This wallet uses statechains to increase the improve scalability and privacy of Bitcoin transactions.
4 min read
Updated: May 6, 2022 at 6:45 pm
Cover art/illustration via CryptoSlate
It is commonly believed that Bitcoin is one of the most private methods to send money and that payments are concealed somewhere in the blockchain. The fact is that using Bitcoin to make a payment is the most visible method to do so. Unlike a traditional bank, where your data is private, every Bitcoin transaction is recorded in the blockchain, a public ledger.
Mercury Wallet is one of the most recent Bitcoin wallets. It employs the notion of statechains and is based on the new Bitcoin layer-2 scaling technology.
As a result, the wallet may accept BTC deposits (UTXOs) without incurring any transaction fees. Because the monies are safely moved between owners without the need for an on-chain transaction.
As a consequence, as the owner, you will be able to quickly transfer complete custody of a Bitcoin amount to anybody. This improves privacy and eliminates miner costs.
Mercury wallet makes use of the unspent transaction output (UTXO) model, which is the underlying item that establishes value and ownership in a cryptocurrency like Bitcoin. A transaction ID, or TxID, and an output index number, or n, are used to identify the UTXO.
The wallet also employs a new technology known as statechains, a Layer 2 scaling solution for Bitcoin. Statechains are cryptographic frameworks made up of a series of digital signatures that pass ownership of a statecoin from one owner to the next. Statechains, like the blockchain, cannot be modified or altered, and it serves as evidence that the statecoin has not been used twice.
Statechains as a Layer 2 alternative scaling solution for Bitcoin
The primary goal of statechains is scalability. Users may use the Mercury Wallet to access this layer. Users may create statechains and conduct statechain transactions here.
Let’s take a closer look at statechains, the architecture that allows for these new private transactions. The amount of space available for Bitcoin transactions on the blockchain is quite restricted. If bitcoin enthusiasts want digital money to be available to as many people as possible, they must find a way to circumvent this restriction.
The Lightning network is the most widely used technique for scaling Bitcoin transactions at the moment. Lightning allows users to perform safe transactions without using any block space, resulting in quicker and cheaper transactions. Statechains are equivalent in this regard.
Statechains, like the Lightning network, rely on multi-signature transactions, which need many users to sign off on a transaction before it can be performed. In the case of statechains, two out of every two private keys must sign off. The user has one key, while the statechain provider has another.
To transfer cash, the user just transmits the receiver the private key. Sending your private key to someone is almost always a formula for having all of your money stolen. However, the statechain provider is intended to have the user’s back and prevent this from happening.
Let’s compare and contrast the Lightning network with statechains since the Lightning network is more well-known.
Users of the Statechain don’t have to worry about routing or liquidity difficulties as Lightning users do. The private key is easily transferred to another owner using statechains.
Unlike Lightning, there’s no requirement for a payment to go across a network, therefore there’s no chance of the transaction failing if one of the network’s hops is short on cash. Although clever new technologies have sprung up in the hopes of making this issue more bearable, liquidity is perhaps the biggest difficulty Lightning users face today. Direct statechain transactions are therefore preferable for bigger payments when routing might be difficult.
Privacy via off-chain transactions, Bitcoin swaps and private key swaps
Mercury Wallet lets users send and receive off-chain transactions, as well as exchange their Bitcoin transaction history with other Mercury users by swapping private keys. The aim is to provide a way for users to carry out Bitcoin transactions with the same amount of privacy that you would have with a cash transaction.
You can utilize swapping to increase your privacy since the wallet allows you to swap statecoins with other anonymous users using a blinded swap mechanism. To swap with other Mercury users, you must first confirm that they wish to trade the same amount of Bitcoin as you. Mercury has devised the concept of a state coin to address this issue. Like an actual coin or note, it stores an exact amount of money.
All you have to do is join a swap group via the Mercury swap conductor for the mercury wallet to automatically perform swaps with other anonymous users. In addition, the Mercury wallet provides information on the privacy status of each statecoin stored in the wallet.
To join a swap group, go to the wallet’s dashboard and click on the Swap button, then Join Group to swap statecoins with other Mercury wallet users.
Another method is to click auto swap on the coin and this will continually keep entering the coin in swaps until either you leave the wallet or you click Leave Group.
Mercury wallet uses a very straightforward mechanism to transfer statecoins from one owner to another. The statecoin receiver first creates a statecoin address using a Bech32 encoded public key with a SC prefix.
The sender must input the address into their wallet, which then works with the Mercury server to create an encrypted transfer message.
A signed backup transaction and a blinded key transfer value are included in the transfer message. After the receiver confirms the transfer message in their wallet, the server completes the transaction.
Also updated is the private key sharing. As a result, signing legitimate transactions with the server is limited to the receiver’s new private key share. The former owner’s private keys are also rendered useless.
