been to become an alternative to decentralized finance, and Syscoin has the same goal of facilitating the transition to a fairer financial reality by combining the security of Bitcoin with the functionality of Ethereum in one Create new opportunities for decentralized data-driven development in a coordinated modular platform. Syscoin is not only built on the security of Bitcoin, but also follows the principles that guide it to become the most secure and decentralized network in the world.

Scalability is the core value of blockchain, and Syscoin is leading the next step in the development of blockchain technology, integrating the security of Bitcoin with the Ethereum graph through Optimistic, ZK-Rollups, cross-chain ZK-Rollups and other Layer2 technologies. Complete programmability is transformed into true scalability.

3. Development History

4. Team background

The team behind Syscoin comes from SYS Labs and the Syscoin Foundation. Team members have different expertise in blockchain technology, cryptography, software development and business strategy.

The Syscoin Foundation is a non-profit organization founded in 2018 with a mission to help develop, guide and nurture the open source decentralized Syscoin blockchain project. SYS Labs is a for-profit entity independent of the Syscoin Foundation, focused on building products on top of the Syscoin ecosystem to drive adoption and utility to new heights.

Jagdeep Sidhu is the CEO and Chief Technology Officer of the Syscoin Foundation. He is good at blockchain technology and basic business practices, and is good at technologies related to scalability and system interoperability. Before joining Syscoin, Jagdeep Sidhu was a software engineer.

Michiel is the Vice President of the Syscoin Foundation and is mainly responsible for Syscoin’s marketing activities

Willy is the financial director of the Syscoin Foundation. Willy is an experienced software engineer. He also actively serves as the head of the Chinese area of Syscoin.

Chris is a member of the Syscoin Foundation Board of Directors and is responsible for market relations. He is also a Java developer.

Bradley is a board member of the Syscoin Foundation and a blockchain solutions consultant. Nearly 25 years of experience in software development and information systems, primarily in relational database administration, SQL development, and data analyst roles in a variety of environments and industries.

SYS Labs’ current operations span the Metaverse, NFT and gamefi platforms, as well as regulatory-compliant Rollups, all with state-of-the-art user experiences and all secured by Bitcoin. SYS Labs is like a combination of Ava Labs, StarkWare, and Matter Labs, and its focus is to get the world on board with Syscoin so that everyone can benefit from its features.

5. Financing information

Syscoin has less public financing information. In the early stages of the project’s launch in 2014, 1,500 BTC were raised through pre-sales.

In 2022, the cryptocurrency exchange MEXC will launch a US$20 million Syscoin Ecological Fund to support the development of the Syscoin ecosystem.

6. Project Structure

NEVM - Network Enhanced Virtual Machine, powering smart contracts on Syscoin

The Ethereum Virtual Machine (EVM) provides an abstraction layer between smart contract code and the Ethereum network machines that execute it. Due to design reasons, one drawback of EVM is that it is not scalable. This means that as demand grows, the network cannot consistently provide reasonable transaction costs and fulfillment times.

Syscoin NEVM is designed to provide smart contracts and interoperability that is extensible to other smart contracts while maintaining low cost and high performance, and provides powerful decentralized settlements powered by Bitcoin’s own proof-of-work security model and through Merged mining to ensure. Blockchain users and market participants will increasingly recognize the importance of proven security, especially as the risks of various experimental security models “come back to square one.” Additionally, once Ethereum moves to proof-of-stake, other proof-of-stake computing platforms will become redundant, while Syscoin’s security will continue to be important.

With NEVM, Syscoin essentially combines the strongest elements of Bitcoin (security model, hash rate potential of merged mining, UTXO efficiency, and compatibility with future UTXO advancements) with Ethereum (broad utility of generalized computing) into one In a single decentralized coordinated financial computing platform. Syscoin will also improve in these two areas. For example, on the UTXO side, chainlocks will address Bitcoin’s long-standing “selfish mining” vulnerability and harden the network against the effects of reorganization after chainlocks are established, which typically takes up to a minute after each block .

