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Context Claims

Recently I have been working through designing various DeFi protocols in the Ergo contract model, and the thought came to mind that to make things more efficient, it would be of great benefit if we could make claims about the global state of the blockchain/UTXO-set. This led me to come up with the concept of global context data accumulation (which I will explain in a moment); however, I didn't realize that the concept is even further extendable to any claim about the blockchain state until a conversation with @jasondavies and @scalahub where they pointed out negative proofs are possible.

So, what are these "Efficient Global Context Claims" then? In essence, smart contract enabled blockchains to date have various levels of context available to developers in the smart contracts themselves. Some may allow little to no outside data from other accounts/utxos/contracts, while others like Ethereum only allow smart contracts to specifically call one anothers' functions to return a value and obtain that tiny slice of context that way. What all of these systems/models lack is the ability to make claims about the state of every single account/UTXO/smart contract on the entire system.

There are clear reasons for this; it is horribly inefficient. With blockchains like Ethereum, where it's almost impossible for a user to bootstrap a full node, expecting a validator to go through the entire state of the blockchain to validate a logical check in a single contract is impossible to even consider implementing when they're already constantly hitting limits. Ergo, on the other hand, is the only blockchain out there that has smart contracts on a UTXO-based system and has the concept of data inputs.

For those who are not familiar, data inputs allow you to reference a UTXO/box in a transaction without spending it. Thus you have access to all of the data/value of tokens within a UTXO without needing to have the right to spend it. Following that line of reasoning, this means we can check data from any dApp/contract on the blockchain without needing permission or having to encode anything at all in the contract to support doing so. This has major implications, which we will now get into.

Because data inputs allow anyone to reference the registers and tokens of any box, this means that we can make generic claims about the whole system and have any user on the system prove/disprove said claims. For example, we can arbitrarily create a smart contract that specifies, This UTXO can only be spent if another UTXO exists with the number 5 in Register R4 and it holds 5 Erg. If such a box exists with 5 Erg and the number 5 in register R4, then anyone can create a transaction using the said box as data input, thereby proving that such a box exists and giving them the right to spend the UTXO.

Now, what if we were to include a reward (say 100 Ergs) together with our smart contract, which is making a claim about the global context? This would provide a monetary incentive for actors (who are not the validators) to scan the entire UTXO-set to find a box that proves the claim at hand, thereby earning the actor money. Thus we could create a box that holds 100 Ergs and specifies the following claim in its smart contract: This UTXO can only be spent if a box exists which holds at least 1000 Ergs at the smart contract address "2iHkR7CWvD1R4j1yZg5bke...". If such a box exists, then anyone can cite the box as data input and earn the 100 Ergs. This is a trivial task and would earn someone about $20.00 USD (in today's Erg/USD conversion rate).

Thus, if our smart contract box does not get spent over the course of the proceeding blocks, we come to the conclusion that such a box does not exist on the network. Thus we have outsourced the scanning and verifying of the global state of the blockchain to users who have a monetary incentive while making it seamless and trustless due to using data inputs.

Now, if we implement software to streamline this task automatically and make it trivial for Ergo users to run at a profit, we can gain a high level of assurance about the claims we make on-chain (the greater the reward, the greater the incentive for "verifiers" to make sure that the claim does/does not hold thereby increasing the assurance). One can view this as an efficient and trustless (due to data-inputs providing proof of validity) variation of oracles where each oracle only processes data from the blockchain and folds it down into a boolean result. This should be possible to run on commodity hardware by anyone anywhere in the world with an internet connection and computer, allowing for a truly decentralized system of "verifiers" who make it possible to make efficient global context claims about the entire blockchain.

This also acts as a superb way for users to come into the ecosystem and earn Erg while providing a truly pivotal service with a low barrier of entry. Once the utxo-set grows very large, and the claims become more complex, we could even imagine "verification pools" coming about, where users are given a segment of the UTXO-set to keep track of/process and receive a small portion of any rewards that their "verification pool" wins. This opens up a lot of doors of opportunity.

With what I've outlined above, we have the ability to make any claim at all about any token or piece of data in any register that is part of any dApp on the entire blockchain. Very powerful. However, we can do even more, which I alluded to in the beginning.

Global Context Data Accumulators

Since data inputs provide us with the full context of a given UTXO, it means that we can also apply arbitrary functions to said data instead of just boolean checks. Thus, we can have our simple "verifiers" actually become "accumulators" who scan the entire blockchain to find all relevant boxes and then fold the data down into a single/set of values which get posted into a new single box.

For example, let's say we want to know the total number of Erg which are held in a smart contract at the address of 2iHkR7CWvD1R4j1yZg5bke.

