Editor | Callum@Web3CN.Pro
Table of contents
1. Project Introduction
2. Project Vision
3. Development History
4. Team Background
V. Financing Information
6. Project Architecture
NEVM
Pruning
Pollux
Z-DAG
VII. Development Achievements
Ecological Construction
Community Status
8. Economic Model
Token Allocation
Economic Model
IX. Advantages and risks
1. Project Introduction
Syscoin is a full-stack modular PoW blockchain solution that merges mining with Bitcoin. Its foundation is the Syscoin native (UTXO) blockchain network, which provides data availability and finality, and runs in conjunction with the Ethereum Virtual Machine (EVM) called NEVM (Network Enhanced Virtual Machine), which provides Ethereum equivalence while inheriting the chain's enhanced security and providing scalability through Rollup.
Syscoin makes Rollup more secure through Bitcoin merged mining settlement, multi-group BLS signature finality, and data availability proof. As an enhancement on top of Nakamoto consensus, Syscoin adds resistance to selfish mining and keeps the chain resilient in the face of non-final scenarios by enabling the protocol to be resolved. Unlike Ethereum's Casper, in these cases, pure Nakamoto consensus is achieved instead of forking.
Multi-signature and data availability are unique innovations of Syscoin
2. Project Vision
Syscoin's mission is to build truly scalable Web3 infrastructure and dapps to meet the needs of a global population, leveraging the first modular blockchain with EVM compatibility, anchored in the Bitcoin network, and extending via Rollups.
Since its launch, Bitcoin has aimed to be an alternative to decentralized finance. Syscoin shares the same goal of facilitating the transition to a fairer financial reality by combining the security of Bitcoin with the power of Ethereum in a coordinated modular platform to create new opportunities for decentralized data-driven. Syscoin is not only built on the security of Bitcoin, but follows the principles that guide it to become the most secure and decentralized network in the world.
Scalability is the core value of blockchain. Syscoin is leading the next step in the development of blockchain technology, elevating the security of Bitcoin and the Turing-complete programmability of Ethereum to true scalability through Optimistic, ZK-Rollups, cross-chain ZK-Rollups and other Layer2 technologies.
3. Development History
4. Team Background
The team behind Syscoin comes from SYS Labs and the Syscoin Foundation, and 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 that focuses on building products on top of the Syscoin ecosystem to drive adoption and utility to new heights.
Jagdeep Sidhu is the CEO and CTO of 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 Syscoin Foundation, responsible for the marketing activities of Syscoin.
Willy is the Treasurer of the Syscoin Foundation. Willy is an experienced software engineer who also actively serves as the Chinese-speaking head of Syscoin.
Chris is a member of the Syscoin Foundation Board of Directors responsible for market relations and is also a JavaScript developer.
Bradley is a member of the Syscoin Foundation Board of Directors and a blockchain solutions consultant. He has nearly 25 years of experience in software development and information systems, primarily in relational database management, SQL development, and data analyst roles in a variety of environments and industries.
SYS Labs’ current operations span the Metaverse, NFT and gamefi platforms, and regulatory-compliant Rollups, all with a state-of-the-art user experience and all secured by Bitcoin. SYS Labs is like Ava Labs, StarkWare, and Matter Labs combined, with a focus on getting the world onboard with Syscoin so that everyone can benefit from its capabilities.
V. Financing Information
Syscoin has little public financing information. In 2014, when the project was first launched, it raised 1,500 BTC through pre-sales.
In 2022, the cryptocurrency exchange MEXC launched a $20 million Syscoin Ecosystem Fund to support the development of the Syscoin ecosystem.
6. Project Architecture
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 its design, the EVM has a flaw in that it is not scalable. This means that as demand grows, the network cannot consistently provide reasonable transaction costs and fulfillment times.
The Syscoin NEVM is designed to provide smart contracts and interoperability, extensible to other smart contracts, while keeping costs low and performance high, and providing strong decentralized settlements that are backed by Bitcoin's own proof-of-work security model and secured through merged mining. 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". In addition, 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, hashrate potential for merged mining, UTXO efficiency, and compatibility with future UTXO advancements) with Ethereum (broad utility for generalized computation) into a single decentralized coordinated financial computation platform. Syscoin will also improve on both fronts. For example, on the UTXO side, ChainLocks will address Bitcoin’s long-standing “selfish mining” vulnerability and harden the network against reorgs after ChainLocks are established, which typically takes up to a minute after each block.
NEVM will implement zero-knowledge proofs, providing scalability and trustless interoperability for Turing-complete smart contracts.
PoDA — Syscoin’s 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 for 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. The characteristics of PoDA make it a valuable alternative to Ethereum's ongoing data availability solution Proto-Danksharding.
The advantages of PoDA can be summarized as follows:
Cheaper transactions
No data sharding required
Higher data throughput through efficient Keccak data blobs
Bitcoin’s own PoW plus Syscoin’s finality guarantee
More resilient to network-based outages/censorship
A simpler data fee market based on Syscoin’s UTXO fee market
Nakamoto hypothesis: Only one honest node is needed to guarantee data
Rollux — Rollup-based L2 suite for scaling NEVM smart contracts
Rollux is a Rollup L2 solution designed to provide EVM users with near-instant, low-cost transfers, executions, and contract deployments. Rollux leverages Syscoin’s L1 for best-in-class secure decentralized settlement and Syscoin PoDA for L1 data availability, providing higher efficiency, lower costs, 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 that can only be achieved through PoW merged mining with Bitcoin. Rollux is built on Bitcoin and Syscoin to take 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, about 25% of Bitcoin computing power mining is also used to mine Syscoin at no additional cost. In this way, Rollux attempts to solve the blockchain trilemma.
Rollux joins Ethereum developers and ecosystem to 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, setting new standards on the three variables of the trilemma. As a suite, Rollux includes Optimistic and ZK-based Rollups, enabling users and projects to choose the network or solution that works best for them. As technology develops, Syscoin can mix between these technologies in the future.
Z-DAG — An instant settlement protocol with probabilistic security for UTXO transfers 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 little to no complexity. It solves problems that are prevalent across the industry, not by changing mission-critical fundamentals or reinventing consensus algorithms, but by maximizing the utility of the battle-tested Bitcoin code with the right tools and conveniences on the network.
Z-DAG is based on Satoshi Nakamoto's "snack machine" concept, which aims to realize peer-to-peer electronic cash and expand the exchange method to tokenized assets. It utilizes memory pool awareness and fast relay topology in a network of independently operated full nodes, all of which are verified first and then trusted. A high degree of probabilistic security can be achieved through the rapid propagation of memory pools across time. By providing tools that are aware of memory pool status, this global memory pool is interactive and useful to recipients.
The probabilistic security provided by Z-DAG guarantees that transactions cannot be double-spent and will be accepted into blocks and settled on-chain. This makes the fee market more efficient than bidding on blocks. It can provide secure high-throughput services even when blocks are full. Technically, this is an L1 solution because the memory pool is located within the blockchain security domain and all valid transactions using Z-DAG are settled on-chain through consensus that complies with Bitcoin Core.
VII. Development Achievements
Ecological Construction
There are currently many ecological projects on Syscoin, including DeFi, NFT, GameFi, infra and other project types.
Although there are many Syscoin ecological projects, their development is relatively slow, and there is only one real project on the chain, PegaSys, with a TVL of only more than 400,000 US dollars on the entire chain. Currently, there are few well-known applications on Syscoin. If it wants to maintain its competitive advantage in the future, it still needs to develop high-quality native projects on the chain.
Community Status
Twitter: 226,674 followers, average fan engagement
Discord: 106,673 people, Telegram: 6074 people, and the activity rate remains at around 2%.
Overall, the project's community activity is poor
8. Economic Model
Token Allocation
SYS is the native token of the Syscoin platform. Its token economics is based on Ethereum's EIP-1559 proposal, with no maximum supply cap, and the supply of SYS is based on deflationary burns from protocol issuance and transaction fees. As of the time of writing, the circulation of Syscoin is 747,394,570 SYS, with a market value of approximately $63 million.
After the latest upgrade to Syscoin 4.0, the block reward time has become 2.5 minutes, and the average block generates 86.8 SYS. In terms of details, the master node rewards are 58.62 SYS per block, the miner rewards are 19.52 SYS per block, and the governance rewards are 8.675 SYS per block. These master node rewards will increase to 79.15 SYS for 1 year of seniority and 117.25 SYS for 2.5 years of seniority. These rewards are reduced by 5% each year.
According to Chainz data, as of September 19, 2023, there are 89,206 SYS currency holding addresses, of which the top 100 holding addresses account for 48.06% and the top 10 holding addresses account for 38.27%. Overall, SYS currency holding addresses are relatively dispersed and highly decentralized.
Economic Model
As a utility token, SYS has multiple functions in 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: The token is also used to create Syscoin Platform Tokens (SPT), a custom asset token that uses 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 a voting mechanism, allowing users to use platform functions and participate in platform governance, contributing to the development of Syscoin.
Syscoin's token economy is influenced by its platform iterations. The project was originally created as a blockchain protocol to extend Bitcoin to achieve decentralized markets, and has been upgraded many times, constantly 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-spend protected cryptocurrency transactions (Z-DAG) and EVM, both of which are protected by the Nakamoto consensus PoW that is mined with Bitcoin.
IX. Advantages and risks
Advantages
The first is scalability. With Rollup running on top of Syscoin, the service is highly scalable, and with Validium and modular extensions, even greater scale is possible. So the scalability aspect is largely covered. Scalability doesn't just mean high transactions per second, it also takes into account transaction costs, and transactions on Syscoin will be cheap even at high throughput.
The second is decentralization. Syscoin has about 2,500 active masternodes running on its network, and this number is likely to increase as the blockchain network grows and rewards are provided for hosting masternodes. This means that Syscoin is not only scalable, but also decentralized.
Finally, there is security. Due to merged mining with Bitcoin, Syscoin currently has about 25% of the 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 not just satisfied with this, Syscoin also uses multi-signatures 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 Layer2 and sidechains are gradually taking off. In addition to Syscoin, there are a large number of other more mature markets that already exist, and it is difficult for Syscoin to get people to actually download applications 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 than Ethereum, and second, the user scale is not as large as Ethereum. The Bitcoin Layer2 ecosystem is still under construction and needs to be verified by the market.
References
https://docs.syscoin.org/docs/intro/syscoin-what/
https://sys-labs.github.io/community-hub/docs/protocol/https://syscoin.org/file/syscoin4-whitepaper.pdf
