Nervos and the global blockchain engineering firm IOHK, developer of the Cardano blockchain, have agreed on a long-term partnership to reduce the security risks that smart contracts pose for the growing DeFi (decentralized finance) area. This was reported to Cointelegraph in Spanish through a statement.
“In the first phase of the association, The two blockchains will jointly research UTXO ledgers and smart contracts to develop an improved framework for other UTXO-based blockchains. Further improvement of the security and scalability alternative to the Ethereum account model, ”the statement said.
“Both the UTXO model and the account model are billing methods to keep track of a user’s assets and transactions on a blockchain. Like the various PoW and PoS consensus algorithms, the two models serve a similar purpose, but have large differences that affect the security of smart contracts. This is especially important for DeFi projects where $ 100 million has been lost to hands. of hackers this year alone. The partnership between Nervos and IOHK is the first joint effort to expand the existing UTXO model and drive further adoption in the blockchain industry, ”they later added.
Romain Pellerin, IOHK Technical Director, said:
“The Cardano and Nervos communities are working on similar streams of research to deliver robust smart contract technologies, native token standards, cross-chain asset transfers and novel crypto primitives.”
Then he added:
“It might come as a surprise that the PoW and PoS initiatives are joining forces, but we believe our industry needs to work together more if blockchain technologies are to become widespread.”
UTXO versus account model
As explained earlier, UTXO (Unspent Transaction Output) refers to the amount of digital assets a user has left over when creating a transaction, which can then be used in a new transaction. “In contrast to the account model used by blockchains like Ethereum, which records a user’s account balance as global status, a UTXO model tracks a user’s unspent transactions in a receipt-like manner, making it easier to authenticate transaction sequences, avoiding duplicate spending and provide general security, ”they stated.
In addition, they claimed that the UTXO model allows parallel processing to scale the computation, while the account model only allows serial processing or one transaction at a time. “Simply put, UTXO is a verification model while the account model is computational. Bitcoin uses the famous UTXO model like Nervos and Cardano, ”they noted in the statement.
“UTXOs are superior to account models in many ways, offering enhanced security, privacy, and scalability that are critical to DeFi,” said Kevin Wang, co-founder of Nervos.
“By working with IOHK to develop and define the UTXO standards, we will continue to offer a secure alternative to the broader blockchain industry,” said Wang.
Further development of the UTXO model
On the other hand, they pointed out in the statement that the recent increase in DeFi has exposed vulnerabilities in blockchain protocols and smart contracts, as well as the risk of hacks and double-spend attacks. “By promoting the UTXO model, Nervos and IOHK want to create a safer and more sustainable infrastructure for digital assets,” they said.
“To advance the development of UTXO, Nervos and IOHK will co-author research on this topic and future improvements to open source, and explore the creation of a universal standard for UTXO models. The two projects will also form a global UTXO alliance with other leading UTXO-based blockchains to facilitate industry-wide collaboration in research, development, education and more, “they emphasized.
You might be interested in: