This content originally appeared on HackerNoon and was authored by Olayimika Oyebanji
It is safe to describe the invention of smart contracts as one of the most significant milestones in web3 and cryptography — after Bitcoin! After all, much of what is now known as the DeFi ecosystem owes its existence to smart contract functionalities, powering a host of decentralized applications (DApps).
\ The keypoint about smart contracts is that they are self-executing agreements stored on a blockchain. They automatically enforce their terms when predefined conditions are met.
\ Smart contracts have come a long way since they were first proposed in 1994 by the renowned American computer scientist, Nick Szabo, such that 19 years later the Ethereum blockchain emerged as the first smart contract platform popularizing the idea of a self-executing blockchain program.
\ In a world where the mass of humanity seek to break free of centralized control, smart contract technology offers a secure and transparent way to conduct transactions without the need for intermediaries. However, despite its level of sophistication, it has remained a subject of cyber security attacks. The DAO hack of 2016, for example,is a stark reminder of what can happen when a major flaw is exploited in a smart contract.
\ Additionally, deploying a smart on a blockchain requires a huge amount of computation and data storage. This often leads to a high transaction fee and the need to keep the network running means that miners or validators are compensated with it.
\ But contending with a high transaction fee can create a significant barrier the adoption of this technology. This is best imagined in a scenario where people have to pay hefty fees for transactions (i.e. buying a cup of coffee with cryptocurrency or an NFT). It not only discourages mass adoption but also hinders the growth of smart contract application across various industries.
\ This bring us to the concept of feeless smart contracts, which is often touted as a potential solution to eliminate transaction fees entirely. Can a zero-fee smart contract unlock a new era of accessibility within the blockchain ecosystem? Let’s find out!
Unpacking Feeless Smart Contracts
In the realm of blockchain technology, the concept of a feeless smart contract platform has attracted a significant amount of attention. This is due to the fact that it promises to not only revolutionize how we interact with decentralized applications (dApps) but also seeks to entirely reshape smart contract technology.
\ However, the realization of a truly feeless blockchain ecosystem can be best described as a work in a progress , with blockchain experts exploring potential solutions that can help solve the current challenges hindering it.
\ The amount of attention it continues to command in the blockchain space has not only made feeless smart contract technology an area of ongoing research and development, but it has also facilitated the emergence of pragmatic approaches such as proof-of-work with burning, layered architectures and proof-of-stake (PoS) consensus mechanism.
Proof-of-Work (PoW) With Burning:
Proof-of-work with burning is a combination of the proof-of-work (PoW) consensus mechanism and the routine practice of burning of a token to drive its scarcity. The idea behind this approach is to allow miners to earn tokens that are burned (i.e. kept out of circulation) when used for transactions.
\ However, this solution is criticized because of the deflationary effect it creates. It is also not considered a sustainable model because critics believe that miner rewards might become insufficient and the network security jeopardized, if tokens are burned too quickly.
Proof-of-Stake(PoS) Consensus Mechanisms:
The proof-of-stake (PoS) consensus mechanism emerged as a viable alternative to the proof-of-work (PoW) mechanism and it has gained a significant amount of attention in the industry.
\ Leading blockchain protocols such as Solana, Cardano, Polkadot, etc leverage this approach to PoW mainly because it requires less energy consumption and it is eco-friendly. However, it is important to note that it is not entirely feeless as a very insignificant amount of transaction fee is usually required for keep the network running.
Layered Architectures:
In a layered architecture, the base layer is designed to handle the security and consensus mechanism of the blockchain, while the fee layer is designed to enable the execution of smart contract. This approach is often deployed by top protocols such as Cosmos and Polkadot as it creates room for a more flexible fee increasing the chances of feeless transactions on the smart contract layer.
Qubic Protocol As a Case Study
Qubic is an AI blockchain ecosystem pioneering innovation in feeless smart contract in a quest to eliminate the transaction fees often associated with deploying smart contract on other platforms. To achieve this feat Qubic protocol proposes a Proof-of-Work(PoW)model with a twist: burning.
\ Similar to Proof-of-Work mechanisms, miners compete to solve complex puzzles ad secure the Qubic network. However, instead of receiving cryptocurrency, miners are rewarded with Qubic Units, the native token of the protocol recently listed on MEXC in tandem with its 2024 road map.
\ Its proposed solution allows users who want to execute a smart contract to BURN a specific amount of QUs, instead of paying a hefty transaction fee. This burning mechanism then removes the burned QUs from circulation, fostering a potential scarcity to increase the value of the remaining tokens.
\ However, since Proof-of-Work(PoW) mechanisms are often criticized for their high energy consumption, Qubic needs to navigate this obstacle to create a truly feeless ecosystem. Nonetheless, Qubic’s burning POW model presents a novel approach in the development of feeless smart contract.
The Challenges of Feeless Smart Contracts
When it comes to feeless smart contract technology, there is a thin line between hype and reality. This is why it is important to first acknowledge that it is an emerging technology and not a one-size-fit-all solution to the high transaction fee that many blockchain protocols continue to contend with.
\ In essence, it is crucial to state that feeless smart contract technology faces a unique set of of challenges such as security, sustainability and scalability.
Sustainability
Building a feeless smart contract is not enough. It must be sustainable in the long run. As a matter of fact,its sustainability lies in its ability to function on a secure and decentralized blockchain protocol.
\ There is also the need to create and maintain sufficient incentives for miners or validators in order to run and secure the network.
Security
Smart contract audit is a routine practice of checking for vulnerabilities in code. This is an industry standard procedure that is required to minimize potential cyber security risks. It is hinged on the premise that blockchain protocols are not immune from cyber attacks, which can result in substantial financial loss.
\ In order to address a potential security risk that may arise,it is crucial for a feeless smart contract to undergo a regular smart audit as it can help to uncover security flaw in its code.
Scalability
Scalability has been recognized as one of the key challenges hindering mass adoption, next only to the complex UI problem of blockchain technology. The idea behind scalability is to ensure that a blockchain protocol can meet up with the growing number of participants on its network.
\ It stands to reason that a feeless smart contract also needs to scale efficiently to handle a growing user base and transaction volume without undermining the performance of its network.
Conclusion
Exploring the idea of feeless smart technology provides valuable insights into some practical solutions tailored towards reducing transaction costs and improving blockchain scalability. Despite the fact that it is currently a distant goal , it holds a lot of potential for revolutionizing the blockchain space, especially in the area of gas fee reduction.
\ Resolved that the idea of a completely feeless blockchain protocol is bound to lead to much skepticism, the innovative approaches that have been explored are already pushing the boundaries of smart contract technology.
\ With continuous development and research, it is going to be finally decided whether the ultimate goal of this technology is to create a feeless blockchain ecosystem or to usher in an era of improved cost-effective user experience.
This content originally appeared on HackerNoon and was authored by Olayimika Oyebanji
Olayimika Oyebanji | Sciencx (2024-07-23T06:22:26+00:00) Are Feeless Smart Contracts the Answer?. Retrieved from https://www.scien.cx/2024/07/23/are-feeless-smart-contracts-the-answer/
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