Blockchain differentiation: Smart Contracts: How They Differ Across Various Blockchain Platforms

1. What are smart contracts and why are they important for blockchain applications?

One of the most innovative and impactful features of blockchain technology is the ability to create and execute smart contracts. Smart contracts are self-enforcing agreements that are written in code and stored on the blockchain. They can facilitate transactions and interactions between parties without the need for intermediaries, such as lawyers, banks, or escrow services. Smart contracts can also ensure transparency, security, and efficiency in various domains, such as finance, supply chain, healthcare, gaming, and more.

However, not all smart contracts are created equal. Different blockchain platforms have different capabilities, limitations, and trade-offs when it comes to designing and deploying smart contracts. Some of the factors that affect the performance and functionality of smart contracts are:

1. Programming language: The choice of programming language determines the expressiveness, readability, and security of the smart contract code. Some blockchain platforms, such as Ethereum, use domain-specific languages, such as Solidity, that are designed for smart contract development. Other platforms, such as Cardano, use general-purpose languages, such as Haskell, that are more familiar to developers and offer more flexibility and robustness.

2. Execution environment: The execution environment defines the rules and conditions under which the smart contract code is run and verified. Some blockchain platforms, such as Bitcoin, use a stack-based virtual machine, such as Bitcoin Script, that is simple and limited in functionality. Other platforms, such as EOS, use a Turing-complete virtual machine, such as WebAssembly, that is more powerful and complex.

3. consensus mechanism: The consensus mechanism determines how the network nodes agree on the validity and finality of the smart contract transactions. Some blockchain platforms, such as Hyperledger Fabric, use a permissioned model, where only authorized nodes can participate in the consensus process. Other platforms, such as Tezos, use a permissionless model, where anyone can join and contribute to the consensus process.

4. Scalability: The scalability refers to the ability of the blockchain platform to handle a large number of smart contract transactions and users without compromising on speed, cost, or security. Some blockchain platforms, such as binance Smart chain, use a centralized approach, where a few nodes control the network and process the transactions faster and cheaper. Other platforms, such as Polkadot, use a decentralized approach, where multiple parallel chains, or parachains, share the network resources and security.

These are some of the main aspects that differentiate smart contracts across various blockchain platforms. Depending on the use case, requirements, and preferences, developers and users can choose the most suitable platform for their smart contract needs. For example, a smart contract that requires high security and decentralization might opt for Ethereum, while a smart contract that requires high speed and low cost might opt for Binance Smart Chain. Alternatively, a smart contract that requires interoperability and flexibility might opt for Polkadot or Cardano.

2. The pioneer of smart contracts and the most popular platform for decentralized applications (DApps)

One of the most prominent and influential platforms for smart contracts and DApps is Ethereum, which was launched in 2015 as the first programmable blockchain. ethereum introduced the concept of a Turing-complete virtual machine, called the Ethereum Virtual Machine (EVM), that can execute arbitrary code written in a high-level language called Solidity. This allows developers to create and deploy various types of DApps, such as decentralized exchanges, lending platforms, gaming, social media, and more. Ethereum also has its own native cryptocurrency, called Ether (ETH), which is used to pay for the execution of smart contracts and transactions on the network.

Some of the key features and challenges of smart contracts on Ethereum are:

- Interoperability: ethereum smart contracts can interact with each other and with external data sources, such as oracles, APIs, and other blockchains. This enables the creation of complex and dynamic DApps that can leverage the benefits of multiple platforms and services. For example, a smart contract on Ethereum can use an oracle service to fetch the price of a certain asset from a centralized exchange, and then execute a trade on a decentralized exchange based on that information.

- Security: Ethereum smart contracts are immutable and transparent, which means that they cannot be modified or tampered with once deployed, and anyone can verify their code and behavior. This reduces the risk of fraud, censorship, and corruption, and increases the trust and confidence of the users and participants. However, this also means that any bugs or vulnerabilities in the code can have serious and irreversible consequences, such as the infamous DAO hack in 2016, where an attacker exploited a flaw in a smart contract and drained over $50 million worth of ETH from a decentralized organization.

- Scalability: Ethereum smart contracts are executed by every node in the network, which ensures consensus and security, but also limits the throughput and performance of the platform. As the number and complexity of smart contracts and dapps on Ethereum grows, so does the demand for computational resources and network bandwidth, which leads to congestion, high fees, and long confirmation times. To address this issue, Ethereum is undergoing a major upgrade, called Ethereum 2.0, which will transition the network from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) one, and introduce sharding and layer-2 solutions to increase the scalability and efficiency of the platform.

3. A third-generation blockchain platform that aims to offer more scalable, secure, and interoperable smart contracts

One of the most ambitious and innovative projects in the blockchain space is Cardano, a third-generation platform that aims to offer more scalable, secure, and interoperable smart contracts. Cardano is not just a cryptocurrency, but a comprehensive ecosystem that supports various applications, such as identity management, governance, and decentralized finance. Cardano's smart contract platform, called Plutus, is designed to enable developers to create complex and expressive contracts that can interact with other systems and protocols. Some of the distinctive features of Cardano's smart contracts are:

- Formal verification: Cardano uses a rigorous mathematical approach to ensure that the smart contracts are correct and bug-free. Plutus is based on a functional programming language called Haskell, which allows developers to write code that can be verified by mathematical proofs. This reduces the risk of errors, vulnerabilities, and malicious attacks that could compromise the security and functionality of the contracts.

- Layered architecture: Cardano separates the computation layer from the settlement layer, which means that the smart contracts run on a different network than the transactions. This allows for greater scalability, as the contracts do not congest the main chain, and also for more flexibility, as the contracts can be updated and modified without affecting the underlying ledger. The computation layer, called Cardano Computation Layer (CCL), is where the Plutus contracts are executed, while the settlement layer, called Cardano Settlement Layer (CSL), is where the ADA tokens are transferred and stored.

- Interoperability: Cardano aims to create a universal framework that can communicate and exchange value with other blockchains and legacy systems. Cardano's smart contracts can interact with off-chain data sources, such as oracles, and also with other smart contract platforms, such as Ethereum, through a protocol called KEVM. KEVM is a version of the Ethereum Virtual Machine (EVM) that runs on the K framework, a formal semantics tool that can verify the correctness and compatibility of different languages and platforms. By using KEVM, Cardano can support the execution of existing Ethereum smart contracts, as well as the development of new ones using Solidity, the most popular language for Ethereum.

- Sustainability: Cardano aims to create a self-sustaining and adaptive system that can fund and govern its own development and innovation. Cardano's smart contracts can be used to create decentralized applications (DApps) that provide various services and solutions for the users and the community. Cardano also has a treasury system that collects a portion of the transaction fees and distributes them to the projects and proposals that are approved by the stakeholders. Cardano's governance model, called Voltaire, is based on a liquid democracy mechanism that allows the participants to delegate their voting rights or vote directly on the issues that affect the network.

Cardano's smart contracts are expected to launch in 2024, after a series of testing and auditing phases. Cardano's vision is to create a platform that can support the development of a more inclusive, fair, and efficient global society, where smart contracts can enable trustless and transparent interactions among individuals, organizations, and institutions.

4. A self-amending blockchain platform that features smart contracts with formal verification and on-chain governance

One of the most innovative and ambitious blockchain platforms that supports smart contracts is tezos. Unlike other platforms that rely on hard forks or off-chain solutions to upgrade their protocols, Tezos has a built-in mechanism that allows its stakeholders to propose, vote, and implement changes on the blockchain itself. This process, known as self-amendment, enables Tezos to adapt to new technologies and requirements without disrupting its network or creating governance conflicts.

Some of the key features and benefits of Tezos as a smart contract platform are:

- Formal verification: Tezos uses a domain-specific language called Michelson to write smart contracts. Michelson is designed to facilitate formal verification, a mathematical method that proves the correctness and security of the code. Formal verification can help prevent costly bugs and exploits that have plagued other smart contract platforms, such as the DAO hack on Ethereum or the Parity wallet freeze.

- On-chain governance: Tezos has a decentralized and democratic governance system that empowers its token holders, known as bakers, to participate in the decision-making process of the network. Bakers can submit proposals for protocol upgrades, delegate their voting rights to other bakers, and approve or reject the proposed changes. The governance process consists of four phases: proposal, exploration, testing, and promotion. Each phase lasts for about three weeks, and the whole cycle takes about three months to complete.

- liquid proof-of-stake: Tezos uses a consensus algorithm called liquid proof-of-stake (LPoS), which is a variation of the more common delegated proof-of-stake (DPoS). In LPoS, bakers can stake their tokens to validate transactions and earn rewards. However, unlike DPoS, bakers can also delegate their staking rights to other bakers without giving up their ownership or governance rights. This creates a more fluid and inclusive staking system, where anyone can participate in the network security and governance, regardless of their stake size or technical expertise.

To illustrate how Tezos works as a smart contract platform, let us consider a simple example of a crowdfunding campaign. Suppose Alice wants to raise funds for her project, and Bob and Carol want to contribute. Alice can create a smart contract on Tezos using Michelson, and specify the rules and conditions of the campaign, such as the funding goal, the deadline, and the refund policy. Bob and Carol can then send their tokens to the smart contract address, and receive a receipt in return. The smart contract will automatically check if the funding goal is reached or the deadline is passed, and either send the funds to Alice or refund the contributors, according to the predefined logic. Alice, Bob, and Carol can also vote on any proposals to change the parameters of the campaign, such as extending the deadline or increasing the goal, using their tokens as voting power. The smart contract will then execute the changes that receive the majority support from the stakeholders.

5. A multi-chain platform that connects different blockchains and allows cross-chain smart contracts

One of the most innovative and ambitious projects in the blockchain space is Polkadot, a multi-chain platform that aims to connect different blockchains and enable cross-chain interoperability, scalability, and security. Polkadot is designed to support various kinds of smart contracts, from simple to complex, across different chains and platforms. Polkadot's smart contract capabilities are based on three main components:

1. Parachains: These are independent blockchains that run in parallel on the Polkadot network, each with its own state, logic, and governance. Parachains can host smart contracts written in any language or framework, such as Solidity, Rust, or Ink, and can communicate with each other through the Polkadot relay chain.

2. Substrate: This is a modular framework that allows developers to easily create custom parachains with their own features and specifications. Substrate provides a set of common components, such as consensus, networking, and cryptography, that can be configured and extended to suit different needs and preferences. Substrate also supports the WebAssembly (Wasm) standard, which enables cross-platform compatibility and high performance for smart contracts.

3. Polkadot Runtime Environment (PRE): This is a layer that connects the parachains to the relay chain and provides a consistent interface for executing smart contracts. The PRE consists of two parts: the Wasm interpreter, which executes the smart contract code, and the Polkadot Host, which handles the network, storage, and consensus functions. The PRE ensures that smart contracts can run smoothly and securely on any parachain, regardless of the underlying technology or design.

With these components, Polkadot enables a rich and diverse ecosystem of smart contracts that can interoperate and collaborate across multiple chains and platforms. For example, a smart contract on a parachain that specializes in decentralized finance (DeFi) can interact with another smart contract on a parachain that focuses on identity management, or a smart contract on a parachain that supports gaming can access data from a smart contract on a parachain that hosts oracles. Polkadot also allows smart contracts to leverage the benefits of each parachain, such as scalability, privacy, or governance, without compromising on security or compatibility. Polkadot's smart contract capabilities are not only flexible and powerful, but also future-proof, as new parachains and features can be added and upgraded without affecting the existing ones. Polkadot is thus a platform that fosters innovation and experimentation in the field of smart contracts, and opens up new possibilities and opportunities for developers and users alike.