Next phase of VSC Hive Smart Contracts and V4V Joint Proposal

Greetings, Hive community! Following the recent launch of the VSC testnet, we are launching our second DHF proposal to cover the next phase of development. Many things have occurred over the last 9 months of heavy development; from building VSC itself, to setting the stage for future L1 changes, the VSC project is quite active and working hard. Despite facing a few technical challenges and delays, like making the network stable, we were able to break through and deliver. These challenges created definite setbacks in our development cycle, though it has shaped the vision of what VSC would look like and how it plays an influential role in the future of Hive.

Our bitcoin wrapping demo was showcased in December of 2023, and in this proposal we will complete that work and light up wrapping of Bitcoin mainnet to Hive. We had to temporarily shift our focus over to developing the core of the network, but now we are refocused. Decentralized Bitcoin wrapping plays a critical role in decentralization of Hive trading from CEXs and making Hive the best payment system for Bitcoin. In this proposal, not only will we release Bitcoin wrapping, but we will target support for all major Bitcoin-forks such as Litecoin, Dogecoin, BCH and more. VSC is the only project on Hive building decentralized Bitcoin wrapping, and one of a handful of projects within the entire cryptocurrency ecosystem doing so. The technology we are building allows Hive to compete with Thorchain, Maya protocol, and other “hot” projects focused on cross-chain trading. With lightning-fast, feeless transactions, Hive comes armed with powerful tools for users and platforms alike. In addition to Bitcoin-like forks, we will start initial research into wrapping EVM tokens to Hive, unlocking a whole host of amazing possibilities.

Our focus is not only on wrapping; while a large portion of our goals are dedicated to wrapping, bringing smart contracts is crucial to the success of Hive, which is very long, long overdue. Now, we have made that a reality.

Why VSC?

For several years, Hive has lacked any form of customizable smart contracts, and with VSC, that gap has been filled. VSC is a unique L2 offering flexibility and a high degree of L1 security. VSC is one of a small numbers of L2s with a strong emphasis on security. Many EVM L2s use a centralized multisig held by only a few entities. With VSC, each additional node on the network increases the security of assets held on Hive and the network as a whole. The network already has more than 50 registered nodes, and continues to grow.

Smart contracts on Hive bring revolutionary changes. Programmability is key to making Hive the ultimate payment processor for Latin America and countries without access to digital currency.

VSC Brings:

• Powerful code in any language smart contracts
• EVM Wallet compatibility
• Wrapping of BTC to Hive
• Tools for payment processing of Hive, HBD and wrapped Bitcoin via automated contract.
• Smart Contract Controlled HIVE accounts
• Native Lite accounts on L2 and soon L1 as well.
• DeFi directly on Hive
• Aid the development of Games, NFTs and many more projects on Hive.
• Low chain bloat - scalable offchain
• …and much more

Working with v4vapp

V4V.app serves as Hive’s gateway to and from the Lightning Network which is the most widely used Layer 2 scaling solution for Bitcoin. Lightning has plenty of problems, but it does have some very wide adoption and big venture capital backing. It is the perfect way to move modest amounts of Bitcoin around. Big services such as Binance, Kraken, Bitrefill and many retail outlets especially in South America, are using Lightning today.For almost two years @brianoflondon has been working on @v4vapp and maintaining it.

Combination of VSC and V4V.app

Up to now, v4v.app has converted Hive and HBD in BTC Sats and vice versa. The aim of tying v4v.app and VSC together within this proposal is to replace the conversion with a programmatic access to internal Hive / BTC and HBD / BTC markets within VSC.

V4V.app will simplify and become only a gateway in and out allowing very fast and cheap movement of Sats without main chain Bitcoin transactions.

Decentralisation

Up to now the API and the frontend of v4v.app has been open source. The back end is still closed. This has been purely because @brianoflondon wasn’t comfortable with the security implications of making this part public.

With the outsourcing of the exchange functions to VSC, @brianoflondon wants to re-write this back end and simplify it tremendously. This will be a fully public repository.

The goal is to allow anyone to run this back end.

Lightning Node

There will be a requirement to manage a Lightning node but also be a VSC Wrapping provider. This won’t be suitable for everyone, but the goal of extra funding is to re-build the system and provide documentation and help for suitable candidates who want to run this service.

By this method, we can have a number of V4V.app providers and increase the fault tolerance, safety and censorship resistance of the system.

In review

What VSC has accomplished thus far.

Stable Testnet - Over the last several months of developments we were met with numerous challenges, from picking the right technology to bug fixes. Despite this, we’ve been able to build a stable testnet. We’ve made substantial improvements in Hive block streaming and VSC consensus. As of writing this, 93% of VSC nodes stay synced within 2 Hive blocks. In the last week alone, we have resolved over a half dozen major issues with the network, further improving VSC.

