Account Abstraction on Starknet

Karolina

16 Nov 2023
Account Abstraction on Starknet

Innovations that enhance user experience and broaden the scope of technological capabilities are always in the spotlight. One such groundbreaking development is the implementation of "Account Abstraction" on Starknet. This concept, although technical, holds immense significance for both everyday users and developers within the blockchain ecosystem. In this article, we delve into the intricacies of Account Abstraction on Starknet, exploring its transformative potential and how it's reshaping interactions in the blockchain world. Our goal is to demystify this complex topic, providing you with a clear understanding of its implications and benefits.

Understanding Starknet

Starknet Overview

Starknet, developed by StarkWare, represents a cutting-edge layer 2 scaling solution for Ethereum. Its primary aim is to enhance the scalability and privacy of Ethereum transactions by using STARK technology (Scalable Transparent ARguments of Knowledge), a zero-knowledge cryptographic proof. This technology allows for massive throughput increases while ensuring data privacy and security. Since its inception, Starknet has rapidly gained attention for its potential to address some of the key challenges faced by blockchain networks, such as high gas fees and slow transaction speeds.

MUST READ: What is Account Abstraction

Key features

  • High Scalability. By offloading computation and storage from the Ethereum main chain, Starknet significantly reduces congestion and fees.
  • Increased Privacy. STARK technology ensures transaction privacy, a critical feature for many users and applications in the blockchain space.
  • Enhanced Security. The framework offers robust security features, leveraging the inherent security properties of Ethereum.

Demystifying Account Abstraction

The Concept of Account Abstraction

Account Abstraction is a revolutionary concept in the blockchain world, initially proposed for Ethereum and now being implemented in platforms like Starknet. At its core, account abstraction blurs the traditional lines between contract accounts and externally owned accounts (EOAs). In typical blockchain models, these two account types have distinct roles and capabilities. Externally owned accounts are controlled by private keys and are used for basic transactions, while contract accounts are governed by their code and can execute more complex operations.

The abstraction of these accounts means treating all accounts as smart contracts, simplifying the user experience, and expanding functionality. This unified approach allows for more complex and automated transactions, akin to traditional banking services, but within the blockchain's decentralized framework. This shift not only streamlines operations but also opens up new avenues for smart contract development and deployment, making blockchain technology more accessible and versatile.

Benefits of Account Abstraction

The implementation of account abstraction brings several key benefits to the blockchain ecosystem:

  • Simplified User Experience. Users can interact with the blockchain with greater ease and flexibility. For instance, multi-signature wallets, which previously required complex smart contract interactions, can become more straightforward and user-friendly.
  • Enhanced Security. By allowing users to set rules for transaction execution in their accounts (such as limits on withdrawal amounts or the need for multiple signatures), the risk of theft and unauthorized access is significantly reduced.
  • Increased Flexibility for Developers. Developers gain more control over how transactions are processed and validated. This facilitates the creation of more sophisticated DApps and services on the blockchain.
  • Interoperability. With a unified account model, the compatibility between different types of transactions and interactions across the blockchain is improved, leading to a more seamless experience.

Account Abstraction in Starknet

MUST READ: Native Account Abstraction: Opening Blockchain to New Possibilities

Implementing Account Abstraction on Starknet

Starknet's integration of Account Abstraction represents a significant leap forward in the blockchain domain. Unlike traditional blockchain networks that distinguish between user accounts and smart contract accounts, Starknet treats all accounts as smart contracts. This approach not only streamlines the user experience but also enhances the network's flexibility and functionality.

Technicals

The technical implementation of account abstraction in Starknet involves several key aspects:

  • Unified Account Model. In Starknet, all accounts, whether they belong to individual users or are part of a decentralized application (dApp), are treated as smart contracts. This uniformity simplifies interactions and transactions on the network.
  • Customizable Transaction Logic. Users and developers can define custom rules and logic for processing transactions within their accounts. This could range from simple validations to complex, multi-step processes.
  • Enhanced Security Features. Starknet's account model allows for built-in security features, such as multi-signature verification and recovery options, directly within the account's smart contract.
  • Ethereum Compatibility. Despite these advancements, Starknet maintains compatibility with Ethereum, allowing users to leverage the benefits of Account Abstraction while staying connected to the broader Ethereum ecosystem.