NEVM will enable zero-knowledge proofs, providing scalability and trustless interoperability for Turing-complete smart contracts.

PoDA – Syscoin Layer 1 Data Availability Solution

Data availability needs to exist within the security domain of L1 so that Rollup can properly serve critical DeFi applications by ensuring the ability of users to exit to L1. Syscoin’s L1 DA solution is called PoDA (Proof of Data Availability). Syscoin’s PoDA differs from Ethereum’s danksharding in how data is stored, presented, pruned, and fees are calculated. PoDA’s properties make it a valuable alternative to Ethereum’s ongoing data availability solution, Proto-Danksharding.

The advantages of PoDA can be summarized as:

• Cheaper deals
• No need for data sharding
• Achieve higher data throughput through efficient Keccak data blobs
• Guaranteed by Bitcoin’s own PoW plus Syscoin’s finality
• More adaptable to network-based outages/censorship
• A simpler data fee market based on Syscoin’s UTXO fee market
• Satoshi Nakamoto’s hypothesis: Only one honest node is needed to guarantee data

Rollux - Rollup-based L2 suite for extending NEVM smart contracts

Rollux is a set of Rollup’s L2 solutions designed to provide EVM users with near-instant low-cost transmission, execution and contract deployment. Rollux leverages Syscoin’s L1 for best-in-class secure decentralized settlement and Syscoin PoDA for L1 data availability, delivering greater efficiency, lower cost, and higher throughput than other L1 DA alternatives. .

Rollux provides the most cost-effective user experience with the lowest possible transaction fees. It also increases security to a level only possible through PoW merged mining with Bitcoin. Rollux is built on Bitcoin and Syscoin to take full advantage of both blockchains. Bitcoin provides security and decentralization, and Syscoin provides EVM compatibility and a powerful dual-chain design to meet the needs of global value exchange. Currently, approximately 25% of Bitcoin mining power is also used to mine Syscoin at no additional cost. In this way, Rollux tries to solve the blockchain trilemma.

Rollux joins the Ethereum developers and ecosystem into the Bitcoin ecosystem, with Syscoin and Rollux acting as a bridge. This integration removes the barriers that have historically separated the two, maintaining the security of PoW and the importance of the Bitcoin network. The trilemma sets a new standard on the three variables. As a suite, Rollux includes Optimistic and ZK-based Rollup, enabling users and projects to choose the network or solution that best suits them. As technology evolves, Syscoin will be able to hybridize between these technologies in the future.

Z-DAG - an instant settlement protocol with probabilistic security for UTXO transfer of assets

Z-DAG is proprietary to Syscoin’s native UTXO chain and is not designed to run on Syscoin’s EVM chain (NEVM).

Syscoin’s Z-DAG is a blockchain throughput scalability solution that adds virtually no complexity. It solves a problem prevalent across the industry, not by changing mission-critical fundamentals or reinventing the consensus algorithm, but by maximizing the utility of the tried-and-true Bitcoin code with the appropriate tools and conveniences on the network.

Based on Satoshi Nakamoto’s “snack machine” concept, Z-DAG aims to enable peer-to-peer electronic cash and extend exchange methods to tokenized assets. It leverages mempool awareness and fast relay topology in a network of independently running full nodes, all verified first, then trusted. A high degree of probabilistic safety is achieved through fast propagation across time-ordered memory pools. This global memory pool is interactive and useful to the recipient by providing facilities for memory pool state awareness.

The probabilistic security provided by Z-DAG guarantees that transactions will not be double spent and will be accepted into the block and settled on-chain. This makes the fee market more efficient than bidding for blocks. Provides secure high-throughput service even when the block is full. Technically, this is an L1 solution as the mempool is within the blockchain security domain and all valid transactions using Z-DAG are settled on-chain via Bitcoin Core compliant consensus.

7. Development results

Ecological Construction

There are currently many ecological projects on Syscoin, including various project types such as DeFi, NFT, GameFi, and infra.

