How Syscoin is looking to advance interoperability and scalability for Ethereum and beyond

Messari hosted a public AMA with Dan Wasyluk, CEO of Blockchain Foundry, and Jag Sidhu, CTO of Blockchain Foundry and President and Lead Core Developer at the Syscoin Foundation, in the Messari community group. Below is a transcript of the conversation.

You can find all of Messari's historical AMA's here

Messari: Good to go! I’d like to introduce Dan Wasyluk and Jag Sidhu from Syscoin (SYS). Welcome Dan and Jag!

Dan Wasyluk: Hi Wilson, thanks for having us

Messari: Thanks for joining! We’ve received a bunch of great questions from the community, but before we start would you both mind giving us some background on yourself and how you got started at your current role?

Dan Wasyluk: Yep sure

So I've been in software development and mgmt for about 20yrs, doing everything from client side desktop development to fullstack web, devops, and team mgmt. Learned about bitcoin in 2013 and did some for-fun projects with people I met on Bitcointalk.com

That's how I stumbled into Jag and many of the current Syscoin core team members. We experimented w blockchain tech and then realized its potential and decided we'd stop playing around and get serious about building a protocol that could provide real-world value to businesses and users alike

Syscoin was born in 2014, we've been evolving it ever since and in 2017 we started a company (Blockchain Foundry Inc) to operationalize businesses on top of the technology in ways that help them improve their bottom line

Jag Sidhu: I’ve been a software professional in the crypto industry since about 2013 and have been working in the market for over 20 years. My background is digital signal processing, client/server communication, artificial intelligence, algorithms/heuristics applies to optimizations for graphic processing. I learned of Bitcoin when it was about $50 and I jumped in from the philosophical point of view not really worrying about making money but more learning and joining the movement, because that is what this is, a movement of collection of individuals where we share common goals, and the goal is a big one. Distributed, trust-less finance.

Messari: It's great to see a project and a team that's been around as long as Syscoin has. Turning to the community, we have a question looking for some clarity on Syscoin vs. Blockchain Foundry: What is the difference between Syscoin and Blockchain Foundry Inc? And I'll add, what drove the team to start a company in addition to the Syscoin project?

Dan Wasyluk: Great question, in reality Syscoin is an independent, open source Foundation-driven software project. Blockchain Foundry is a corporate blockchain products and services company that works with all kinds of distributed ledgers. The relationship between SYS and BCF is that since BCF was started by a group of Syscoin founders, we do have resources on our corporate payroll dedicated to improving the protocol as well as intiatives at a corporate level to increase its adoption.

The Syscoin Foundation ultimately chooses which upgrades move forward and which do not, but BCF puts forwards upgrades it thinks would benefit the protocol based on specific client-requests we see at the corp level.

BCF has won a few SYS governance proposals as well, so there is alignment in our corporate mission to see SYS more widely adopted. For example the first even Syscoin mobile wallet is being built by BCF.

Jag Sidhu: BCFN:CSE being a public company is a great corporate face for our open source protocol, giving legitimacy to the project itself and providing inroads to enterprise partnerships and ultimately adoption.

Messari: This approach makes a lot of sense, especially from the perspective of driving adoption. Where have you seen the most adoption? As in what kinds of business or applications are looking to use Syscoin? And related, are there any plans for Syscoin products regarding DeFi?

Dan Wasyluk: Right now a lot of the adoption we are seeing is related to the tech we've really been working on more in 2017 ish time period around real-time value transfer. That is — a token platform that supports near-realtime value transfer. This has tied into corporate work heavily especially in respect to stable coins, loyalty points, fan points, etc. None of these use cases want to wait for blockchain confirmation slowness. None of them want to spend a lot on fees. All need high throughput. We've even had Whiteblock audit our blockchain speed/throughput which has really reinforced SYS being a top option for these types of use cases.

Going a bit more into mid-2018 to current yes DEFI is a big focus for us. We believe that for the forseeable future ETH will be the king of any 'real value' DEFI apps and so we've built a trustless bridge between the Syscoin blockchain and the Ethereum blockchain that is trustless with zero liquidity limitations and works with Syscoin Platform Tokens.

What this means is that you can have the best of both worlds- fast, scalable, cheap value transfers on the Syscoin blockchain that interoperate with the ecosystem of DEFI apps that exists in the Ethereum space, and portability between the two. This also means Syscoin Platform Tokens have instant-access to all of the hardware/ecosystem/tooling already available for ERC20 tokens.

Messari: The Ethereum bridge is a very interesting piece of technology. We had a number of questions regarding it. First up:

• How does Syscoin’s bridge with Ethereum differ from Cosmos, ICON, Matic, Rootstock and most other popular projects focused on interoperability?

