Finance is the art of risk management. Risks exist in both assets and operations. An asset has a price, price is a reflection of its intrinsic value and synthesized risk. We can’t evaluate an asset without looking into its risk. The risks in operations are mainly from humans who are error-prone and corruptible. The evaluation of asset and operation risk is at the core of finance, no matter whether referring to traditional finance based on traditional assets or shiny new decentralized finance (aka. DeFi) running on native crypto assets.
The risk of crypto-assets is comprised of external risks such as regulation changes, and internal risks such as design flaws and implementation bugs. On Ethereum, the native asset is ETH, and the non-native assets are what we call ERC tokens, which refers to tokens that comply with any one of ERC20 standards and its companions such as ERC721 and ERC777 etc. The risk of the native asset is lower than the risk of a non-native asset because the latter can be affected by both Ethereum client bugs and smart contract bugs. For ERC tokens and DeFi, bugs in a smart contract are of the highest concern because DeFi as a system is a complicated network weaved together through endless smart contracts created by different developers from different places. We call the risks caused by smart contract bugs smart contract risks. …
A generalized UTXO as state storage
When designing the Nervos Common Knowledge Base (CKB), we wanted to solve three problems:
If the above problems fail to be resolved, Layer 1 will not run for long, let alone fulfill its great promise. These problems are rooted in the underlying blockchain architecture and protocol, making them difficult to solve with patches. We have to reexamine the root of the problems at the underlying data structure and seek a more appropriate base. …
Some thoughts on blockchain nodes presented in an intelligible way without any mathematical formulas, computer algorithms or superstitious beliefs.
As we all know, nodes in a blockchain network are classified into the following categories:
Block-producing nodes are responsible for packaging transactions and generating blocks. They have different names in different blockchains, such as “Miner/Mining pool” in Bitcoin and Ethereum; “Delegator” in Bitshares; “Producer” in EOS; “Stakeholder” in Cardano; “Validator” in Casper and “Consensus node” in CITA.
In these networks, block-producing nodes are usually also full nodes, but these two roles can be separated. The most typical example of a purely block-producing node is a bitcoin miner mining in a pool with the ‘getblocktemplate’ protocol. …