Although there are many Syscoin ecological projects, their development is relatively slow, and there is only one project, PegaSys, that is actually on the chain, and the TVL on the entire chain is only more than 400,000 US dollars. Currently, there are few well-known applications on Syscoin. If you want to maintain a competitive advantage in the future, you still need to develop high-quality projects native to the chain.

Community status

Twitter: 226,674 followers, average fan interaction

Discord: 106,673 people, Telegram: 6074 people, the activity rate remains at around 2%.

Overall, the project’s community activity is relatively low

8. Economic Model

Token Distribution

SYS is the native token of the Syscoin platform. Its token economics are based on Ethereum’s EIP-1559 proposal, with no maximum supply cap, and the supply of SYS is based on deflationary burning of protocol issuance and transaction fees. As of this writing, Syscoin has a circulating supply of 747,394,570 SYS and a market capitalization of approximately $63 million.

After the latest upgrade to Syscoin4.0, the block reward time became once every 2.5 minutes, with an average of 86.8 SYS generated per block. Broken down, for the master node, each block reward is 58.62 SYS, and for the miners, each block reward 19.52 SYS, with 8.675 SYS rewarded per block for governance. These masternode rewards will increase to 79.15 SYS for those with 1 year of experience and to 117.25 SYS for those with 2.5 years of experience. These rewards shrink by 5% annually.

According to Chainz data, as of September 19, 2023, there were 89,206 SYS currency holding addresses, the top 100 holding addresses accounted for 48.06%, and the top 10 holding addresses accounted for 38.27%. Overall, SYS currency holding addresses are scattered and the degree of decentralization is high.

Economic Model

As a utility token, SYS has multiple functions within the Syscoin ecosystem. Specific use cases:

• Miner rewards: as an incentive for network members to verify themselves
• Transaction fees: SYS holders can use tokens as gas fees for transactions, smart contract deployment, etc.
• Custom Token Issuance: This token is also used to create the Syscoin Platform Token (SPT), a custom asset token using the Syscoin Token Platform.
• Platform governance: SYS tokens also play a governance role in the network. Token holders can participate in the decision-making process through the voting mechanism, allowing users to use platform functions and participate in platform governance, contributing to the development of Syscoin.

Syscoin’s token economics are affected by iterations of its platform. The project began as a blockchain protocol to extend Bitcoin to enable the creation of decentralized markets. It has been upgraded and upgraded many times, continuously introducing new features and functions to the platform. The most recent Syscoin 4.0 introduced a novel UTXO asset platform implementation with instant, pseudo-interactive, zero-confirmation, double-spending protected cryptocurrency transactions (Z-DAG) and EVM, both through integration with Bitcoin Mining is protected by the Nakamoto consensus PoW.

9. Advantages and Risks

Advantage

The first is scalability. Rollup running on Syscoin, the service is highly scalable and can achieve greater scale through Validium and modular expansion. So the scalability aspect is heavily covered. Scalability doesn’t just mean high transactions per second, it also takes into account transaction costs, making transactions on Syscoin cheap even at high throughput.

The second is decentralization. Syscoin runs approximately 2,500 active masternodes on its network, and this number may increase as the blockchain network grows and offers rewards for hosting masternodes. This means that Syscoin is not only scalable, but also decentralized.

Finally, there’s security. Due to merged mining with Bitcoin, Syscoin currently has about 25% of its computing power used to mine Bitcoin, which is already a lot of security. The Syscoin team is now looking to onboard more Bitcoin miners as it aims to become one of the most secure settlement layers. But it is not only satisfied with this, Syscoin also uses multi-signature to achieve finality, eliminating the risk of attacks such as 51%, selfish mining, and remote MEV attacks, making it more secure.

risk

First of all, projects on Bitcoin Layer 2 and side chains are gradually getting started. In addition to Syscoin, there are tons of other more mature markets that already exist, and Syscoin has a hard time getting people to actually download an app to access the market.

Secondly, the current scale of the Bitcoin ecosystem is still far behind that of Ethereum. First, there are fewer well-known projects compared to Ethereum. Second, the user scale is not as good as that of Ethereum. The Bitcoin Layer 2 ecosystem is still in the construction stage. It needs to be verified by the market.

references