The Evolution of Smart Contracts and Cryptoeconomic Security

The Evolution of Smart Contracts and Cryptoeconomic Security

“The Evolution of Smart Contracts and Cryptoeconomic Security” discusses how smart contracts are improving, their growing use of oracles and new data sources, as well as the cryptoeconomic security that externally connected smart contracts will come to rely on.

Table of Contents
Section 1: What is a Contract and What is its purpose?
3:35 – Commercial agreements upon social contracts
5:27 – A brief history of Commercial Contracts
7:21 – Increasing economic production through the ability to create contracts
9:03 – Technology enforced contracts leading to smart contracts of the present
11:28 – What digital agreements seek to achieve in a future of automation
12:50 – Asymmetric control of centralized contracts on the web/Internet
14:33 – Smart contracts and blockchains automating digital agreements and social contracts
16:22 – A parallel legal system for emerging market growth in Insurance, risk and economic destiny
17:45 – Smart contracts changing the way of life for billions of people and generations to come

Section 2: The Oracle problem for smart contracts
19:10 – Decentralized Oracles and Smart Contracts and tamper-proof digital agreements
21:00 – Delivering external real-world events to smart contracts
28:00 – Chainlink’s approach to reliable and secure decentralized oracles for Web3
32:55 – Why decentralized oracles decrease the risk for users and smart contract developers
34:40 – Binding service agreements for securing data quality in decentralized oracle networks

Section 3: On-chain Service Agreements and Cryptoeconomic incentives of staking
37:45 – Providing guarantees of reliable high-quality data to smart contracts
39:55 – Cryptoeconomic security from staking
40:53 – Implicit staking in decentralized blockchain network protocols
42:27 – Explicit staking of generating blocks in decentralized blockchain network protocols
44:44 – Staking in Chainlink’s decentralized oracle network for the end-to-end security of a contract
47:30 – User fees in Chainlink’s decentralized oracle network for reliable high-quality data delivery
48:50 – Governance structures in a decentralized oracle network
53:05 – Smart Contracts as the dominant form of digital agreement
54:04 – Accelerating the creation of various smart contracts through the Chainlink Grants Program

Blockchain-based smart contracts are the next generation of digital agreements, providing deterministic guarantees on the execution of the contract according to its terms. However, smart contracts require a secure and reliable connection to external data existing outside the blockchain, commonly known as the “oracle problem”.

Chainlink offers multiple features to help developers overcome the oracle problem, including decentralization, provably secure nodes, high-quality data, crypto-economic security, defense-in-depth strategies, connection to numerous blockchain environments, and a large open-source development community. These features have allowed products from decentralized finance (DeFi) to enterprise-level solutions to seamlessly integrate external data into their smart contracts.

One of the most important elements of any blockchain oracle network is the use of high-quality data. To give users stronger guarantees about the quality of data, Chainlink applies binding Service Agreements between the requesting smart contract application and the node operator(s), which are cryptographically signed by both parties. The Service Agreement outlines the exact terms of service that the node operators need to provide and the penalties for not upholding the terms defined.

Sergey expands on the crypto-economic security backing service agreements by discussing implicit and explicit staking. Implicit staking refers to the idea that participants in the network will act in its best interests to uphold the value of the underlying asset, while explicit staking refers to node operators depositing a pre-determined stake to back their performance of the agreement, which can be slashed for not upholding the terms.

The Chainlink Grant Program is also introduced as a way to accelerate the development and adoption of smart contracts via a more robust set of data and open-source tools available on the Chainlink Network. This will accelerate the development cycle, increase access to quality data, further expand API services, and provide additional developer tools to make it easier to build and monitor Chainlink oracle networks.

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