Mercury Wallet uses a novel technology to scale Bitcoin transactions whilst also increasing privacy for its users. Off-chain transactions and secure private key swaps are some of the features that really make this wallet stand out.
Polygon’s ecosystem is surging with a 170% YTD growth and over 19,000 dApps deployed
Polygon › Adoption
The number of dApps on Polygon now outweighs other major competitors like Ethereum, Solana, and Avalanche.
3 min read
Updated: April 29, 2022 at 4:08 am
Cover art/illustration via CryptoSlate
The Polygon ecosystem has witnessed historical growth in the past several months and now supports over 19,000 dApps—an increase of over 170% from January this year.
According to data from Alchemy, this growth is also evident in the number of monthly active teams building on Polygon, which grew from 3,000 to 8,000 in the last five months alone. The influx of developers is even larger when zooming out—their number increased by sixfold since October 2021.
Polygon’s push to become the platform of choice in the Web3 era
Insights into Polygon’s adoption show that the network gearing up to become the protocol of choice to power the Web3 ecosystem. Out of the 19,000 dApps, over 65% were hosted exclusively on Polygon.
These dApps relay 3 million transactions per day and leave Ethereum, Polygon’s biggest competitor, in the dust with its 1.5 million daily transactions. This has led many blue-chip DeFi platforms to integrate into the Polygon ecosystem—Aave, 0x, Balancer, Curve, Uniswap, and 1inch have all launched on Polygon in the past year.
Arjun Krishan Kalsy, the VP of growth at Polygon, told CryptoSlate that the growth the network has experienced comes from a combination of its novel high-speed, low-cost infrastructure, unparalleled ecosystem support, and the overall demand for sustainability within the blockchain sector.
Kalsy says that Polygon’s ability to offer a “frictionless” Layer-2 solution has unlocked the full potential of dApps—both new and existing ones. Projects are able to benefit from ultra-low fees and a sustainable environment that still leverages Ethereum’s security and decentralization.
He believes that it’s that sustainability that will keep projects coming to Polygon—after attaining its carbon-neutral status, it will go carbon negative this year. Kalsy believes this will be a crucial point for developers and brands looking to build sustainably.
It seems that Polygon has positioned itself into a state of perpetual growth. Offering developers tech that’s more innovative, agile, and efficient than most on the market has made it an obvious choice for thousands of projects.
“Polygon essentially positions itself as the only viable choice for those looking to construct interoperable services on an EVM-compatible platform,” Kalsy explained. “The high composability of culture-driven projects within the emerging ecosystem pushes tremendous value to those building on Polygon.”
This is evident in the equal distribution of Web3 verticals in the Polygon ecosystem. Kalsy noted that the platform has witnessed exponential growth across gaming, DeFi, NFTs, and the metaverse as all dApps launched on Polygon are able to feed off each other and grow their communities together.
Neither Kalsy nor the rest of the team behind Polygon seem particularly worried about an impending bear market. While they’re prepared for the acute impact of a sudden market downturn, they aren’t too worried about the future of Polygon.
“Bear markets create a “survival of the fittest” environment, where only the strongest teams outlive the harshness of the market. Somewhat redeeming is that this market condition weeds out the poorer quality projects and allows those with strong fundamentals to shine brighter than before. So potentially, a bear market could hinder growth in terms of volume, but on the flipside, it will likely prompt the evolution of more high-quality, passionate, and well-funded projects.”
Kalsy said that a fundamentally strong business such as Polygon will continue to grow even in times of great market volatility. This, Kalsy added, is due to the fact that Polygon has been focused on building technology and providing ecosystem support—without caring too much about the market.
“We expect this trend to continue.”
The latest increase Polygon experienced is part of a much broader adoption cycle that began over two years ago. In the spring of 2020, Polygon had only around 30 active dApps. Today, that number stands well above 19,000. The inflection point for the network came after the infamous DeFi summer when transaction costs surged on Ethereum. It also aligned with the launch of Polygon Studios the following year, as its innovation hub and fund helped incubate a huge number of products and teams.
The network’s reign as the king of Web3 won’t be coming to an end any time soon, at least according to Kalsy. As the Web3 universe grows so will the number and the quality of its users, and Polygon will be on the frontlines offering a hand to both the retail and the institutional markets.
“With enterprise companies entering the fray (e.g., Stripe), we expect the growth of the Polygon ecosystem to increase further as more and more businesses worldwide start to tokenize and take their businesses into the web3 universe.”
Ethereum L2 solution Optimism to launch new governance model, token via airdrop
Ethereum › Layer2
The governance system is a unique bicameral model in which two different entities will work together to grow the ecosystem.
2 min read
Updated: April 27, 2022 at 3:15 pm
Cover art/illustration via CryptoSlate
After weeks of speculations, leading Ethereum Layer-2 solution Optimism has announced that it will be launching and airdropping a governance token — OP — designed to give its users more power and control over its ecosystem.