Write smart contracts in any language - VSC has native support for web assembly smart contracts, which means developers have access to varieties of programming languages and tooling. Our official SDK only supports AssemblyScript (javascript-like), though, in the future, we will expand support to more languages, which will bring in a large developer base of programmers from traditional fields.

Cross-chain wrapping - From day zero, wrapping has been a core focus of this project, especially in the topic of security and decentralization. To solve this problem, countless hours of research and development were undertaken, and as a result, we have developed a strategy that ensures decentralization and highly secure wrapping using the consensus of Bitcoin L1 and collateralization.

Lite Accounts - When VSC was first conceptualized, it was envisioned to support native lite accounts through its innovative off-chain system. Not only did we build lite accounts natively into VSC, but we are actively working on direct interoperability with other ecosystems such as EVM. Our vision is not only to make VSC compatible with EVM identity but also make it possible for seamless ownership of native Hive using your Ethereum wallet. In the near future, VSC Lite Accounts will support using the Hive L1 directly.

VSC Block Explorer - ****A close friend of the VSC project (@techcoderx) has built a block explorer for VSC. The website is available at https://vsc.techcoderx.com. It plays an important role in debuggability and user-friendly design

VSC DeFi UI - We have built a basic user interface for handling VSC DeFi such as wraps/unwraps, swaps, etc. We have several plans to mature this UI into something much larger than just a simple swap UI, so stay tuned for future updated and long-term plans. We believe part of our work is having a good UI not only as a basic demo, but a mature products users can interact. Our custom UI will be one of the first to support native Metamask login using VSC lite accounts.

Next Phase

Building the L2 network - Building out the core of the VSC Network is a critical to reaching a sustainable, secure, and future-proof network, allowing for larger endeavors such as transparent sharding. Over the last 6 months, we have been busy researching and figuring out the optimal design for how VSC consensus should operate and be a secure L2. We have mostly finished this work and now the next stage is continuing integration of these technologies into the VSC core. The testnet already has incorporated some of this technology and we will continue to push forward.

Partnerships + Frontend integrations - An important part of the VSC Project's outreach campaign is integrating VSC with as many frontends as possible. In addition to integrations, we are looking forward to working with developers building on VSC and help collaborate to better improve our tooling and documentation. We will put in considerable amounts of work to streamline integration with VSC.

Decentralized Bitcoin wrapping - A large focus of VSC is enabling fully decentralized Bitcoin wrapping to Hive. In conjunction with v4v, our wrapping technology can be incorporated to create a seamless bridge between Bitcoin mainnet, lightning network, and wrapped bitcoin on Hive. Part of the next phase of VSC development’s goal will heavily focus on making HBD the stable coin of the lightning network and creating powerful payment technology for everyday use.

Wrapping More Assets to Hive - Long term, we aim to support more bridged assets to Hive aside from Bitcoin. We plan to support Bitcoin forks such as LTC, DOGE, BCH, and more as they require minimal effort to develop. Other assets such as ETH, BSC, SOL, etc are on our list to explore. We acknowledge previous efforts to bring Hive to Thorchain and Maya protocol. We will collaborate with these projects to bring Hive to as many places as possible.

Swiss Army Knife of Hive - Deploying VSC smart contracts requires zero dedicated infrastructure. Easily create programmable logic on the chain without running heavy infrastructure or dealing with complicated engineering challenges. Whether you are deploying zero code tokens or massive projects, VSC is fully equip to handle a variety of use cases.

Scope

General:

• Continued monitoring of the current network and testing for both security and bugs
• Documentation
  • Text tutorials
  • Video tutorials
  • Explainer text documents and videos
  • Lower level software and architecture documentation
  • Smart contract documentation
  • API definitions

Core Development:

• Implement changes to the Hive L1 to support massive multisigs
• Develop indexer technology for handling VSC tokens and NFTs for use across both Hive and VSC.
• Real time transaction streaming and confirmation
• [Research] lite/SPV clients for top blockchains like ETH, BNB, Thorchain, etc
• [Research] zero knowledge proofs/homomorphic encryption and relevancy to VSC/Hive
• [Research] verkle trees/improvements to lower level data structures
• [Research] Hive Engine migration and tooling

Smart contract VM

• Support Rust/Golang based smart contracts
• Dynamic intercontract call/read linking
• RC Metering - research and implement
  • Computation cost
  • Storage cost
  • IO cost
  • Contract calls / external bindings cost
• Indexed APIs for defining indexable queries and searches
• Dynamically linkable common use libraries
• Smart contract modular inheritance - i.e smart contracts can implement functionality from other contracts
• Deterministic randomness
  • Select from list - i.e lottery
  • Generate random seed
• Intents scope
  • Token intent
  • Intercontract write intent
  • Entrypoint specific intent
  • RC limit intent
  • Permanently allowed intent
• Crypto APIs
  • Elliptic curve (secp256k1, ed25519)
  • BLS curve
  • Hashing
    • Sha256, RIPEMD-160 (already implemented)
    • Keccak
    • Others TBD
• Implement 128-bit and 256-bit integers either by library or binding.
• [Research] Identify best suited smart contract languages to be supported next

