last updated 2023-10-30 Main Menu- Mastering Evrmore

Main Menu- EvrLight and Nostr4Evr

EvrLight and Nostr4Evr
*EvrLight uses Evrmore as Layer-1 for diverse Lightning assets like Bitcoin is Layer-1 for Lightning money*

An Overview of Technologies for Assets on Bitcoin and Lightning
The limitations of payment channels and why EvrLight is better

There is a long history of projects which have attempted to implement Assets on the Bitcoin blockchain. The first generation, often called "colored coins", such as Counterparty and Mastercoin/OmniLayer, suffered from the risk of being destroyed if the coins were spent by wallets which did not understand their protocol. They also suffered from the high fees and slow confirmation times of the Bitcoin blockchain. More recently, the Ordinals project is similar and is famous for generating large mining fees.

RGB and Taproot-Assets are relatively recent projects offering improvements which may prove useful in the future. But they are very complex, unintuitive, and more centralized because they require critical portions of their data to be stored off-chain in some secure way.
Taproot-Assets is an impressive work of cryptographic design. It provides the cryptographic primitives needed to store arbitrary data in a UXTO, and it defines a protocol for using that to create and track Assets. But it doesn't define any standards for the types or characteristics of Assets or how the Asset holders interact or are restricted. Even for on-chain Taproot Assets, the Asset transactional data is stored off-chain with clients (which they would only do for assets they own since it costs resources and fees) or in a centralized database per asset.

Evrmore, by contrast, is a simple UTXO-based extension of the bitcoin design enhanced specifically to support assets, which any Bitcoin developer or Lightning developer can easily understand and use.

RGB and Taproot-Assets have both made claims that their assets can be routed on Bitcoin's Lightning Network. OmniLayer, meanwhile, has proposed OmniBOLT, a Lightning-like network which would have to be built in parallel with Bitcoin's Lightning Network, but which could then route USTD (Tether) along with other assets.

But those claims can be misleading to non-experts. So it is worth taking a closer look at what they can actually deliver. In fact, it is worthwhile to consider what the limitations are for ANY assets being routed on the Lightning Network.

First just a brief review of Lightning Network functionality: The Lightning Network is based on Payment Channels. As any Lightning developer or node operator knows, one of the biggest challenges in routing payments over a multi-hop route of Payment Channels is finding nodes with sufficient liquidity. If you want to send X Bitcoins to someone else through a multi-hop route, every node along that route must have locked up at least X Bitcoins on-chain to give them X Bitcoins off-chain in their channel. The on-chain Bitcoin are effectively collateral to guarantee the IOUs they are handing out off-chain. Moreover, their X off-chain Bitcoins must not have already been spent so that they still have X liquidity in the correct direction.

That scheme can work very well for fungible items available in high volume. It is well suited for Bitcoin, and it could be used for any widely-available high-volume stable coin like Tether.

On the other end of the scale, Payment Channels don't work at all for non-fungible tokens (NFTs). By definition, an NFT is unique so that if you own it, none of the Lightning Network nodes can own it. End of story. NFTs cannot be supported. OmniBOLT says this in their spec, which they admit without hesitation since they are only interested in Tether.

Between those extremes, there could be fungible tokens which are available in only limited supply, or there could be a related group of non-fungible tokens which are very similar to each other. Taproot-Assets claims to support all these cases (including single NFTs) with the ability to do multi-hop routing over the Lightning Network. But the way it accomplishes that feat is by converting the asset to standard Bitcoins when entering the Lightning Network, routing the Bitcoins, and then converting the Bitcoins back to assets when exiting the Lightning Network. That sounds wonderful in principle, but in reality it imposes serious limitations in all cases except high-volume stable coins. First, such a scheme can only work if there is a universally trusted price oracle to dictate the conversion prices. Moreover, the Lightning entry and exit nodes must be willing to take additional arbitrage risk in holding the asset. The Lightning entry node must already be holding that asset and be willing to sell it at that price in order to deliver Bitcoin into the route. The next-to-last exit node must be willing to buy that asset at that price in order to receive Bitcoin and deliver the Asset. Lastly, if the assets are NFTs, then in addition to requiring a trusted price oracle (which is unlikely for an NFT), the data in the NFT which makes it unique must be stored off-chain and off-Lightning in some trusted way to make the conversions possible.
Once again, the end result is functionality which in truth only works for Bitcoin and high-volume stable coins.

Now that the inherent limitation of assets on Payment Channels has been established, we can compare those designs with EvrLight.

To be clear, EvrLight makes it possible to buy and sell assets USING Lightning, but not OVER Lightning. Assets do not move through a Lightning network routing path from one party to another as open chained HTLCs the way Lightning-BTC does. Assets move from one UTXO to another on the Evrmore block chain under the control of Lightning interacting with the Evrmore on-chain UTXO Assets. Asset transactions are therefore affected by the block interval speed, mining cost, and security of the Evrmore blockchain. On the upside, there is no such thing as asset channel capacity to worry about, which makes EvrLight work just as efficiently for low volume fungible assets and NFTs as it does for high-volume stable-coin assets. The same cannot be said of any Lightning-native virtual colored coin scheme, for which channel capacity would make the scheme unusable for all but the highest volume stable coins. Note also that Evrlight transactions do not require the use of Watchtowers to prevent losing an asset. Either party is free to go offline as long as the asset seller heeds the HTLC refund timeout and the Lightning invoice expiry which he himself decides. Finally, it is worth saying that the basic idea of tying an asset layer to Lightning using HTLCs could be applied to other asset chains, but Evrmore's similarity to Bitcoin and its simplicity allow a tighter level of integration than is possible with other chains. EvrLight does require that both parties be on-line when an asset is bought or sold in order for the sale to be successful, as all these schemes do. A Lightning payment is made from one wallet to another, and the on-chain activity is a related side effect. In that sense it is no different that ZAPs, which are also Lightning wallet-to-wallet transactions which require that both parties be on-line or using a Lightning service provider who is on-line. The recipient of a ZAP must have his wallet online or the ZAP will fail.

EvrLight does not promise the impossible at some time in the future after a new platform is built and achieves community consensus. EvrLight cannot deliver infinite scalability and near-instant settlement. But EvrLight can deliver as-good-as-it-can-be peer-to-peer asset support which works just as well for NFTs as it does for stablecoins, with 2-minute 1-conf settlement time, low fees, and enhanced privacy, available as a protocol for developers to build into their applications today.

Technical protocol details of EvrLight are documented HERE


"In Theory There Is No Difference Between Theory and Practice, While In Practice There Is"

Copyright 2022,2023 by Hans Schmidt
Note: this is in no way related to the wonderful book "Mastering Bitcoin" by Andreas Antonopoulos