The rise of a tokenized global on-chain economy, grounded in the principles of a multi-chain ecosystem, brings diverse data and execution demands. Traditional financial systems, reliant on extensive Web2 tech stacks, will need to find seamless ways to integrate and interact with the ever-growing blockchain networks. This integration must be meticulously designed to allow efficient two-way communication of data and messages, preserving the operational integrity of both environments. In such an aggregated future, transactions will face significant pressure to maintain key values:

• Reliability: Ensuring that intended outcomes are achieved as expected. 

• Security: Guaranteeing that transactions remain free from interference by external parties. 

• Verifiability: Providing assurance that the expected outcomes have occurred as intended.

Currently, consensus on these three standards is predominantly achieved by on-chain transactions, whereas the traditional financial system often relies on several trusted intermediaries to process a transaction. Blockchain transactions, with their immutable records of all state-changing events, enable deterministic verification and allow decentralized node operators to reach a consensus on transaction finality. Even cross-chain transactions achieve consensus on these standards when supported by decentralized oracle networks.

Realizing the full potential of DeFi within a blended DeFi-TradFi setup demands robust mechanisms to enable consensus computing across both on-chain and off-chain environments. Such mechanisms would ensure consensus on key standards for diverse transaction activities, including data access, message transfers, and transaction executions, regardless of whether they occur on-chain or off-chain. This attests to the global financial system's attributes of tamper-resistance, hyper-availability, trust minimization, enhanced composability, and permissionless and universal accessibility.

A significant advancement in this direction is being spearheaded by Chainlink, the largest on-chain oracle network. For over five years, Chainlink has played a pivotal role in strengthening DeFi ecosystems by addressing off-chain data requirements, supporting over $75 billion in DeFi Total Value Locked (TVL). Chainlink has also been collaborating with several institutional players in the capital market to drive the adoption of DeFi within the TradFi sector. Furthermore, Chainlink has enhanced cross-chain transactions, replacing default bridges in numerous networks with its revolutionary Cross-Chain Interoperability Protocol (CCIP). Recently, Chainlink unveiled a suite of new products and protocols at their annual conference of the year, SmartCon 2024, each contributing to their ambitious vision of establishing a global standard for value transfer across the financial system.

Through its Chainlink Platform Privacy Suite, which includes the Blockchain Privacy Manager, CCIP Private Transactions, and DECO, Chainlink ensures the privacy and security of all data and messages exchanged across the financial landscape. The platform even supports capabilities that keep transaction specifics entirely private, including from Chainlink nodes themselves. Building on this foundation, Chainlink is trying to address the data requirements of tokenized assets comprehensively and efficiently through its implementation of the Unified Golden Record. This establishes a highly reliable and universally accessible single source of truth for tokenized assets.

Chainlink has also demonstrated a production-ready implementation at SIBOS 2024, depicting a distribution-versus-payment scenario where on-chain delivery was seamlessly executed against off-chain payment—without any special upgrades to the legacy tech whatsoever. Additionally, with its time-tested, high-performance Decentralized Oracle Networks (DONs), which have set the gold standard for on-chain DeFi, Chainlink guarantees reliable, verifiable, and secure transaction activities for the emerging global on-chain financial infrastructure.

Inspired by microservices, Chainlink unveiled a groundbreaking initiative at SmartCon 2024 to accelerate the realization of a global tokenized on-chain economy. Chainlink's co-founder Sergey Nazarov highlighted historical parallels to COBOL and Java Runtime Environment, explaining how they simplified technology during their eras, making it more accessible—which effectively led to the establishment of new banking methods that spurred economic growth. He envisions a similar paradigm shift in global finance by bringing the world’s financial systems securely and seamlessly on-chain through a robust and efficient runtime implementation—the Chainlink Runtime Environment (CRE).

The Chainlink Runtime Environment (CRE) is designed to empower developers and builders by significantly reducing the time and effort required to codify and implement their ideas. CRE unifies blockchain networks, smart contracts, and Chainlink’s oracle services into a single, cohesive framework, effectively serving as a comprehensive development platform and an all-in-one builder’s toolbox. This chops down the complexities associated with coding and implementation within the diverse and rapidly evolving on-chain ecosystem. CRE simplifies blockchain application development, laying the foundation for the next wave of economic innovation.

With CRE, developers can write code in familiar languages like Go and Typescript (more on the way) to draft workflows tailored to their specific implementation needs. Previously, Chainlink offered multiple prepackaged services, each combining separate capabilities into a workflow, all executed by the same DON. However, with CRE, Chainlink adopted a modular approach to re-architect the Chainlink Platform. This new structure proposes to deconstruct the DONs down to their distinct capabilities, allowing each capability within a workflow to be executed by a dedicated, purpose-built DON. Thus, as opposed to the previous architecture of a single DON handling all capabilities within a workflow, CRE enables individual DONs to execute specific capabilities, which are then combined to form a cohesive and efficient workflow.

This modular approach, with separate DONs, ensures that each DON provides highly reliable and predictable capabilities. It enables developers to craft workflows that align with their specific needs while the runtime environment orchestrates the execution by calling the appropriate DONs to execute the particular capabilities in an optimal order to fulfill the workflow requirements. This allows developers to easily create and manage their workflows while CRE efficiently handles the execution overhead.

CRE serves as the engine behind the Chainlink Platform—coordinating the appropriate DONs to execute specific capabilities, as required by the workflow, in a decentralized manner, with the necessary consensus overlay. It enables the Chainlink Platform to unlock limitless developer innovation, stepping us another yard closer to the next-generation marketplace for the global on-chain tokenized economy. The vision for Chainlink CRE reassures us to establish a consensus computing paradigm, powered by Chainlink platform services, ultimately driving the development of a global on-chain tokenized economy.

With interest in on-chain global finance increasing by the day, the traditional financial sector (TradFi) is actively exploring avenues to expand its offerings and help establish a robust digital asset market. The vision is clear: TradFi is betting heavily on a tokenized digital economy, with the goal of bringing trillions of dollars worth of real-world assets (RWAs) on-chain. With such piqued interests in tokenization, it's only fair to ask - what exactly does 'tokenization' entail !?

We have been expecting 'tokenization' to be a procedural replication of an RWA into its digital counterpart. The concern then becomes what this digital counterpart represents. Could it be a static snapshot, capturing the asset as it exists at the moment of tokenization? Or could it be a reference pointer, directing to an address or identifier corresponding to the real-world asset?

For an initial take, let's assume it to be an on-chain token standard, say an ERC-721 or an ERC-1155 from an ETH pov. With that, we've added a structure to our concept of digital clones - intriguingly, an immutable structure. This raises an important question: Why assign immutable properties to a tokenized RWA when the underlying asset is constantly changing in the real world?

This argument underscores that 'tokenization' extends far beyond creating a static digital representation.

The notion of tokenization encompasses a representation of the real-world asset alongside the specific data that makes the asset utiliseable. Every transaction with an asset is essentially a function on its data points resulting in a state change, regardless of the environment where it's performed. In the real world, with the legacy systems, this may look like pulling data from different servers, cross-checking particulars and proceeding with the change as per the inferences. While this approach works for manual processes, it's the farthest thing from efficient and effective asset management.

One of the fundamental challenges within our current framework is the escalating fragmentation of asset data. Critical data points such as ownership history, pricing information, net asset value, auditor attestations, and similar records reside in separate serves spread across the globe, handled by various intermediaries. Completing a transaction often requires accessing and duplicating data from these multiple disparate sources, sometimes repeatedly, by numerous parties. This increases the risk of data loss, unauthorized access, and illegitimate replication, ultimately leading to substandard and unreliable data inputs for the transaction. Additionally, the lack of efficient mechanisms to synchronize data availability and updates across this fragmented setup presents a significant obstacle to even initiating a transaction, let alone bringing it to completion.

Interestingly, Distributed Ledger Technologies (DLT) like blockchain were introduced to address this critical issue—providing a single source of truth accessible to all market participants. This may appear to be the most practical solution, considering we're optimizing for a tokenized global economy that leverages the foundational principles of blockchain technology. However, such an approach is only feasible in a mono-chain future, where all assets are created, managed, and utilized exclusively on a single blockchain network. Evidently, the future has already moved onto a multi-chain paradigm.

Envisioning a tokenized on-chain future demands 24/7/365 access to reliable data across numerous sidechains, rollups, and base-layer blockchains, all synchronized in real-time with verified, high-quality off-chain data. This underscores the necessity for a universal golden record—a highly reliable, singular source of truth for tokenized assets, which should be credibly neutral and is devoid of information asymmetry.

An earnest step towards addressing this critical requirement is Chainlink's innovative implementation - 'Unified Golden Record'. This initiative aims to bolster the tokenized representations of RWAs with key off-chain data such as market pricing, reference data, compliance checks, identity verifications, ownership records, auditor attestations, and proof of reserves. Chainlink, through its decentralized network of node operators, collects and aggregates verified, high-quality data from multiple independent sources, seamlessly contributing to the Unified Golden Record in real-time.

Furthermore, Chainlink's CCIP can be effectively leveraged to provide reliable access to the Unified Golden Record across disparate blockchain networks. CCIP ensures that both tokens and their associated data remain composable and interoperable, enabling institutional players to reliably interact with and utilize each other's digital assets' data and thereby enable ingenious use cases for the customers.

This product offering from Chainlink integrates existing infrastructure into the on-chain network, establishing synchronized information between the tokenized asset and its corresponding underlying real-world asset. Thus by providing a single, shared, trusted, fair, and consistently up-to-date Unified Golden Record, Chainlink enables the traditional financial system to build additional on-chain and hybrid services on top of existing ones. Furthermore, with Chainlink's high-performance infrastructure and decentralized network, maintaining the quality and authenticity of asset data becomes easier than ever.

The Unified Golden Record is the key to enabling reliable and efficient programmability for automated financial services. This initiative accelerates the convergence of banking and blockchain technology, paving the way for global access to shared liquidity. A tokenized global economy is only achievable with a single source of reliable, tamperproof truth on tokenized assets, available across all blockchains and synchronized with the real world, within a credibly neutral setup—this is the promise of the Unified Golden Record.

The existing standards, protocols and tech stack that the world has been running on top of could greatly benefit from an upgrade. The fact remains that we're knee-deep in an Internet era, where everything revolves around data. The concern is whether we have been treating this data most optimally. When every action/transaction is fundamentally a logical operation on a set of data points, our legacy systems, unfortunately, often fall short in maintaining the provenance, authenticity, or privacy of the dataset. A much more alarming facet of this situation is how customers and individual users have come to normalize and even expect such subpar data handling practices as a matter of convenience. The possibility that a piece of data could be verified or utilized without necessitating its full exposure remains a futuristic outlook that many do not see coming to pass. This has enabled illegitimate access and unauthorized replication of sensitive data by third parties and malicious actors. And by the time such actions come to light, it is often too late and prohibitively expensive to proceed with a remedy.

As we start manifesting a digitally enriched, tokenized global economy, it becomes increasingly critical to ensure the security and privacy of datasets that will largely dictate the resilience of the global capital markets. Bridging the global economy to on-chain finance requires verification systems that keep sensitive information private while certifying its authenticity. Additionally, these solutions must be thoughtfully designed to ensure seamless integration with legacy systems, minimizing unnecessary infrastructural overhead and ensuring smooth operational transitions. A promising contender to meet this requirement is an innovative initiative from Chainlink, which has been several years in the making - DECO.

Chainlink's DECO is a three-party setup that ensures the provenance and provability of valuable and sensitive data while being compatible with traditional systems. At its core, DECO operates as a Zero-Knowledge Transport Layer Security protocol enabling customers and institutional players to authenticate and verify web data in a privacy-preserving manner. The three integral components of the DECO system include:

• WebServer/API: An off-chain database accessible via the TLS protocol, serving as the source of data queries

• DECO Prover: An institutionally operated Chainlink service that interfaces with TLS APIs to generate Zero-Knowledge (ZK) proofs for data points.

• DECO Verifier: Chainlink's Decentralized Oracle Networks (DONs) that validate ZK proofs and create attestations for seamless on-chain utilization.

  

A DECO-enabled workflow begins with an institutional setup submitting a data query along with its API credentials for the relevant data source to the DECO Prover running on its premises. This data represents any information the querying organization already has authorized access to via a TLS API endpoint. Instead of directly reading or replicating the data for a specific business purpose, the institution can now rely on the DECO Prover, which is securely hosted and fully operated within their infrastructure.

With the credentials made available, the DECO Prover can query the data source and receive a valid response via the TLS protocol. A key advantage here is that the data source or web server does not require any modification to interact with the DECO Prover, as it follows a standard TLS messaging process. This makes DECO seamlessly compatible with the majority of legacy systems already operating on the TLS protocol.

After retrieving the requested information from the data holder, the DECO Prover generates a proof of provenance, ensuring the authenticity of the data source. Additionally, the DECO Prover can selectively disclose specific parts of the response and create Zero-Knowledge proofs asserting particular business claims.

This allows the prover to convince the Chainlink DONs running the DECO Verifier of the accuracy and provenance of the specific business claims in question. Once the DECO Verifier successfully validates the proof, it generates attestations that can be submitted on-chain to the relevant smart contracts, facilitating further on-chain transactions.

DECO helps create a secure, intelligent, and proactive framework for institutional players to manage and utilize client/customer data, ensuring its utmost privacy. It also enables enterprise parties to comply with the diverse confidentiality requirements in the most cost-effective way. DECO's data verification services align closely with the data minimization principles inherent in the Web3 domain, facilitating the key institutional players to reduce the risks associated with data authenticity and excessive data exposure in an on-chain market.

Chainlink has also announced, at SmartCon 2024, a package implementation of DECO technology - DECO Sandbox, allowing developers and institutions to experiment with their specific data needs over a simplified browser interface. The DECO Sandbox also provides pre-configured examples covering some essential and ubiquitous use cases for the tokenized global economy. The well-configurable Sandbox allows interactive and intuitive proof generation and verification, aiming to accelerate the adoption of DECO technology by developers and organisations alike.

DECO is a one-stop solution for enterprise clients to improve operational efficiency, reduce compliance burdens, and maintain customer trust in a transforming market towards a tokenized global economy. With data privacy stepping in as a key business imperative rather than a mere regulatory concern, traditional institutions are now expected to offer best-in-class services that prioritize and respect these concerns. The Chainlink Platform Privacy Suite , encompassing the Blockchain Privacy Manager, CCIP Private Transactions, and DECO, is perfectly positioned to enable them to achieve this goal.

The ideas and concepts of on-chain decentralised finance (DeFi) have long been envisioned to offer an open, accessible, and efficient alternative to the traditional financial system(TradFi). While these promises are still very much feasible, we are witnessing a shift in market dynamics driven by emerging demands in the global economy. Increasingly, clients, customers and even individual users are gravitating towards the benefits of a synergized blend of TradFi and DeFi rather than choosing one over the other. And visibly the market is gradually evolving in this direction. The World Economic Forum projects the market for tokenized assets to reach upwards of $16 trillion by 2030. The demand for on-chain representation of traditionally off-chain assets is estimated to rise further in the foreseeable future.

To meet this ever-rising demand and to actually realize the benefits of on-chain finance, the established institutional setups need to bridge the knowledge gap and address the risks involved in securely integrating these digital assets.  Liquidity and data security are significant concerns that are voiced to be immediately addressed. These concerns and risks are only expected to amplify over time, with the technology becoming much easier and accessible for anyone to spin up a public or private chain to their likeness. Thus the institutions are being pushed to effectively and securely deliver data and value across public, private, and cross-chain networks adopted by their users and counterparties. The need to enforce such stringent security norms is compounded by the dozens of compliance laws that these institutions and asset managers must adhere to. Ensuring security across both on-chain and off-chain transactions, as well as cross-chain privacy, is no longer a luxury; it is a fundamental necessity that must be secured deterministically from the ground up.

Chainlink, in its mission to accelerate institutional blockchain interoperability, has been endeavouring to address these very challenges. At their latest annual conference SmartCon 2024, Chainlink's co-founder Sergey Nazarov has announced two new offerings designed to tackle the particular pain points bottled around these various security concerns.

Chainlink, being a chain agnostic oracle, has been enabling on-chain data, off-chain compute and cross-chain interoperability across 20+ open blockchain networks for over five years. As it extends its financial rails to institutional players in the capital market, the platform needs to extend its offerings onto private blockchains as well. To address this requirement, Chainlink has developed the Blockchain Privacy Manager, an off-chain infrastructure that can be configured and run by private chain operators.

The Blockchain Privacy Manager facilitates precise read/write access controls for private blockchains. This system-agnostic setup allows the institutions to connect any off-chain system, including traditional enterprise backend systems, to private chain networks. Additionally, the fine-grained control over RPC requests and responses ensures that sensitive on-chain data points remain secure and protected from third-party exposure.

The system also ensures security against unauthorized access to data at Chainlink nodes, allowing the institutional parties to configure and selectively authorize specific Chailink oracle networks to read/write to pre-approved smart contracts on their private chains. This setup makes it easier for the private chain to access Chainlink-validated off-chain data without exposing sensitive on-chain information.

CCIP Private Transactions leverage an on-chain symmetric encryption/decryption protocol—designed to enable fully confidential cross-chain transfers between private blockchains. This setup aims to establish end-to-end encryption (E2EE) in the workflow, with the encryption keys generated and managed by the institutional players. This E2EE implementation guards against viewing or tampering with the contents of cross-chain transactions by all third parties. Institutions can selectively share decryption keys with relevant parties based on the transaction's purpose.

This service is powered by specialized CCIP Private Transaction smart contracts deployed on private blockchains. These contracts encrypt outgoing CCIP messages and decrypt them upon arrival at the destination chain. Each chain lane uses unique encryption keys, allowing institutions to manage separate keys for different counterparties. This granular key management enables transaction details to remain accessible only to authorized entities, ensuring confidentiality while maintaining seamless cross-chain operability.

Together, these solutions address the critical security concerns currently hindering traditional financial institutions from adopting and enabling tokenized asset services for their global customer base. The Blockchain Privacy Manager enables institutions to maintain granular control over data flow within their private blockchains. It also ensures sensitive on-chain data remains protected from external exposure, safeguarding institutional privacy requirements. Combining this with CCIP private transactions ensures confidentiality in cross-chain transactions. The E2EE enabled by the CCIP private transactions contracts on each private chain rules out any means by which the transaction can get compromised by nefarious parties. These solutions from Chainlink effectively address compliance requirements and eliminate risks of data compromise, even from Chainlink nodes themselves.

Thus by adopting the Blockchain Privacy Manager, TradFi institutional setups can offer guaranteed privacy on data-at-rest, ensuring private chain data is securely managed and shared only as needed. And with CCIP private transactions, further guarantee the privacy of data-in-transit, safeguarding transaction data during cross-chain communication. In aligning with Chainlink’s vision, these implementations pave the way for a private, secure, and scalable blockchain infrastructure, empowering TradFi to embrace the tokenized future.

For long the blockchain industry has been struggling to demonstrate tangible, real-world utility. While the industry did flourish internally, very rarely did we see projects and policies that effectively aim to integrate the technology with everyday applications. The advent of Decentralized Physical Infrastructure Networks (DePIN) brought hope, but we are yet to see innovative ideas taking a stronghold, or for that matter, a sizeable market presence. From the proliferation of memecoins, stablecoins, and altcoins to Bitcoin cementing its status as "digital gold" with record-breaking highs, the crypto space has witnessed unprecedented activity. On the Ethereum front, the ETF approval has marked a milestone, and the Total Value Locked (TVL) across roll-ups doubled in value. Interoperability has become the concerno-uno with promising initiatives taking shape, each creatively tackling the issue on multiple fronts. DeFi appears poised for sunnier days ahead.

Now, one could not be blamed for hoping to see these on-chain utilities seamlessly blend with and enhance our real-world interactions. Imagine having the same level of composability and accessibility for real-world assets as we currently do with the tokens in our wallets. This vision begins with enabling on-chain access to traditionally off-chain assets, by tokenising them to digital assets format. Tokenisation opens up immense opportunities and encourages builders to develop innovative utilities around real-world Assets (RWAs). It can help set up an entirely different market for digital asset management. Evidently, we are already on this path, with Chainlink, a leading oracle provider, paving the way.

Chainlink has successfully onboarded billions of dollars worth of RWAs across multiple blockchains. It has also set up world-class infrastructure to accelerate the on-chain and cross-chain integration of these tokenised assets. By collaborating with leading institutional players in the capital markets, Chainlink is driving the adoption and proliferation of digital assets. One key concern voiced by these institutional players is the overhead to establish compatibility between blockchain ecosystems and traditional financial systems. While on-chain transactions and consensus can happen seamlessly within the blockchain's sandboxed environment, correlating and configuring them to reflect and respond to the traditional banking setup is anything but simple. Chainlink itself has been actively partnering with several different traditional finance organizations to develop solutions that bridge this gap. Resolving these compatibility issues is critical to the future of blockchain-based asset management.

At SIBOS 2024, it appears we have finally arrived at a promising solution. On the second day of the event, Chainlink co-founder Sergey Nazarov delivered a keynote address, showcasing a live demo of a production-ready implementation. This solution enables seamless coordination between on-chain events and traditional finance (TradFi) messaging systems. The technology facilitates triggering blockchain transactions in response to real-world traditional finance actions, effectively dissolving the barriers between DeFi and TradFi systems.

The implementation depicted a standard distribution versus payment process, executed across multiple phases to ensure secure and efficient transactions.

In this phase, all parties involved in the transaction agree on the specifics of the exchange through the traditional financial messaging standard, SWIFT. Acting as an intermediary, SWIFT facilitates communication between the seller’s and buyer’s custodians, to confirm the details of the digital asset being transferred and the corresponding payment. This settlement establishes off-chain, the foundation for the transaction, ensuring alignment between both parties.

In this phase, Chainlink’s Decentralized Oracle Networks (DONs) intercept the settlement instructions transmitted via SWIFT messages. The DONs authenticate the SWIFT message cryptographically, ensuring its validity.

Once verified, the relevant digital asset is locked on the seller’s source blockchain. Upon successful completion, Chainlink notifies the SWIFT intermediary, confirming that the asset has been securely locked.

Following the asset lock, the payment is processed through traditional financial systems. The SWIFT intermediary initiates a payment request to the buyer's bank for the agreed-upon value of the digital asset. Once the request is successfully processed the funds are transferred to the seller's account and a confirmation message is broadcast. Thereby the payment for the digital asset is settled off-chain.

After receiving payment confirmation from the SWIFT intermediary, Chainlink’s DONs validate its authenticity and trigger the next step in the process. The DON unlocks the asset on the source chain and facilitates its secure transfer to the destination chain. This cross-chain transaction is powered by Chainlink's Cross-Chain Interoperability Protocol (CCIP), which ensures smooth communication across blockchains, and its Blockchain Privacy Manager, which safeguards sensitive transaction data throughout the process.

With the asset successfully transferred to the buyer's chain, the trade between the seller and buyer custodians is complete, marking the conclusion of the distribution versus payment process.

With this live demo of the actual product, Chainlink has pioneered a way to transform traditional off-chain SWIFT messages into corresponding on-chain events. Crucially, at no point in this entire process has the traditional banking system been required to switch to blockchain-based infrastructure. The entire settlement process was facilitated and executed using existing infrastructure and the established standards of the traditional finance sector.

Chainlink remained a neutral intermediary between TradFi and DeFi, furnishing time-sensitive blockchain transactions that accurately reflect the settlement agreements. This demo highlights how the complexity of blockchain can be abstracted to allow easier ways to own and manage a variety of digital assets. The underlying blockchain technology remains seamlessly integrated, with Chainlink’s efficient setup ensuring smooth operations.

With this implementation live in production, the traditional finance sector is now equipped to offer innovative solutions for digital asset ownership and management to its billions of customers globally. Furthermore, Chainlink can help facilitate the tokenisation of a wide array of real-world assets, to their digital clones. The technology is ready—now it is up to TradFi to take action.

DeFi has shown significant potential. It prospered and delivered, over cycles of bearish and bullish markets. Chainlink has played a pivotal role in accelerating this progress, anchoring transaction activities with reliable, real-time off-chain data. The potential of digital assets is undeniable—real, lucrative, and increasingly essential for the traditional finance sector. It’s clear that TradFi and DeFi are now seamlessly integrated, creating a forward-looking, unified financial ecosystem.

The (chain)linked future looks ever so hopeful and promising.

Kakarot is an implementation of the Ethereum Virtual Machine (EVM) in Cairo, the Zero-Knowledge Domain Specific Language(Zk-DSL) from Starkware designed for STARK-based proofs. This setup facilitates verifiable EVM executions, positioning the Kakarot proving engine as a ZkEVM. Currently, in beta, Kakarot functions as an EVM instance within the Starknet ecosystem, providing EVM compatibility on this Layer 2 (L2) network.

Starknet with its zk-focussed CairoVM has been setting the highest standards for blockchain interactions in the layer 02 space. While ZK-focused EVM implementations aren't uncommon in the Ethereum ecosystem, CairoVM stands out by prioritizing performance and efficiency over EVM compatibility. This design choice differentiates Starknet's execution environment significantly from Ethereum, its settlement layer. Although this approach comes with its own set of advantages, it has also hindered Starknet's integration with the broader Ethereum ecosystem. Ethereum L1, along with its extensive roll-up offerings, benefits from strong network effects and substantial Total Value Locked (TVL), much of which is lost on Starknet due to its incompatibility. One small example is the developer expertise, which is predominantly Solidity-centric on Ethereum, facing a steep learning curve in the Cairofied Starknet environment.

Such divergence from the standard Ethereum design conventions has made it challenging to scale the practical advantages of Starknet to the broader EVM ecosystem. Kakarot aims to resolve this issue by introducing an EVM-compatible execution environment within Starknet. This integration allows seamless interaction between Starknet and the rest of the Ethereum network, enabling users to harness the benefits of STARK-enabled zero-knowledge (zk) provability. Further, it bridges the gap and facilitates developers and projects to access Starknet’s efficiency and scalability while maintaining compatibility with Ethereum standards.

Kakarot's core EVM is implemented as a Cairo smart contract on Starknet, with an exposed interface in Ethereum JSON-RPC specification. This makes Kakarot's ZkEVM, an Ethereum Virtual Machine (EVM) built on top of Starknet's Zero-Knowledge Virtual Machine (ZK-VM), the CairoVM. Kakarot sets up one-to-one Starknet-compatible account contracts for every EVM account interacting with the network - each assigned a unique Starknet-formatted address. For users with their Externally Owned Accounts (EOAs), the experience remains identical to Ethereum - use their regular wallets, sign transactions with their private key and send them off as usual. Under the hood, Kakarot transforms their Ethereum transactions into Starknet transactions at the RPC (Remote Procedure Call) level, mapping each to a unique hash value. These transformed transactions are then retrieved by a CairoVM client via Starknet RPC and processed by Kakarot's core EVM contract. The execution traces and resulting state changes are forwarded to the Starkware Shared Prover (SHARP), which generates a STARK proof for the transaction. This proof is subsequently sent to Ethereum Layer 1 (L1) for verification -- voila, provable EVM compute.

In essence, the Kakarot proving engine creates an EVM runtime within the Starknet ecosystem, establishing it as a first-of-its-kind, multi-VM environment. The implications of this innovation extend beyond merely processing EVM transactions. With the Kakarot ZkEVM, Solidity smart contracts can now interact seamlessly with Cairo contracts and vice versa. This unlocks the potential for faster and cheaper transactions—courtesy of Starknet—while scaling interoperability with the broader Ethereum ecosystem.

Although the Kakarot ZkEVM is currently implemented as a Cairo smart contract on Starknet, its underlying technology could scale beyond the bounds of this Layer 2 network. In the near future, the Kakarot proving engine could evolve into a Type 1 chain-agnostic prover, enabling provable computation for EVM blocks across different environments. This means that adopting the Kakarot ZkEVM could allow any Layer 2 roll-up to transition into a ZK roll-up. Closer are the days of fault-proof chains finally upgrading to ZK technology.

Another potential application includes the development of dedicated provable app chains that settle on Ethereum. Such advancements could significantly enhance the ecosystem’s scalability, efficiency, and interoperability.

At the time of writing, Kakarot has entered its final testnet phase on Starknet Sepolia. KKRT Labs has subjected the Kakarot ZkEVM to a rigorous testing journey, started way back in May 2024 with a public whitelisted testnet, followed by a general public testnet that concluded in October 2024. During this phase, the ZkEVM also underwent a successful audit by Zelic (known for its work on Layer Zero and Solana), solidifying itself as a provably secure and scalable solution. The current testnet phase is expected to conclude by the end of the year (EOY), with the Kakarot ZkEVM aiming to go live on the Starknet mainnet by Q4 2024.

As of now, Kakarot supports over 20+ dapps on Starknet Sepolia, aggregating over 250K+ transactions. Users can access testnet funds via the faucet page, request them on Discord, or bridge assets using Gasyard. They can then interact with various dApps listed on the ecosystem page, showcasing the network's growing utility and readiness for mainnet deployment.

Kakarot official website : https://www.kakarot.org/

Kakarot developer docs : https://docs.kakarot.org/

Kakarot faucet : https://sepolia-faucet.kakarot.org/

Kakarot discord : https://discord.gg/kakarotzkevm

Kakarot X(Twitter): https://twitter.com/kakarotzkevm

Spearheaded by the OG L2s and sidechains, the Ethereum ecosystem is no short of layers 02 chains scaling transaction throughputs to giga values. At the time of writing, heated discussions and calculated decisions are being crafted around the concept of 'interoperability'. We're way past the bubble of mono-chain supremacy and every other app cooking up in the ecosystem needs super-tuned highways for data transfer across multiple chains to even compete with their mainstream Web 2.0 counterparts.

A promising development on this front has come from the house of Polygon, with their proposals for a Polygon 2.0 architecture aimed at developing a network of interconnected zero knowledge-powered L2 chains that scale Ethereum to the size of the Internet [1]. The proposals (Polygon Improvement Proposal - PIP) outline an integral element of this architecture - a technical upgrade to the native ecosystem token MATIC.

MATIC had long been the native token on Polygon before the network even took on that name. MATIC has been the gas token on the Poygon POS network and has also been used for staking to validate the chain. Polygon 2.0 architecture pushes to upgrade this token to a hyper-productive token that can power the 'Value layer of the Internet', proposing a successor to MATIC - POL [2].

With the release of the Polygon chain development kit - the CDK, it has become incredibly easy to spin up production-ready ZK-powered L2s, tailored to distinct use cases. As a matter of fact, we have already seen numerous L2s and VMs brought forth via CDK - Immutable zkEVM, and OKX's xLayer to name a few. Each of these chains plays a substantial role in conceiving the 'Value layer of the Internet' and Polygon 2.0 aims to make things super-easy for these chains to cooperate and communicate openly with each other, with the Polygon Mainnet and with Ethereum L1. What drives this vision to fruition is an upgraded token capable of coordinating and securing the ecosystem maturation - POL.

POL is suggested as a third-generation token built upon the footings of first-gen BTC and the successor- ETH. MATIC, for the most part, has been as productive as ETH, allowing holders to secure the network (POS Mainnet) by staking their token and in return incentivising them with more MATIC tokens. Now this would have been perfect in a monolithic POS environment, but the Polygon Mainnet itself is upgrading to a ZK-powered rollup to form a supernet with the other Polygon CDK chains. The new formulations of this ecosystem demand robust tokenomics to meet the compelling and dynamic considerations for growth and expansion, and MATIC alone wouldn't fare well at that.

This proposed new token, still an ERC20, would set itself apart in two perceptible ways [2] :

• POL would allow the token holders to stake and secure any chain in the Polygon supernet i.e. be a validator, run and secure any Polygon CDK chain.

• Every chain can tailor additional offerings and rewards to attract more validators and further improve the security of the network

With the proposed set-up of Polygon 2.0 architecture, POL can help ensure a well-decentralized pool of validators running and securing technically, any number of polygon chains, besides the base protocol, facilitating the scalability and the growth of the network manifold. This also remains intensely beneficial to the validators who now have exposure to multiple reward lanes from the different CDK chains.

POL would also facilitate community-run governance of important aspects of the Polygon ecosystem.

The initial supply of POL is set to 10 billion tokens, to match that of MATIC, one-to-one, and the entirety of the fund will be dedicated to migration from MATIC. Following a successful migration, POL will be released at an annual emission rate of 1% separately for validator rewards and ecosystem support, for a period of 10 years. This timeline is fixated to accommodate for the Polygon ecosystem growth as well the industrial maturation. It's expected that, in the set period, the ecosystem would scale legibly to allow the network transaction fees and other rewards alone to sufficiently incentivize the validators to keep staking and securing the network. At the onset of such a state, the community can govern over the further emission of POL tokens, to either reduce its emission rate or to stop it altogether, but never going abroad over the set rate of 1%.[3]

Given the initial supply of POL, matching that of MATIC, migration becomes pretty straightforward. There is no action needed from users holding MATIC on Polygon POS as the entire MATIC on the mainnet would get automatically upgraded to POL, irrespective of whether the toen is held in a self-custody wallet, centralized exchanges or locked in vesting contracts.