Consensus:

• Implement consensus staking/proof of burn consensus for node operation
• Implement highly efficient consensus agreements for supporting a large number of node operators
• Support VSC lite client mode and smart contract consensus
• [Research] Sharded proof of X consensus
• [Research] Fraud proofs or other relevant measures to building long term scalability

Lite Accounts:

• Support Ethereum Address resolution and ENS domains indexing
• Implement HBD staking for RCs (currently, completely unrestricted)
• Implement RC instant delegation
• On chain interactions
  • custom_json
  • transfers
  • [Research] receive beneficiary rewards
• Hive L1 functionality
  • Lite accounts can broadcast directly to the Hive L1
  • Build a secondary indexer for 3rd party use/integrate with HAF
• Smart addresses
  • Programmable and customable addressees defined by smart contract code.

Contract Development:

• Develop standard smart contracts:
  • DEXs & Liquidity Pools
  • Tokens
  • NFTs
• Bitcoin wrapping:
  • Chain Relay [in progress]
  • Wrapping Contract
  • Liquidity pool/DEX
  • Price oracle (LP)
• Software Development Kit
  • Bitcoin utilities
    • Decoding Bitcoin transactions and blocks
    • Verifying proof of work headers
    • Verifying merkle proofs
    • Payment verification

User Facing Frontend

• Develop a UI for handling minting of tokens and NFTs on VSC
  • Ready made token in a box
• History feed
  • Filter options
    • Filter by sender
    • Filter by receiver
    • Filter by amount
    • Filter by token
    • Filter by timestamp
  • CSV transaction export
  • JSON transaction export
• Manage multiple virtual accounts
  • Create account
  • Delete account
  • Transfers to/from

Please keep in mind the above scope is subject to change as we develop the project. The above scope provides a rough outline and may change.

Budget

In this proposal, we are asking for 249k over 365 days with an addition 10 days of buffer, for a total of 665HBD/day. This amount covers the development of VSC and V4VApp.

Other Costs:

• Marketing & Events
• Hackathons
• Server & infrastructure costs
• Any unplanned expenses or additional developer resources
• If unused, funds will be used to cover next years development costs and/or returned to the DHF

We understand this is not a small proposal. However, the amount is only marginally higher than our previous proposal on a per month basis. VSC has a large scope and is extremely impactful to Hive. We believe this amount is more than justified given the work we have done and the importance of this project.

A substantial amount of progress has already been made, and we will continue to push forward in bringing this vision to light. VSC is positioned to bring Hive to the same level as EVM chains and in some cases even unique advantages over EVM. VSC is building for the future Hive needs.

Timeline

Over the last several months, we have made a huge amount of progress in a short period. The team has built a strong MVP and demonstrated fully decentralized Bitcoin wrapping to the community. The next 6 months will be heavily focused on building a mature and feature-rich network with a strong emphasis on enabling good UX products. Keep an eye out for revisions to the above roadmap, as we plan on releasing a revised roadmap with more granular goals for the next 12 months of development!

Summary

Ultimately, the VSC project has made substantial amounts of progress so far in bringing smart contracts to Hive. The support from the community has been amazing and we look forward to continuous support from the community.

We ask you to vote for this next DHF proposal and keep us building. If you have any questions about this proposal or the project in general, let us know in the comments below or our discord. Please do not hesitate to reach out!

Further reading

• VSC - Hive Smart Contracts Now In Testnet!
• VSC - Hive Smart Contracts - 2023 In Review
• A sneak peak at the VSC smart contract SDK
• Massive multisigs on Hive - Proposal to the Hive core team. & The future of Multisigs & cryptography on HIVE
• Our original DHF proposal
• VSC Partners with V4V.APP

Links & socials

Website: https://vsc.eco

Docs: https://vsc-eco.github.io/

SDK: https://vsc-eco.github.io/sdk

Contract Template: https://github.com/vsc-eco/contract-template

VSC Node: https://github.com/vsc-eco/vsc-node

3Speak Videos: https://3speak.tv/user/vsc.network

VSC Explorer: https://vsc.techcoderx.com

VSC Discord: https://discord.com/invite/yvGXZsQTU6

Team

The VSC team is compromised of 4 engineers with strong experience in Web3 and blockchain technology.

• @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
• • Fullstack developer (backend focus) with strong working experience in Web3 and startups. He primarily works on the VSC Core and supports within the VSC team
  @geo52rey - Core Contributor
• @piyushjha - Frontend Developer
  • Frontend developer working on building the frontend focus of the VSC Project.
• @platinium - Part time Core Contributor
  • Fullstack developer with a strong interest in web3 and blockchain technology.
• @manuphotos - Community Manager / Social Media team
  • Founder of HiveCuba | Photographer | Community Manager of Hive Keychain | Developer

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