Optimism’s unique bicameral governance model
The governance system is a unique bicameral model in which two different entities will work together to grow the ecosystem. The model consists of a Citizen’s House and a Token House that form the Optimism Collective together.
The Token House will be populated by users who will be the beneficiary of the first OP airdrop. It will be a significant player in the governance as Token House users will have the ability to vote on the project’s direction.
On the other hand, the Citizens house will come later in 2022 and will be saddled with distributing “retroactive public goods funding, generated from the revenue collected by the network.”
Citizen House members will be conferred with “Citizenship” via a “soulbound non-transferrable NFT.”
The uniqueness of this model has generated a lot of positive reactions within the crypto community, with Ethereum co-founder Vitalik Buterin tweeting about it.
Possibly the biggest attempt at non-token-holder-centric DAO governance so far. Excited to see where this goes.
— vitalik.eth (@VitalikButerin) April 26, 2022
Optimism sets up new foundation
With the launch of its new token, the layer2 scaling solution has also established the Optimism Foundation, which would initially be responsible for the initial operations of the Collective.
According to its press statement, the foundation is the first phase of a process that looks to spread power through the Optimism Ecosystem. As the ecosystem grows, the foundation will transfer some of its powers until it has no more functions.
The newly created Optimism Foundation will serve as a steward of the Collective, running governance experiments on behalf of the Collective and bootstrapping the ecosystem before eventually dissolving.
Optimism’s two co-founders, Ben Jones and Jing, would lead the team, and they would be supported by a top executive from The Graph Foundation and a Council Member of the Radicle Foundation, alongside others.
Optimism’s OP token would begin to be airdropped by as early as the second quarter of this year, and over 250,000 addresses are qualified.
The OP token will have a total supply of over 4 billion, and 19% has been allocated for user airdrops, while core contributors would also get 19%. Other allocations include 25% used for the Ecosystem funds, 20% for retroactive public goods funding, and 17% for investors.
How Cardano’s Hydra scaling solution beats the Bitcoin Lightning Network
Cardano › Altcoins
Hydra promises more scalability and interoperability, and, according to Charles Hoskinson, it will also offer a better layer 2 experience than the Lightning Network.
2 min read
Updated: April 21, 2022 at 6:48 pm
Cover art/illustration via CryptoSlate
Cardano founder Charles Hoskinson tweeted a link to the Hydra website on April 20. The website contains node installation instructions, a quick start guide, and demo content.
Check out the Hydra Website: https://t.co/FXHwEtuoAK #HailHydra
— Charles Hoskinson (@IOHK_Charles) April 20, 2022
Dubbed by Input Output (IO) as the “ultimate layer-2 scalability solution,” Hydra will improve the underlying performance of the chain to support growth and adoption via increased capacity.
What’s more, the launch of Hydra will add a new dimension to Cardano, similar to the Lightning Network for Bitcoin — except better, according to Hoskinson.
What is Hydra?
In December 2021, Haskell Dev Matthias Benkort tweeted that Hydra is moving closer to testnet. Many assumed this meant a sooner than expected rollout for the scaling solution protocol.
Fast forward to now, and it appears as though a final version will launch soon. Hydra’s launch means a scaling solution to maximize throughput, minimize latency, incur low to no costs in doing so, and significantly reduce storage requirements.
It will achieve this by utilizing a process called isomorphic scaling, which works by processing transactions off the main chain while reserving the main chain as a secure settlement layer.
Through isomorphic state channels, or heads, Cardano functions such as native assets, non-fungible tokens (NFTs), and Plutus scripting are all available within each head. Therefore, users get the benefits and security of the layer-1 chain but within a “sharded head,” of which there will be many.
“These are state channels that are capable of expediently reusing the exact state representation of the underlying ledger and, hence, inherit the ledger’s scripting system as is.”
In theory, the network will become faster as it scales through more heads being added.
Cardano Hydra versus Bitcoin Lightning Network
Speaking to Lex Fridman last year, Hoskinson described Hydra as a co-designed layer-2 solution for scaling. Co-designed in the sense that special provisions are in place to accommodate Hydra, unlike the Lightning Network, which was not co-designed with Bitcoin.
The benefits of co-design are it’s effortless to move in and out of the system while still maintaining security properties.
Add to that the sophistication that comes with separate heads, along with a “more expressive accounting model,” and the result is that it’s possible to do more, including building safeguards against lost funds.
“So instead of always being aligned and always being available, what happens if they [the head and tail protocols] die for a bit and then they come back? And you can create all kinds of guarantees that your funds won’t be lost or locked forever or things like that. There’s a failure recovery mode for this type of stuff.”
With the Basho scaling phase well underway, the next question is whether the ADA price will react accordingly.
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