Jag Sidhu: Most bridges require counter parties for liquidity purposes because they do not have first class integrations unless they provide spv proofs and games so challengers can revert bad chains or build a reorganization mechanism to always follow longest chain.. ours has a game to avoid the case where an invalid chain is entered into ethereum but also first class integration on syscoin to listen to ethereum a network on the way back.. it’s different in that there are no intermediaries, custodians or counterparties needed. Atomic swaps are cool once there are billions in liquidity but also tons of problems especially dealing with people and especially when larger values come into play

That being said things like zero knowledge proofs may pave the way for more innovation to improve ability to make it a general bridge mechanism

Basically the difference? In our implementation you literally have a fractional supply across 2 chains.. the Syscoin spt can spread supply as it’s the same thing you have ability to cryptographically verify ownership on either chain with your coins just like proving your signature can spend your account/utxo.. fractional supply is a new concept as a result of our work

Not only for Syscoin assets/spt but also for existing erc20 like tether for example which now can move to another chain and become spendable

Dan Wasyluk: And the concept Jag is referring to is different than say USDT on TRX. That is entirely different from USDT on ETH, diff chains, diff supply amounts. The fractional supply concept Jag is referring to means that there will be USDT on ETH, and a part of that actual supply can now move to the Syscoin chain, which is very different than Bitfinex setting up USDT on SYS (as they did with USDT on TRX). It will introduce new paradigms that we hadn't even thought of tbh, cross chain tracking doesnt even exist for this kinda of technology because the tech is 100% new.

Jag Sidhu: And you didn't hear it from me, but it's zero-knowledge

Dan Wasyluk: Tracing tools of today will need to evolve to stay relevant

Messari: I was about to ask how ZKPs can impact this process and if the team has been exploring zero knowledge implementations

Jag Sidhu: Oh I meant its zero-knowledge in that your moving between chains so traditional analysis will not apply like dan was saying, perhaps it breaks the link between being able to track.. I'm not promoting it as a privacy preserving tool, but that is a god given right and we deserve it at the same time

Dan Wasyluk: yeah the way movement to and from chains works doesn't fit with current tracing tools at all

Jag Sidhu: Using ZKP for the ability to prove your from the right chain to another chain is something like I spoke about above, its some research we are doing with universities/phd students to see if we can improve upon our current design to generalize it

Messari: This is fascinating. I'm going to move on to some other questions, but if there is more material on this topic, please share it here. I'm sure everyone here would like to check it out.

Jag Sidhu: Yes I’m really excited about halo paper coming out from the guys at ECC

Messari: Back to the Ethereum bridge, community members are curious to know if there are any other chains that Syscoin may bridge to in the future.

• After the Ethereum bridge, which of the top 50 blockchains by market value would be the next logical candidates for bridges & generate high txs vol for Syscoin?
• Could it be possible to bridge to the btc chain to have something like the lightning network running on Syscoin?

Jag Sidhu: Yes!... that is one of the things we are researching

So as you may know.. we were one of the first (maybe the first) to do a LN with real value on mainnet a few years ago when segwit was first proposed

I don't think LN is ready yet in its current incarnation but we plan to develop LN capability at our Syscoin SPT layer (Syscoin platform tokens) so business/enterprises can take advantage of offchain payment channels for low-cost high speed transfers without bloating.. and using ZDAG as a backup in case those channels go down (the things that plague the bitcoin LN implementation).. we can plug in to the system while enhancing usability because of onchain scaling

That is also a research topic we are establishing with our university partnerships.. the goal is to do a proof of concept showing how assets can be viable with LN, of course it's easy with SYS but its more interesting to be able to serve a platform where its users can use LN with tokenized assets

Regarding bridging to bitcoin itself? until MAST/Taproot come out there is no way to do the things we need to do, to be able to bridge INTO bitcoin, they would need to fork which isn't going to happen

Dan Wasyluk: Yeah we are actually looking for better-than-lightning solutions. If you caught any of the payment processor presentations from our BlockParty Amsterdam event the univ Jag mentioned is doing a lot of work on better-payment-channels. The university work being done around payment processors was mind blowing. They have solutions far better than LN cooking. But I digress.

Jag Sidhu: There is an Ethereum bitcoin asset I think, and that may be bridgeable into sys so in effect you can do BTC<->SYS through SYS<—>BTC(ERC20)<—>BTC

Messari: That is great to hear. As great as LN is, I agree that it's still a work in progress. More research around it and other implementations are absolutely necessary. Also I'm glad you brought up ZDAG. We have a couple of questions related to it:

• How secure and decentralized is ZDAG considering its speed? What is the reasoning behind design decisions from perspective of speed/security trade off?
• What are the pros and cons of using ZDAG as a token transaction framework?

