Increasing global GDP by 5 percent: bringing blockchains to the global economy
By Lawrence Lundy-Bryan, Partner & Head of Research
We are excited to announce our investment into Agoric to support the team to bring security, usability, and interoperability to smart contracts. In the global economy, establishing trust costs up to 35 percent of GDP. Smart contracts are key to changing the way trust is established in the economy. Automating and decentralizing trust-establishing processes could increase global GDP by 5 percent and grow global trade by 15 percent according to a recent WTO report.
Realising these transformative benefits requires a new approach to smart contracts. Today smart contract platforms are insecure, hard to use, and limited to specific networks. Agoric’s interoperable secure distributed smart contract platform is foundational to the Convergence Stack and is crucial in supporting an open data economy.
Bringing blockchains to the global economy: security, usability, and interoperability
Hosho, the smart contract auditing firm, found that 25 percent of audits revealed critical bugs, and 60 percent of all projects had at least one security issue. These bugs are the result of the rich scripting capabilities of the Solidity language and the lack of formal verification. Ethereum is still the dominant smart contract or distributed application (dapp) platform in terms of developer mindshare even if EOS and Tron are leading in terms of transactions through gambling and gaming applications. However both platforms are still immature in terms of tools and practices, and have both experienced bugs and hacks. Smart contracts aren’t a SaaS product that can be updated the next day. These are contracts managing millions and billions of dollars. Their lack of security is a deal breaker for large enterprises and financial institutions, hampering blockchain adoption.
While most smart contract platforms currently use an identity-based security architecture where access is granted based on the sender of a transaction, it has been shown that identity-based security architectures have specific, significant flaws. In contrast, Agoric uses an object-capability (ocap) security architecture, in which access to a programming object itself is the authority to use the object. This approach has been used successfully to create secure operating systems, and to control untrusted scripts in Google’s Caja project and Salesforce’s Locker Service.
“In recent years, smart contracts have been prone to a number of extremely expensive errors that have been made even by real experts working incredibly hard to do it right. Programming smart contracts in the way the industry does it now is just too hard and too hazard-prone, and the losses are too great. This is a huge problem and one that needs to be fixed.”
Mark Miller, Chief Scientist, Agoric
A second problem for smart contract development today is usability. The developer community around Ethereum and other smart contract platforms is still relatively small. According to Slashdata, just 3% of developers worldwide have adopted blockchain-related projects and growth has now plateaued. There are several million smart contracts deployed on the public Ethereum blockchain alone. State of the Dapps lists 2,667 applications currently live across all platforms. But again, growth has slowed in 2019 with only 88 new applications launching, the lowest number since January 2018. Despite excitement around blockchains and smart contracts, the developer community is small and stagnant. This is due to many reasons, chief among them is the fact that developers have to learn a new programming language.
“The Agoric vision is to unlock the potential of smart contracts, not only for bleeding-edge experts but also for millions of mainstream programmers. The Agoric team is uniquely right for this great task, and I’m proud to support them.”
Zooko Wilcox, CEO of the Electric Coin Company (makers of Zcash)
A third and growing problem is one of interoperability. We at Outlier have always believed that the potential of crypto-networks is a world of cross-network interactions. Blockchain to blockchain communication is vital in preventing the same closed siloes that came to define Web 2.0. Much of the attention has been focused on blockchain to blockchain interoperability through atomic swaps, Cosmos and Polkadot; little focus has been on the challenges at the logic layer. A huge limiting factor to widespread adoption is if a contract can only interact with another contract on the same system. As we bring automation to global trade, vendor lock-in means an inability to pay suppliers, track IoT sensors, and share credentials.
Agoric has been designed in such a way as to be crypto-network agnostic offering ‘smart-contracts-as-a-service.’ Instead of creating a smart contract on one particular chain like Ethereum, Tezos or Cardano, contracts are written in SES, and programs are deployed in vats, a runtime that operates consistently across single “solo” machines, permissioned quorum clusters, or public blockchains.
“The prior work of the Agoric founders was one of the key inspirations for the architecture of the Cosmos Network. As we work on releasing the first version of inter-blockchain communication protocol, we expect that Agoric’s smart contract and digital asset architecture will enable trillions of dollars in assets to be managed by networks of blockchains.”
Zaki Manian, Director of Research, All In Bits (Cosmos)
- World class team
- World class investors and supporters
Agoric is supported by an impressive array of global investors along with Outlier Ventures, including Gumi Cryptos Capital, Interchain Foundation (Cosmos), Kilowatt Capital, Lemniscap, MetaStable Capital, Rockaway Blockchain, Xpring (Ripple), and others, joining initial seed investors Electric Coin Company (Zcash), Naval Ravikant, and Polychain. The support of Cosmos and Ripple will be particularly valuable to deliver on the vision of smart contract interoperability across networks.
- Crucial compute and bridge protocol for the Convergence Stack
At Outlier, we are not just building a portfolio of investments, we are helping design, build, integrate and accelerate a literal stack of highly synergistic technologies based around a new (and more equitable) data economy. One that will be more open, decentralised and privacy preserving. Agoric is building two crucial pieces of the Stack for compute and bridges. For compute, Agoric is making it easier for developers to create and deploy secure smart contracts. In addition, the design of the vat runtime means that Agoric acts as a bridge for the stack logic, in the same way Cosmos acts as a bridge for the ledgers themselves. Agoric supercharges the development and adoption of the Convergence Stack.
“Creating secure smart contracts using today’s technology is inherently difficult. Agoric includes robust security properties beyond anything available today, and it will provide that security across substrates, from local machines to global blockchains. The implications for secure development of blockchains, cross-chain compatibility, and the future economic opportunities that this will unlock means this is a vitally important development in contract technology”.
Dean Tribble, CEO, Agoric
We are excited to support the team and integrate Agoric into the Convergence Stack.
Get in touch at email@example.com if you are building any other protocols required for the Stack.