Earlier this year we announced our intention to bring stablecoins to GoChain to benefit from GoChain’s superior speed and throughput which makes day-to-day payments, such as buying coffee, a reality. Instead of the typical stablecoin way of doing things, where a third party holds custody of fiat cash backing each token, GoChain stablecoins will be backed by stablecoins on Ethereum, 1-to-1.
Today, we’re proud to announce GOST Protocol, the first of its kind enabling interoperability between blockchains in a fully decentralized manner.
Currently buying coffee with crypto isn’t feasible because the blockchain networks that the stablecoins are on are too slow and can’t handle the volume. Tether (USDT) is on the Bitcoin network and most of the others are on the Ethereum network (USDC, TUSD, PAXOS, etc). Bitcoin can only handle 7 transactions per second and takes a minimum of 10 minutes to confirm a transaction or 60 minutes (6 block confirmations) if you want to be safe. Ethereum can only handle around 13 transactions per second and you have to wait at least 15 seconds or minutes if you want to be safe and that’s if the network isn’t congested, which it usually is. You can’t run a coffee shop where people have to wait at the cashier for 10 minutes for their payment to go through. Once a token has been transferred to GoChain, you can expect transaction times of less than 5 seconds and 100x the volume before it gets congested.
We believe these performance issues are the primary reason cryptocurrency adoption has not taken off and is limited to speculators, rather than users. Our goal from day 1 has always been to make a blockchain that could actually be used for day to day things such as playing games or buying coffee.
In addition to performance, GoChain’s transaction fees are several orders of magnitude smaller. The average transaction fee for the past 24 hours on Bitcoin is $2.29. That is not a typo. On Ethereum it is $0.21. Again, you can’t expect your local coffee shop to accept fees that are significantly higher than the credit card fees are being charged on your $5 latte. Once a stablecoin has been transferred to GoChain, you’ll be able to use it with fees along the lines of $0.000001.
How It Works — GOST Protocol
At a very high level, it works like the following:
- User deposits Ethereum ERC-20 tokens into a contract (GOST-C1) on Ethereum.
- GoChain nodes monitor GOST-C1 for deposits and if it sees one, after X block confirmations (30–60), a transaction to mint the equivalent tokens on GoChain in a GO-20 contract is committed.
- User can then use those tokens on GoChain exactly the same way as Ethereum, but with all the benefits mentioned above.
- User burns GO-20 tokens on GoChain.
- GoChain nodes wait for X block confirmations for the burn then they all submit a transfer approval to the GOST-C1 contract on Ethereum. Once the majority of nodes have submitted this transaction, the ERC-20 tokens are released to the user.
- Fully auditable in real-time.
- No entity, except the owner of the tokens, has custody of the tokens or access to the tokens at any point.
We believe GOST Protocol enabling blockchain interoperability between blockchains and making it easy to move tokens back and forth between chains easily and efficiently will open new possibilities for app developers. High speeds and low transaction costs can make the dream of decentralized applications a reality, that failed in blockchain round 1 due to poor user experience. It also reduces any fear of lock-in to a specific blockchain since you can move assets around to other chains.
In addition, GOST Protocol paves the path towards huge scalability improvements for GoChain by enabling multiple GoChain networks to run and be able to transact across each other.
This will be live on the GoChain testnet in the coming weeks. If you’re interested in helping us test it, please let us know.
The proposal for this is available here if you’d like to comment or provide feedback: