# Project Research | Scalable PoW EVM Blockchain Syscoin By [WEB3CN_Global](https://paragraph.com/@web3cn-global) · 2023-09-25 --- **1\. Introduction to the Project** ----------------------------------- Syscoin is a full-stack modular PoW blockchain solution that operates through merged mining with Bitcoin. It is built on the foundational Syscoin native (UTXO) blockchain network, providing data availability and finality. Alongside it operates the NEVM (Network Enhanced Virtual Machine), which is an Ethereum Virtual Machine (EVM), offering Ethereum compatibility while inheriting enhanced security from the native chain and scalability through Rollup. Syscoin enhances the security of Rollup through Bitcoin merged mining settlement, multi-party BLS signatures for finality, and data availability proofs. As an enhancement atop the Nakamoto consensus, Syscoin adds resistance to selfish mining and maintains chain resilience in scenarios where non-finality is encountered, without the need for forks, in contrast to Ethereum's Casper, which requires pure Nakamoto consensus in such cases. ![Multi-signature and Data availability are Syscoin's Unique Innovations ](https://storage.googleapis.com/papyrus_images/db1fd540f0cb3fbbfe337b14cbbeb9905bcbf7411a9b33228a157c51b438aca5.png) Multi-signature and Data availability are Syscoin's Unique Innovations 2\. Project Vision ------------------ Syscoin's mission is to build a truly scalable Web3 infrastructure and dApps to meet the needs of the global population, utilizing the first modular blockchain with EVM compatibility anchored in the Bitcoin network and scaled through aggregation. Since Bitcoin's inception, its goal has been to become an alternative to decentralized finance, and Syscoin shares the same goal: to promote the transition to a fairer financial reality by creating new opportunities for decentralized, data-driven solutions. Syscoin is not only built on the security of Bitcoin but also follows the principles that guide it to become the world's most secure and decentralized network. Scalability is at the core of blockchain's value, and Syscoin is leading the next phase of blockchain technology development by elevating the security of Bitcoin and the programmability of Ethereum's Turing completeness to true scalability through Optimistic, ZK-Rollups, cross-chain ZK-Rollups, and other Layer 2 technologies. 3\. Development History ----------------------- ![](https://storage.googleapis.com/papyrus_images/60377e1842e25e5df6c4b13405fc955735d8ad78b90ed236056a278fc1c9c403.png) 4.Team Background ----------------- The team behind Syscoin consists of members from SYS Labs and the Syscoin Foundation, each bringing diverse expertise in blockchain technology, cryptography, software development, and business strategy. The Syscoin Foundation, established in 2018, is a non-profit organization with a mission to assist in the development, guidance, and nurturing of the open-source decentralized Syscoin blockchain project. On the other hand, SYS Labs is a for-profit entity independent of the Syscoin Foundation, focusing on building products on top of the Syscoin ecosystem, pushing adoption and practicality to new heights. **Key Team Members:** * **Jagdeep Sidhu** serves as the CEO and Chief Technology Officer of the Syscoin Foundation. He specializes in blockchain technology and fundamental business practices, with expertise in technologies related to scalability and system interoperability. Before joining Syscoin, Jagdeep Sidhu worked as a software engineer. * **Michiel** holds the position of Vice President at the Syscoin Foundation and is primarily responsible for Syscoin's marketing activities. * **Willy** is the Financial Controller at the Syscoin Foundation and brings extensive experience as a software engineer. He also actively serves as the Head of the Chinese-speaking community for Syscoin. * **Chris** is a board member of the Syscoin Foundation and primarily handles market relations. He is also a JavaScript developer. * **Bradley** is a board member of the Syscoin Foundation and a blockchain solutions consultant. With nearly 25 years of experience in software development and information systems, Bradley has held roles in various environments and industries, including relational database management, SQL development, and data analyst roles. ![Syscoin's team](https://storage.googleapis.com/papyrus_images/e5fe7a2934db08e2aab6106d986bddc1a331b9f5525b271a18091ea1ef492d62.png) Syscoin's team SYS Labs is currently engaged in businesses spanning the Metaverse, NFT, and gamefi platforms, along with regulatory-compliant Rollups. All of these endeavors prioritize cutting-edge user experiences and are fully secured by Bitcoin. SYS Labs functions as a fusion of Ava Labs, StarkWare, and Matter Labs, with its primary focus being to invite the entire world into the Syscoin ecosystem so that everyone can reap the benefits of its features. 