And maybe a brief explanation on what ZDAG is for those unfamiliar with it

Jag Sidhu: The ideology behind ZDAG is that Bitcoin does not distinguish between marcro and micro, they believe all micro will be offchain. ZDAG offers that micro distinction so the merchants can accept payment for coffee without imposing cost of the courts (blockchain proof of work). For a large value transfer sure I'll wait for confirmations maybe 10 or 15

CON: It reduces security of nakamoto consensus a tiny bit... in general a double spend will be detected 99.9999% of the time, based on our WP and some analysis we did

In terms of decentralization? it’s as decentralized as bitcoin. For speed we saw that because its essentially as fast as the transaction can be relayed, the better propagation we can do the faster it goes, so we work on partnerships or pieces of technology to help us relay those across the world quicker, like gateways over fibre to connect the Syscoin nodes with transactions faster.. of course masternodes help with decentralization because as the network topology gets "thicker" it is more resistant to bad actors who try to intercept messages and not relay.

gmaxwell had some great explanation as to why the topology of bitcoin networking was mesh and not direct or some other faster form, because of denial of service and spam attacks on every other implementation as well as privacy preserving features of being able to get a message and no one will know how that message got to you through which routes and who created it

Messari: Also glad you brought up masternodes and their impact on the network. We have a (rather blunt) question on them, and one on Syscoin's unique approach regarding consensus/mining:

• Why did you choose masternodes? Aren't they just a gimmick fad that's now over? Do they even serve a purpose?
• What are the unique feature of your consensus mechanism (proof of useful work) and how it is better from other consensus?

Jag Sidhu: Yup. So masternodes serve a real purpose, not the privatesend/instantsend dash did, because I didn't really like that codebase and implementation I feel ZDAG solves it more elegantly and efficiently, for privatesend that code was a mess with many angles of attack.. so we just use masternodes as an incentive to run full nodes with a future layer of decentralized dapps we may build on top (under research, like data storage, merkelized commitments for dapps)

Masternodes increase our resiliance to attack and allow ZDAG to be operationalized at enterprise grade uptime and consistency.. because we have thousands of masternodes, it means there are more routes for messages to get from sender to receiver, and thus find an optimal path and decrease times for transactions (we went safe and reference clients use 10 seconds but in the future esp with fiber networks and gateways we may get that down to a few seconds)

Because we don't do any funny consensus stuff on masternodes they are much safer and actually if you would tell a bitcoin core developer, they would probably agree on serving the purpose they do because that's really the only thing a node can do without causing harm to the network through a million different angles of attack that become possible (something eth devs are finding out now that they are trying to do something similar with eth2.0/sharding)

Unique consensus? we are merge-mined with bitcoin so effectively we get to leverage bitcoins security and protocol assumptions which have been rigoursly tested and market driven. PoW sha256, with Bitcoin, yet most of the payment goes to masternodes. This is because a Bitcoin miner doesn't have to do much extra work to earn sys he is already doing the work mining BTC and getting SYS for almost free, so we can optimally pay out more to masternodes which do more work and less to miners and get our security for a lot cheaper.

I believe that in the future, anything out of the top few will need to be merge-mined, there is no asic proof mining algo, you can always FPGA an algorithm and then come up with a fab /build an asic to do any algorithm memory hard or not

Messari: This was incredibly insightful and I could keep going. But I don't want to keep you too long. Thanks so much for joining us Dan and Jag! To finish off could you just give us what excites you most regarding the future of the project and what the best ways are for people to keep up with the happenings with Syscoin

Dan Wasyluk: Thanks for having us we always appreciate these focus and directed discussions around high value topics, so thanks for that

Jag Sidhu: Great questions! Really plugged in crowd

Dan Wasyluk: I can speak for myself, I know Jag and I get excited about different things! I am very excited for the Syscoin Bridge. I really think people are missing the disruption potential this new technology has and how its better than current trust-based implementations out there. I'm also really excited about the massive catalyst this will serve as for the ecosystem as a whole- all of the tooling, apps, wallets, etc that work w ERC20 will suddenly be at the disposal of Syscoin users as well.

One more point I'm really excited about is our evolving Syscoin-side infrastructure. It takes a lot of tooling to make this tech useful for people, and we now have almost web3-equivalent capabilities within SYS that enable much easier and more in-depth integrations. It makes things like writing a wallet for SYS or an SPT a breeze. Really excited to see how this expanded ecosystem, entirely new technology, and evolving capabilities and systems on the Syscoin side play out through 2020.