Practical Applications and Use Cases

The implementation of account abstraction on Starknet opens up a plethora of practical applications and use cases, some of which include:

  • Simplified Wallet Interfaces. Wallets on Starknet can become more user-friendly, with built-in security checks and automated transaction processes, making them more accessible to the average user.
  • Advanced Financial Instruments. The flexibility in transaction processing allows for the creation of sophisticated financial tools and services, such as automated escrow services, complex multi-party payment schemes, and advanced trading strategies.
  • Enhanced dApp Development. Developers can create dApps with more complex logic and user interactions, paving the way for applications that were previously difficult or impossible to implement on traditional blockchain platforms.
  • Innovative Governance Models. Starknet’s account model facilitates the development of decentralized autonomous organizations (DAOs) with intricate governance mechanisms, enabling more democratic and efficient decision-making processes.

Account abstraction on Starknet, therefore, is not just a technical enhancement; it's a paradigm shift that expands the boundaries of what's possible in the blockchain space. By simplifying user interactions and providing developers with more powerful tools, Starknet is setting a new standard for blockchain functionality and user experience.

The Future of Account Abstraction on Starknet

Upcoming Developments and Updates

The journey of account abstraction on Starknet is ongoing, with continuous improvements and updates being planned and implemented. These future developments are expected to further refine the technology, making it more robust, user-friendly, and versatile. 

The innovative approach of Starknet in implementing account abstraction is likely to have a significant impact on the broader blockchain landscape. This impact can manifest in several ways:

  • Setting a New Standard. As more users and developers experience the benefits of account abstraction on Starknet, it could set a new standard for user experience and functionality in blockchain platforms, influencing future blockchain developments.
  • Inspiring Innovation. The success of Starknet could inspire other blockchain platforms to adopt similar models, leading to a wave of innovation in the blockchain space.
  • Expanding Blockchain Adoption. By simplifying the user experience and enhancing the capabilities of blockchain applications, Starknet's approach to account abstraction could play a key role in driving wider adoption of blockchain technology across various industries.

Conclusion

The exploration of Account Abstraction on Starknet reveals a significant advancement in the blockchain realm, showcasing a perfect blend of innovation, user-centric design, and technical prowess. Starknet's implementation of this concept signifies a pivotal shift in how blockchain technology can be approached and utilized.

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Token Engineering Process

Kajetan Olas

13 Apr 2024
Token Engineering Process

Token Engineering is an emerging field that addresses the systematic design and engineering of blockchain-based tokens. It applies rigorous mathematical methods from the Complex Systems Engineering discipline to tokenomics design.

In this article, we will walk through the Token Engineering Process and break it down into three key stages. Discovery Phase, Design Phase, and Deployment Phase.

Discovery Phase of Token Engineering Process

The first stage of the token engineering process is the Discovery Phase. It focuses on constructing high-level business plans, defining objectives, and identifying problems to be solved. That phase is also the time when token engineers first define key stakeholders in the project.

Defining the Problem

This may seem counterintuitive. Why would we start with the problem when designing tokenomics? Shouldn’t we start with more down-to-earth matters like token supply? The answer is No. Tokens are a medium for creating and exchanging value within a project’s ecosystem. Since crypto projects draw their value from solving problems that can’t be solved through TradFi mechanisms, their tokenomics should reflect that. 

The industry standard, developed by McKinsey & Co. and adapted to token engineering purposes by Outlier Ventures, is structuring the problem through a logic tree, following MECE.
MECE stands for Mutually Exclusive, Collectively Exhaustive. Mutually Exclusive means that problems in the tree should not overlap. Collectively Exhaustive means that the tree should cover all issues.

In practice, the “Problem” should be replaced by a whole problem statement worksheet. The same will hold for some of the boxes.
A commonly used tool for designing these kinds of diagrams is the Miro whiteboard.

Identifying Stakeholders and Value Flows in Token Engineering

This part is about identifying all relevant actors in the ecosystem and how value flows between them. To illustrate what we mean let’s consider an example of NFT marketplace. In its case, relevant actors might be sellers, buyers, NFT creators, and a marketplace owner. Possible value flow when conducting a transaction might be: buyer gets rid of his tokens, seller gets some of them, marketplace owner gets some of them as fees, and NFT creators get some of them as royalties.

Incentive Mechanisms Canvas

The last part of what we consider to be in the Discovery Phase is filling the Incentive Mechanisms Canvas. After successfully identifying value flows in the previous stage, token engineers search for frictions to desired behaviors and point out the undesired behaviors. For example, friction to activity on an NFT marketplace might be respecting royalty fees by marketplace owners since it reduces value flowing to the seller.

source: https://www.canva.com/design/DAFDTNKsIJs/8Ky9EoJJI7p98qKLIu2XNw/view#7

Design Phase of Token Engineering Process

The second stage of the Token Engineering Process is the Design Phase in which you make use of high-level descriptions from the previous step to come up with a specific design of the project. This will include everything that can be usually found in crypto whitepapers (e.g. governance mechanisms, incentive mechanisms, token supply, etc). After finishing the design, token engineers should represent the whole value flow and transactional logic on detailed visual diagrams. These diagrams will be a basis for creating mathematical models in the Deployment Phase. 

Token Engineering Artonomous Design Diagram
Artonomous design diagram, source: Artonomous GitHub

Objective Function

Every crypto project has some objective. The objective can consist of many goals, such as decentralization or token price. The objective function is a mathematical function assigning weights to different factors that influence the main objective in the order of their importance. This function will be a reference for machine learning algorithms in the next steps. They will try to find quantitative parameters (e.g. network fees) that maximize the output of this function.
Modified Metcalfe’s Law can serve as an inspiration during that step. It’s a framework for valuing crypto projects, but we believe that after adjustments it can also be used in this context.

Deployment Phase of Token Engineering Process

The Deployment Phase is final, but also the most demanding step in the process. It involves the implementation of machine learning algorithms that test our assumptions and optimize quantitative parameters. Token Engineering draws from Nassim Taleb’s concept of Antifragility and extensively uses feedback loops to make a system that gains from arising shocks.

Agent-based Modelling 

In agent-based modeling, we describe a set of behaviors and goals displayed by each agent participating in the system (this is why previous steps focused so much on describing stakeholders). Each agent is controlled by an autonomous AI and continuously optimizes his strategy. He learns from his experience and can mimic the behavior of other agents if he finds it effective (Reinforced Learning). This approach allows for mimicking real users, who adapt their strategies with time. An example adaptive agent would be a cryptocurrency trader, who changes his trading strategy in response to experiencing a loss of money.

Monte Carlo Simulations

Token Engineers use the Monte Carlo method to simulate the consequences of various possible interactions while taking into account the probability of their occurrence. By running a large number of simulations it’s possible to stress-test the project in multiple scenarios and identify emergent risks.

Testnet Deployment

If possible, it's highly beneficial for projects to extend the testing phase even further by letting real users use the network. Idea is the same as in agent-based testing - continuous optimization based on provided metrics. Furthermore, in case the project considers airdropping its tokens, giving them to early users is a great strategy. Even though part of the activity will be disingenuine and airdrop-oriented, such strategy still works better than most.

Time Duration

Token engineering process may take from as little as 2 weeks to as much as 5 months. It depends on the project category (Layer 1 protocol will require more time, than a simple DApp), and security requirements. For example, a bank issuing its digital token will have a very low risk tolerance.

Required Skills for Token Engineering

Token engineering is a multidisciplinary field and requires a great amount of specialized knowledge. Key knowledge areas are:

  • Systems Engineering
  • Machine Learning
  • Market Research
  • Capital Markets
  • Current trends in Web3
  • Blockchain Engineering
  • Statistics

Summary

The token engineering process consists of 3 steps: Discovery Phase, Design Phase, and Deployment Phase. It’s utilized mostly by established blockchain projects, and financial institutions like the International Monetary Fund. Even though it’s a very resource-consuming process, we believe it’s worth it. Projects that went through scrupulous design and testing before launch are much more likely to receive VC funding and be in the 10% of crypto projects that survive the bear market. Going through that process also has a symbolic meaning - it shows that the project is long-term oriented.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.

FAQ

What does token engineering process look like?

  • Token engineering process is conducted in a 3-step methodical fashion. This includes Discovery Phase, Design Phase, and Deployment Phase. Each of these stages should be tailored to the specific needs of a project.

Is token engineering meant only for big projects?

  • We recommend that even small projects go through a simplified design and optimization process. This increases community's trust and makes sure that the tokenomics doesn't have any obvious flaws.

How long does the token engineering process take?

  • It depends on the project and may range from 2 weeks to 5 months.

What is Berachain? 🐻 ⛓️ + Proof-of-Liquidity Explained

Karolina

18 Mar 2024
What is Berachain? 🐻 ⛓️ + Proof-of-Liquidity Explained

Enter Berachain: a high-performance, EVM-compatible blockchain that is set to redefine the landscape of decentralized applications (dApps) and blockchain services. Built on the innovative Proof-of-Liquidity consensus and leveraging the robust Polaris framework alongside the CometBFT consensus engine, Berachain is poised to offer an unprecedented blend of efficiency, security, and user-centric benefits. Let's dive into what makes it a groundbreaking development in the blockchain ecosystem.