We can post a box with a 100 Erg reward on-chain with a contract that specifies anyone can spend the box if: 1. The user provides at least one data input of a box owned by 2iHkR7CWvD1R4j1yZg5bke. 2. The user creates a single new box with: - The number of data inputs he provided in register R4 - The accumulated data in R5 (total number of Ergs held in all data inputs) - His public key in register R6 - This box locked under the "Finalizing Accumulation" script

This new box under the "Finalizing Accumulation" script finalizes/ends the accumulation if no one spends it in the next five blocks. However, it allows anyone to spend the box if they: 1. Provide at least one more data input than the value in register R4. 2. Create a single new box with: - The number of data inputs he provided in register R4 - The accumulated data in R5 (total number of Ergs held in all data inputs) - His public key in register R6 - This box locked under the "Finalizing Accumulation" script again

Thus, the user has proven that he/she has found more data inputs than the previous user, which match the stated restrictions. Once the accumulation has been finalized because no one has spent it after five blocks, the user who has their address in R6 can withdraw his reward and move the value in R5 (the accumulated datapoint) into a new box of its own in a register allowing anyone on the entire network to easily reference it as a data-input.

Admittedly this is a slightly naive way to implement an accumulator scheme (as it could take arbitrarily long for the datapoint to finalize, and probably could use an NFT to make it easy to find the finalized datapoint, for example), but it was chosen to be as clear as possible for how accumulators could be implemented/work. We can likely build-out "data accumulation pools" where there are hard-capped time limits for protocols that require consistent data accumulation.

Context data accumulators allow us to sum up the state of the blockchain into one or more registers of a new box. This can be very useful in many use cases, such as in DeFi, where you may need to know the total funds held in a liquidity pool contract in order to calculate interest rates accurately. Using context data accumulators to checkpoint/accumulate the state of the blockchain allows users to parallelize actions within dApps inside of their own UTXOs completely separate from others while still contributing to a global shared core state of the dApp that is put together by the accumulators. It may even be possible to one day merge such schemes with sharding and/or side-chains to allow for scaling of smart contracts thanks to the nature of the UTXO model and this snapshot/accumulation approach to contract design.

Conclusion

With all of that said, thanks to Ergo's UTXO model with data inputs, we have the ability to trustlessly fold the whole UTXO-set state down into a single value and post the result on-chain. By leveraging monetary incentives, we can thus use this to create efficient claims on global blockchain context and/or accumulate data into a single box that is readable by anyone and everyone.

There is likely a lot more to be said/thought about with all of this, but I believe this should be good enough of a starting point to get the idea out there in an understandable form.

Update

Here are some further of my thoughts from Discord on improving security for claims using pools (Which is also possible for data accumulation which further allows for accumulating/checkpointing in predefined time intervals.):

For claims, we can probably separate time into epochs/intervals as well, and anyone who joins a "Claim Pool" for a specific claim has to put up some collateral on entry which shows that they are actively checking said claim.

Whoever first posts the counter-proof to the claim gets the reward (or maybe we can use a 1st (65%), 2nd (25%), 3rd (10%) payout scheme). However, all other participants must also post the counterclaim as well within the given time duration to prove their active participation. If one participant fails to do so, then it shows that they have failed to perform their task, and therefore their collateral is given to all of the other active participants in equal portions.

We could even incorporate residual-payout schemes with such Claim pools, where there is a large reward for proving the counterclaim; however, verifiers still receive a reward in every epoch if no counter-proof is produced by any participant. This way, you incentivize active checking for a long duration of time while still providing enough funds for verifiers to continue. (Though we'd need the per-epoch fee to be several orders of magnitude smaller than the reward so that game theoretically, it is always in everyone's best interest to claim the reward rather than all participants colluding and just getting passive rewards for doing nothing).

To make this even more robust, we could theoretically also add the ability for outsiders to provide counter-proofs to the claim after an epoch has finished in the proceeding epoch. Thus if the pool participants colluded to not provide the counter-proof data input and someone else can prove that the claim has been disproved via a data input, then said outsider can redeem the reward and all of the collateral of all pool participants.

As such, pool participants receive a small residual income for actively checking, and if they fail to do their job, then outsiders have an incentive to double-check in order to receive the reward and "liquidate" all of the pool participants' collateral.

Going further, we could also encode arbitrary entry conditions for joining a Claim Pool. It could just be submitting collateral and redeeming a "pool entry token" allowing for seamless entry/exit, could be semi-permissioned, and/or there could be hard-caps to the total number of verifiers (could be useful if residual payout scheme is in place).

There's a lot of flexibility with all of this, and I think it should be possible to create some sort of a go-to default scheme that provides solid security together with good incentives for active claim checking.


After some more thinking, I've realized that with global context claims, we can also easily create trustless prediction markets for the state of any dApp/contract/data on-chain.

Essentially you could just mint two different tokens and lock them in a contract that has a claim in it. People can buy a "True" token or a "False" token, and if the claim gets proven before an expiration block height, then say "True" token holders get paid out; else, if the block height arrives, then the "False" holders get paid out. The claim can be proven by anyone via a data input, and so we could just have a basic prize or a full-fledged claim pool to make it secure.