Announcing Witnet 2.0 including huge protocol enhancements like Proof of Stake, tokenomic updates, and tooling upgrades.
Witnet is now a superior oracle solution for decentralized financial products and because of this, it is now time to scale the oracle for the masses. Introducing Witnet 2.0.
What is Witnet 2.0?
Witnet 2.0 encapsulates a lot of massive changes at the Witnet protocol level to make the oracle future-proof and scale in security while it grows and secures more value on-chain. These changes include the transition to Proof of Stake, upgrades to tokenomics, the addition of the decentralization bridge, and smaller changes to scale the oracle latency and add scripting functionality. Other changes include upgrades to Sheikah to make it smarter, and wallet functionality to achieve staking capabilities.
Why 2.0?
The Witnet whitepaper came out in November 2017. Prior to this whitepaper, there was not a solution to the blockchain oracle problem that states the sophistication of issues that arise when smart contracts are trying to get off-chain information to help execute their deterministic decisions. This posed a lot of problems. Back in 2017 there wasn’t a lot of usage on blockchains aside from trading actual tokens on centralized exchanges. There wasn’t really DeFi, Dexes, lotteries, or much else. The only smart contracts that existed were things like universal basic income and Crypto Kitties.
Fast forward to October of 2020 and the Witnet mainnet finally went live. Many people know the intricacies of how Witnet operators achieve consensus and tackle the oracle problem. Witnet is a single-purpose engine that does one job and has specific tools for that one job. Because of this, it does that job really well. Developers finally had a suitable oracle to actually provide decentralized data feeds in a fully secure manner that was based on true cryptoeconomic incentive rather than trust.
We are in a very different place now in 2023. The network has been working particularly well for quite a few years and we have seen a lot of grass roots protocols use Witnet and grow their TVL exponentially. While this is great for all involved parties, it can cause some issues with security as scaling both protocols together isn’t correlated.
Witnet 2.0 encapsulates the idea of a bunch of protocol and ecosystem enhancements that we’ve been studying extensively. Some of these changes are things we have discussed with the community, and some are changes you might’ve never heard us talk about before. This article will discuss the two most important changes in their own section, and some other ones in the subsequent section.
The most important thing to know about Witnet 2.0 is that the network will be transitioning to a Proof of Stake consensus mechanism. This makes it the first Proof of Stake oracle network in the world.
Why Proof of Stake?
When we launched the network we created a consensus mechanism that was tailored to oracle problems. This worked very well for the following years that allowed Witnet to bootstrap use cases, grow a community, and grow the protocol’s ability to be battle tested. This was also during a period where Proof of Stake was nascent and only found on a few niche blockchains, so the decision was made to create a custom solution that we dubbed Random Proof of Eligibility.
After quite extensive research into how different consensus mechanisms could look on Witnet, we decided to follow a true PoS method for a couple of different reasons that are quite unique to Witnet itself.
For starters, because Witnet is fully decentralized on the protocol level and the coin distribution (pre-mine) was fairly distributed, we can assume this decentralization will continue into the future. This is also leveraged by the fact that running a node is permissionless and so easy to do. Some context: running a Witnet node only requires around 60 GB of disk storage to do the initial block download, and only expected to grow 30 GB a year. On top of that, one only needs about 2–4 GB of RAM. These are easily obtained hardware requirements and is why we currently can estimate around 10,000 nodes that already operate on the Witnet blockchain.
Additionally because Witnet doesn’t have complex transactions like state changes such as an EVM, we can predict that hardware requirements will not become a barrier to entry for node operators.
As we know, there must be a collateral requirement for nodes fulfilling data requests, otherwise the oracle would be operating on trust which is what Witnet set out to avoid upon inception. This is why a Proof of Stake mechanism will set up the future of the protocol for success because nodes must stake $WIT that will be burned if said node provides false information in any given data request, or fail to contribute to chain consensus correctly. Another great fact about Proof of Stake is that the more honest stakers that participate, the less coins there are that can be used in a malicious way within the network. This would make Witnet the first every Proof of Stake oracle system on Earth.
It also goes without saying that Proof of Stake strengthens Witnet’s appeal to new community members, exchanges, and protocols. Anyone would be able to run a node by either downloading the chainstate on their local computer, or simply joining a Staking as a Service on an exchange or something.
Why tokenomics updates?
This update is simple and something that can essentially be rolled out quite quickly, whereas the Proof of Stake update will be a longer process. We’ve been discussing tokenomic updates for quite some time, and they have been public discussions for as long as Witnet has been live on mainnet.
Simply put, tokenomics decisions made in the early days of the network don’t represent the current state of the network today. Why not change them? Scaling Witnet in the future requires a change to the tokenomics, as the security of the network partially relies on the strength of the tokenomics.
There are a few different ways to change tokenomics. The simplest and best way to do it is to change the issuance schedule in a positive way. Right now the WIT issuance from each block halves every 5 years. The first halving will be in October 2025 and go from 250 to 125 $WIT per block. If we shortened the halving, it will decrease the total supply of un-mined coins without changing current $WIT holders much. We could also simply change the total supply, or look at different ways to get to the final solution.
What else in 2.0?
The decentralized bridge
A pillar of the success of Witnet decades into the future would be to create a fully decentralized bridge on any possible blockchain. This would allow bridge nodes to collect data requests (and fees) from a chain, relay it to the Witnet sidechain (with fees), and relay the finalized request back to the initial chain. The Witnet development community focused on making the Witnet layer 1 fully decentralized, and then deciding to focus on the bridge later on. We would like to include the necessary upgrades in Witnet 2.0 so that anyone can run a bridge when the feature is released, earn money for providing a service, and support the Witnet network and any chain of their choice.
Sheikah improvements
Our beloved Sheikah will get an update that allows the wallet to be much lighter. Of course, it will most likely remain as a desktop wallet as we have our MyWitWallet. The general concept for this update would be to optimize the syncing process to the full node that Sheikah connects to. This shouldn’t degrade the privacy features too much and should allow for a faster sync process when opening the app.
Witnet usability
In addition to all of the enhancements above, we are increasing usability of the Witnet protocol to help it scale with more protocols using the oracle. Some of these fixes are simple, some are more complicated. For example, we can add tally transactions into the same block to make oracle latency much faster.
Wrapping up
If you have made it this far in the article you probably recognize that two of the biggest protocol upgrades are quickly approaching and they are designed to vastly change how Witnet looks. It gives anybody the ability to stake $WIT, secure the network, and earn a piece of the pie for doing so. Additionally, these upgrades give more incentive for exchanges to list the $WIT coin as staking and tokenomics are core to exchange business models and also allow them to participate in Witnet consensus.
Please remember that we are still in the early phases of this roadmap and things are prone to change. The goal of these proposals is to improve Witnet for the long term. Additionally, remember that these improvements must be accepted by the network via TAPI.
We are expecting this brand new implementation to go live by the end of 2023.
Cheers to Witnet 2.0.