What is Berachain?

Overview

Berachain is an EVM-compatible Layer 1 (L1) blockchain that stands out through its adoption of the Proof-of-Liquidity (PoL) consensus mechanism. Designed to address the critical challenges faced by decentralized networks. It introduces a cutting-edge approach to blockchain governance and operations.

Key Features

  • High-performance Capabilities. Berachain is engineered for speed and scalability, catering to the growing demand for efficient blockchain solutions.
  • EVM Compatibility. It supports all Ethereum tooling, operations, and smart contract languages, making it a seamless transition for developers and projects from the Ethereum ecosystem.
  • Proof-of-Liquidity.This novel consensus mechanism focuses on building liquidity, decentralizing stake, and aligning the interests of validators and protocol developers.

MUST READ: Docs

EVM-Compatible vs EVM-Equivalent

EVM-Compatible

EVM compatibility means a blockchain can interact with Ethereum's ecosystem to some extent. It can interact supporting its smart contracts and tools but not replicating the entire EVM environment.

EVM-Equivalent

An EVM-equivalent blockchain, on the other hand, aims to fully replicate Ethereum's environment. It ensures complete compatibility and a smooth transition for developers and users alike.

Berachain's Position

Berachain can be considered an "EVM-equivalent-plus" blockchain. It supports all Ethereum operations, tooling, and additional functionalities that optimize for its unique Proof-of-Liquidity and abstracted use cases.

Berachain Modular First Approach

At the heart of Berachain's development philosophy is the Polaris EVM framework. It's a testament to the blockchain's commitment to modularity and flexibility. This approach allows for the easy separation of the EVM runtime layer, ensuring that Berachain can adapt and evolve without compromising on performance or security.

Proof Of Liquidity Overview

High-Level Model Objectives

  • Systemically Build Liquidity. By enhancing trading efficiency, price stability, and network growth, Berachain aims to foster a thriving ecosystem of decentralized applications.
  • Solve Stake Centralization. The PoL consensus works to distribute stake more evenly across the network, preventing monopolization and ensuring a decentralized, secure blockchain.
  • Align Protocols and Validators. Berachain encourages a symbiotic relationship between validators and the broader protocol ecosystem.

Proof-of-Liquidity vs Proof-of-Stake

Unlike traditional Proof of Stake (PoS), which often leads to stake centralization and reduced liquidity, Proof of Liquidity (PoL) introduces mechanisms to incentivize liquidity provision and ensure a fairer, more decentralized network. Berachain separates the governance token (BGT) from the chain's gas token (BERA) and incentives liquidity through BEX pools. Berachain's PoL aims to overcome the limitations of PoS, fostering a more secure and user-centric blockchain.

Berachain EVM and Modular Approach

Polaris EVM

Polaris EVM is the cornerstone of Berachain's EVM compatibility, offering developers an enhanced environment for smart contract execution that includes stateful precompiles and custom modules. This framework ensures that Berachain not only meets but exceeds the capabilities of the traditional Ethereum Virtual Machine.

CometBFT

The CometBFT consensus engine underpins Berachain's network, providing a secure and efficient mechanism for transaction verification and block production. By leveraging the principles of Byzantine fault tolerance (BFT), CometBFT ensures the integrity and resilience of the Berachain blockchain.

Conclusion

Berachain represents a significant leap forward in blockchain technology, combining the best of Ethereum's ecosystem with innovative consensus mechanisms and a modular development approach. As the blockchain landscape continues to evolve, Berachain stands out as a promising platform for developers, users, and validators alike, offering a scalable, efficient, and inclusive environment for decentralized applications and services.

Resources

For those interested in exploring further, a wealth of resources is available, including the Berachain documentation, GitHub repository, and community forums. It offers a compelling vision for the future of blockchain technology, marked by efficiency, security, and community-driven innovation.

FAQ

How is Berachain different?

  • It integrates Proof-of-Liquidity to address stake centralization and enhance liquidity, setting it apart from other blockchains.

Is Berachain EVM-compatible?

  • Yes, it supports Ethereum's tooling and smart contract languages, facilitating easy migration of dApps.

Can it handle high transaction volumes?

  • Yes, thanks to the Polaris framework and CometBFT consensus engine, it's built for scalability and high throughput.