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DaVinci Protocol a sharded ethereum compatible platform

Abstract: The launch of the Ethereum blockchain in 2015 demonstrated the ability to deploy Turing complete smart contracts on decentralized, peer-to-peer networks in a transparent and trustless manner. It spawned a multitude of decentralized applications, creating entirely new fields of innovations such as DeFi, AMMs, NFTs, DEXs, etc. In turn, these applications increased demand on the Ethereum network. Due to scalability issues, users faced high transaction fees and long confirmation times, resulting in limited adoption. Other smart contract platforms have been created with higher throughput levels than Ethereum but lack true scalability or decentralization. To address these challenges, we present Shardeum, a sharded, Ethereum compatible, smart contract platform. DaVinci is powered by the Shardus protocol which employs dynamic state sharding, cross-shard atomic composability, auto scaling, linear scaling and many other novel technological innovations designed to solve the scalability trilemma and keep transaction fees low even as adoption increases. We believe sustainably low transaction fees are key to bringing decentralized applications to the masses.

Purpose

This whitepaper is an evolving document that details Shardeum's current vision, roadmap, technology and future direction. Due to the dynamic nature of our development process, some aspects of our technology are continuously being refined, enhanced and adapted to serve our community better and align with our mission. We deeply value the trust, patience and support the entire community has extended during these foundational phases of development. In collaboration, we aspire to architect a groundbreaking system characterized by enduring reliability, sustainability, low fees and an innate capacity to evolve in alignment with user requirements.

Disclaimer

The content of this whitepaper is intended for informational purposes only and does not constitute financial, legal, or any other form of professional advice. Readers are advised to conduct their own independent research and consult with professionals in the relevant fields before making any decisions related to DaVinci or any associated projects.

1. No Guarantee: The DaVinci platform, as described in this whitepaper, is presented "as is" without any guarantees or assurances of any kind, whether expressed or implied. While every effort has been made to ensure the accuracy and completeness of the information provided, there may be errors, omissions, or inaccuracies that could affect the validity or applicability of any statement made.

2. Future Changes and Developments: Cryptocurrencies and blockchain technologies are rapidly evolving fields. The information contained in this whitepaper might become outdated or may not reflect the current state of the DaVinci platform or its future iterations. The DaVinci development team reserves the right to make changes or improvements to the platform without prior notice.

3. Regulatory Uncertainty: Cryptocurrencies and blockchain technologies are subject to a complex regulatory landscape that varies by jurisdiction. There is no guarantee that DaVinci will not become the subject of future regulatory actions or prohibitions in certain jurisdictions.

4. Potential Risks: Engaging with Shardeum, like all blockchain and cryptographic projects, carries inherent risks. This includes but is not limited to technological vulnerabilities, market volatility and third-party actions or interventions. It is imperative that potential users and participants understand these risks before engaging with Shardeum.

5. Investment Warning: This whitepaper should not be considered as a solicitation or offer to buy or sell any security or as a recommendation to invest in Shardeum. Potential investors should be aware that investments in cryptocurrencies can be high-risk and past performance is not indicative of future results.

6. Liabilities: The DaVinci development team, contributors and any associated parties shall not be liable for any losses or damages, whether direct or indirect, arising from the use of or reliance on the information contained in this whitepaper. Anyone considering using DaVinci or engaging in associated activities should conduct thorough due diligence and seek advice from appropriate professionals. By accessing this whitepaper, readers accept full responsibility for any actions taken based on the information contained herein.

7. Introduction

While Ethereum 2.0 (Serenity) will bring Proof of Stake Sybil control and many other innovations to the Ethereum ecosystem, the completion date is currently unknown. Following completion, Ethereum 1.0 will continue to provide a viable and usable network, requiring long term support and optimization. The DaVinci (Proof of Stake Decentralized Autonomous Organization) protocol provides an immediately available scalability solution for Ethereum 1.0, creating the opportunity for staking and delegated staking, very fast transactions, and very low transactional costs. DaVinci runs on a fully compatible EVM-based sidechain, allowing for mainnet interoperability while providing greater efficiency, lower fees, configurability, and other benefits relative to current EVM consensus implementations.

In addition to slow and costly transactions, there is increasing evidence that Nakamoto consensus (also known as Proof of Work) models are not ecologically viable in the long term. Bitcoin currently uses “at least 2.55 gigawatts of electricity”, with the potential to consume “7.67 gigawatts in the future”, comparable to the total usage of countries like “Austria (8.2 gigawatts) [1] .” As a result, more blockchain networks are adopting Proof of Stake (POS) and Delegated Proof of Stake (DPOS) protocol variants as consensus alternatives [2] . These protocols are responsible for designating the network nodes that process transactions and update the ledger in a distributed system. They have been shown to provide the requisite security and consensus for a blockchain, and offer improved efficiency over current Nakamoto implementations [3] . In DaVinci, the POS algorithm is implemented as a decentralized autonomous organization (DAO).

Participants in POS protocols stake assets, in the form of tokens or coins, to protect the network and achieve agreement regarding blockchain transactions. There are many projects within the Ethereum ecosystem where project specific tokens are held by project supporters, however, these assets have limited utility. By converting project specific tokens to DPOS staking tokens, token holders can participate as validators or delegators in the consensus process on an Ethereum-based sidechain. They earn rewards (either block rewards or transactional rewards) based on their participation. This provides an opportunity for token holders to convert any amount of current holdings into staking tokens, which in turn earn reward-based dividends.

While many POS and DPOS implementations are currently available, they often have set criteria which determine their base functionality and limit their potential usage. The parameters in the DaVinci chain are highly configurable. This includes the underlying consensus protocol, block reward functionality, transaction rate, staking specifications, and other implementation details. The reference implementation provides settings and parameters which can be changed depending on the purpose of the chain and the needs of its users.

1.1 Proof of Stake model

Consensus algorithms provide an economic incentive for honest protocol execution and decentralization. In a Proof of Stake (POS) model [4] , individuals stake an amount of tokens in an effort to be selected as a block producer (validator). Validators are chosen based on numerous criteria; typically the amount of stake and a randomness beacon are used in the selection process. In exchange for successful block creation, validators are rewarded with additional tokens.

A main advantage of a POS Sybil resistant system is the reduced energy expenditure in comparison to a Proof of Work (POW) model. Additionally, POS incentivizes validators to run high-bandwidth nodes and backup nodes for redundancy, which improves network throughput. POW, on the other hand, incentivizes the purchase of more mining hardware, which does not improve the maximum throughput.

There are two major POS models: Chain-based proof of stake, which “[..] features a chain of blocks and simulates mining by pseudorandomly assigning the right to create new blocks to stakeholders, and Byzantine Fault Tolerant (BFT) proof of stake, where an existing BFT consensus is repurposed for Sybil control and economic incentive models” [5] . DaVinci utilizes smart contracts for the validator selection process. These validator sets then run the underlying consensus protocol. It can be configured to use OpenEthereum's AuRa consensus engine [6] or Honey Badger BFT [7] .

1.2 Delegated Proof of Stake

Delegated Proof of Stake (DPOS) [8] extends the POS model to allow additional individuals to stake their tokens on potential validators (candidates), without participating in block production themselves. Candidates who collect a higher percentage of tokens have greater odds of becoming validators on the network. Rewards are then divided amongst the validators and the staking entities (delegators).

DPOS provides the opportunity for delegators to “vote” on potential validators by staking tokens on them. Candidates are incentivized to maintain a good reputation in order to attract more delegators and increase their chances of becoming validators. DaVinci is designed to support a DPOS model.

1.3 Decentralized Autonomous Organization (DAO)

A DAO is a self-sustaining, virtual entity defined by “smart contracts that contain the assets and encode the bylaws of an entire organization” [9] . All financial transactions, rules, and decisions are enacted and stored on the blockchain, creating a transparent and verifiable record. Rules are initially set forth in smart contracts, and members (participating token holders) interact according to these regulations to further the goals of the organization. Organizational rules can be modified through mechanisms contained in the on-chain contracts or through an off-chain governance process, such as subjective resolution and/or software updates.

1.4 DaVinci consensus model

DaVinci consensus implements a layered POS model connected by smart contracts on a public blockchain (see Figure 1 below). Sybil control and incentives exist in smart contracts working within the EVM and the execution state is stored on a public chain implementing the DaVinci consensus. The underlying BFT consensus exists on the network protocol level. This model requires modifications to the BFT consensus algorithm implementations in the Ethereum client to facilitate information exchange between smart contracts and the consensus layer. This includes communication relays regarding consensus faults and validator set management. Note that the AuRa implementation of DaVinci will be completed first, and HBBFT will be implemented in a future release.

Lauched in 20 Nov 2024 - https://mainnet-explorer.davinci.bz/tx/0xcbf2a4f9ec2e5e35ea9cb2dfaedf4362610e12f3fec2f341c82c025529f05ac4

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