5\. Funding Information ----------------------- There is limited public information available regarding Syscoin’s funding history. In its early stages during its launch in 2014, the project raised 1500 BTC through a presale. In 2022, the cryptocurrency exchange MEXC introduced a $20 million Syscoin Ecosystem Fund aimed at supporting the development of the Syscoin ecosystem. 6\. Project Architecture ------------------------ **NEVM (Network Enhanced Virtual Machine):** NEVM provides support for smart contracts on Syscoin. It is an Ethereum Virtual Machine (EVM) that operates in conjunction with Syscoin's native UTXO blockchain network. NEVM offers Ethereum compatibility while inheriting enhanced security from the Syscoin blockchain and scalability through Rollup. Syscoin enhances the security of Rollup by incorporating Bitcoin's merged mining settlement, multi-party BLS finality, and data availability proofs. These features make Rollup more secure. Syscoin strengthens its resistance to selfish mining, allowing the protocol to resolve down without forking in non-final scenarios, unlike Ethereum's Casper. In these situations, pure Nakamoto consensus is achieved rather than a fork. **Multi-Signature and Data Availability:** Multi-signature and data availability are Syscoin's unique innovations. **PoDA (Syscoin's Layer 1 Data Availability Solution):** Data availability needs to exist within the security domain of Layer 1 (L1) to ensure that Rollups can correctly serve critical DeFi applications by guaranteeing users' ability to exit to L1. Syscoin's L1 DA solution is called PoDA (Proof of Data Availability). PoDA differs from Ethereum's danksharding in how data is stored, presented, pruned, and how fees are calculated. PoDA's properties make it a valuable alternative to Ethereum's Proto-Danksharding data availability solution. **Rollux (Rollup-Based L2 Suite for Extending NEVM Smart Contracts):** Rollux is a Rollup-based Layer 2 (L2) solution designed to provide nearly instant, low-cost transfers, execution, and contract deployment for EVM users. It leverages Syscoin's L1 to achieve secure and decentralized settlements comparable to other L1s. It also utilizes Syscoin PoDA to ensure L1 data availability, offering higher efficiency, lower costs, and greater throughput compared to other L1 DA alternatives. Rollux aims to provide users with a cost-effective experience with as low transaction fees as possible. It elevates security to levels achievable only through merged mining with Bitcoin. Built on Bitcoin and Syscoin, Rollux fully utilizes both blockchains. Bitcoin provides security and decentralization, while Syscoin offers EVM compatibility and a robust dual-chain design to meet global value exchange needs. **Z-DAG (Probabilistic Secure Instant Settlement Protocol for UTXO Transfers):** Z-DAG is native to Syscoin's UTXO chain and is not designed to run on Syscoin's EVM chain (NEVM). Syscoin's Z-DAG is a blockchain throughput scalability solution with minimal added complexity. It maximizes the utility of proven Bitcoin code by making the most of appropriate tools and conveniences on the network. Z-DAG is based on Satoshi Nakamoto's "snack machine" concept, aiming to enable peer-to-peer electronic cash and extend the exchange of tokenized assets. Z-DAG utilizes memory pool awareness and a fast-relay topology in an independently running full-node network. It offers a high level of probabilistic security by rapidly propagating time-sorted memory pools, which are first validated and then trusted. The global memory pool is interactive and useful for recipients as it provides memory pool state awareness. Z-DAG's probabilistic security ensures that transactions cannot be double-spent and will be accepted into blocks and settled on-chain. This makes the fee market more efficient, even when blocks are full, while providing secure high throughput services. Technically, it is an L1 solution as the memory pool resides within the blockchain's security domain, and all valid transactions using Z-DAG are settled on-chain through consensus that complies with Bitcoin Core. 7\. Achievement --------------- **Ecosystem Development** There are numerous ecosystem projects on Syscoin, spanning various project types such as DeFi, NFTs, GameFi, infrastructure, and more. ![projects in Syscoin](https://storage.googleapis.com/papyrus_images/68745dd061af3150c5b58bb73b0e5ad98dafde88ee11752a7bdd625df2da37c7.png) projects in Syscoin Although there are numerous ecosystem projects on Syscoin, their development has been relatively slow. Additionally, there is only one project, PegaSys, that has successfully gone live on the chain, with a total value locked (TVL) of just over 400,000 USD. Currently, there are few well-known applications on Syscoin, and to maintain a competitive edge in the future, the development of high-quality native on-chain projects is essential. **Community Status** Twitter: 226,674 followers with moderate engagement from fans. Discord: 106,673 members, Telegram: 6,074 members, with an activity rate hovering around 2%. Overall, the project's community engagement appears to be relatively low. **8.Economic Model** -------------------- **Token Distribution** SYS is the native token of the Syscoin platform. Its token economics are based on Ethereum's EIP-1559 proposal, with no maximum supply limit. The supply of SYS is based on protocol issuance and deflationary burning of transaction fees. As of the time of writing, the circulating supply of Syscoin is 747,394,570 SYS, with a market capitalization of approximately $63 million USD. After the recent upgrade to Syscoin 4.0, block rewards occur every 2.5 minutes, generating an average of 86.8 SYS per block. Breaking it down, masternodes receive 58.62 SYS per block, miners receive 19.52 SYS per block, and governance receives 8.675 SYS per block. These masternode rewards increase to 79.15 SYS for those with 1-year tenure and 117.25 SYS for those with 2.5-year tenure. These rewards reduce by 5% annually. ![](https://storage.googleapis.com/papyrus_images/d157dfdbb11380a1703f92ff1c387b3490acd7afbf623f4bfb6dae6fa1ffaf35.png) According to Chainz data as of September 19, 2023, there are 89,206 SYS holding addresses. The top 100 holding addresses account for 48.06% of the total supply, while the top 10 holding addresses account for 38.27%. Overall, the distribution of SYS holding addresses appears to be relatively decentralized, indicating a higher degree of decentralization. ![](https://storage.googleapis.com/papyrus_images/18f89c63f5f53b01cc1460e124564bde10b9fa58c1f4f5b8a96b092988464d1a.png) **Tokenomics** As a utility token, SYS serves various functions within the Syscoin ecosystem. Specific use cases include: 1. Miner Rewards: It incentivizes network participants to validate the network. 2. Transaction Fees: SYS holders can use the token for transaction fees, gas fees for smart contract deployment, and other network fees. 3. Custom Token Issuance: The token is also used to create Syscoin Platform Tokens (SPTs), which are custom asset tokens utilizing the Syscoin token platform. 4. Platform Governance: SYS tokens play a governance role within the network, allowing token holders to participate in decision-making through a voting mechanism, enabling users to utilize platform features and contribute to Syscoin's development. The tokenomics of Syscoin are influenced by the platform's iterations. Originally created as a blockchain protocol to extend Bitcoin for decentralized marketplaces, the project has undergone multiple upgrades, introducing new features and functionalities to the platform. The recent Syscoin 4.0 upgrade introduced a novel UTXO asset platform implementation with features like instant, pseudo-interactive, zero-confirmation, double-spend protection cryptocurrency transactions (Z-DAG) and the Ethereum Virtual Machine (EVM), both secured through the Nakamoto consensus PoW alongside Bitcoin mining. 9\. Advantages and Risks ------------------------ **Advantages:** 1. Scalability: Syscoin operates on Rollup technology, which offers high scalability. Through Validium and modular extensions, it can achieve greater scalability. This not only means high transactions per second but also considers transaction costs, making transactions on Syscoin affordable even with high throughput. 2. Decentralization: Syscoin currently has around 2500 active masternodes on its network, and this number may increase with the growth of the network. This demonstrates Syscoin's decentralization. 3. Security: Syscoin benefits from its merge-mining with Bitcoin, with approximately 25% of the hash rate dedicated to mining Bitcoin. This level of security is substantial. The Syscoin team is actively seeking to onboard more Bitcoin miners to become one of the most secure settlement layers. Additionally, Syscoin utilizes multisignature to achieve finality and mitigate risks associated with attacks like 51% attacks, selfish mining, and remote MEV attacks, enhancing its security. **Risks:** There are several Bitcoin Layer 2 and sidechain projects emerging. Besides Syscoin, many other more mature options already exist, making it challenging for Syscoin to attract users to access the markets through its platform. ![](https://storage.googleapis.com/papyrus_images/f15a4f5430a2950bfd8332b703a9a63ad698473386089fe4da6dd497a3ac30ed.png) Secondly, the current Bitcoin ecosystem lags significantly behind Ethereum in terms of scale. There are fewer well-known projects, and the user base is smaller compared to Ethereum. Additionally, the Bitcoin Layer 2 ecosystem is still in its early stages of development and requires market validation. --- *Originally published on [WEB3CN_Global](https://paragraph.com/@web3cn-global/project-research-scalable-pow-evm-blockchain-syscoin)*