MATIC holders on Ethereum L1 can use the live Polygon Portal Interface for seamless token upgrades. Users holding MATIC on Polygon zkEVM are also advised to use the Polygon Portal Interface, after bridging the MATIC tokens to Ethereum L1.

Currently, there are no set deadlines for MATIC to POL migration and everyone is allowed to progress with the process at their own pace. Further information and recommendations on MATIC-POL migration can be found in Polygon's detailed blog.[4]

The POL-powered Polygon 2.0, introduces a novel, infinitely scalable, and seamlessly interconnected network of Layer2 chains. The drafted tokenomics of POL aims to supercharge this vision and accelerate its consummation. Being one major pit-stop on that roadmap to Polygon2.0, the MATIC - POL upgrade, is bringing us closer to facilitating better user experiences, both on and off-chains, via cross-chain interoprability. The future is bright and Polygon2.0 is for sure, something I'm counting down to.

[1] https://polygon.technology/blog/polygon-2-0-implementation-officially-begins-the-first-set-of-pips-polygon-improvement-proposals-released

[2] https://polygon.technology/blog/polygon-2-0-tokenomics?utm_source=twitter&utm_medium=social&utm_content=token-2.0-blog

[3] https://polygon.technology/papers/pol-whitepaper

[4] https://polygon.technology/blog/save-the-date-matic-pol-migration-coming-september-4th-everything-you-need-to-know

These are data points on actual human beings, reflecting their tastes and interests, at times even building a digital clone of avid internet citizens. And in the wake of the AI boom, where almost every other product has a generative AI model integration and a privacy clause that defaults to data sharing for model training, data privacy and protection are close to impossible to maneuver. Reflecting on this would just make us wish if only we had the supreme control over our data, deciding on who to share it to, what they can utilize it for or maybe revoke it at our choice. Wouldn't that just be so great ?

And that is the promise of Gateway protocol !

Gateway started as a credentialing protocol, decentralizing the issue, receipt and consumption of verified credentials, hoping to fix the glaring shortcomings of the established web2 practices of credential management. It was only a matter of time to expand upon it's standard of verifiable on-chain credentials to the overarching data landscape of our digital ecosystem.

Imagine this, you have been a long time user of Netflix and has spent considerable screen time with it. Meta, at one point, wants to access your Netflix footprint to recommend specific ads and contents on its different suite of apps. In present day, this is happening pretty much without your acknowledgement or awareness. The deal is between the corporates where the user is a mere data point.

Gateway proposes to change this dynamic and holds you the reign to make critical decisions on your data.

If you have observed, in the above scenario we have got three parties involved : Netflix (data contributor) , Meta (data consumer) and the user (data creator). Gateway aims to take this distinction one step higher to assign ownership and access privileges to these parties. While Netflix still remains the data contributor, who puts together the screen time, the watchlist, genres of interest and the likes, the ownership of this data must be anchored to the creator - the user. This would mean that the user has now become an intermediary to the data transaction process and has extensive visibility and control over it.

The architectural set up of Gateway protocol proposes for data contributing organizations to bundle up specific formats of data whose ownership rests with the users. The user can then decide to share a static snapshot of this data upon request from a consumer, who in turn will have to pay an amount for accessing this information.

The technical setup starts with the contributing organization preparing high value sensitive data about its users in pre-defined template formats called 'data-models' to create what is to be called 'Personal Data Assets' (PDA). These PDAs are encrypted files targeted at a specific user and encapsulates sensitive user data collected by the organization from that particular user. These PDAs are initially verified against the particular data model schema by entities called validators. Upon successful verification, this transaction of PDA creation gets recorded in the Gateway Ledger - the protocol's layer01 blockchain. This allows for global verifiability and auditability for all transactions.

At this point, the contributing organization interacts with a smart contract to create a Data Assurance Commitment, specifying explicit storage parameters for the sensitive data in concern. Now to store this highly sensitive user data, the protocol utilizes special nodes called Sharders that partition this encrypted data into smaller fragments. These shards will later on be stored in specialized storage units called Encrypted Data Vaults (EDV), based on the specific storage parameters defined in the Data Assurance Commitment. The EDVs stake some amount of token to take part in this process.

These EDVs constitute the data layer of the protocol and are rewarded or penalized based on their ability to prove they are storing the data. This is done by using Challenge Protocol, a smart contract in the validation layer that periodically challenges the EDVs to prove data storage and with a positive challenge response, the EDVs will be allowed to claim rewards from the Challenge Pool - distributing funds among EDVs, validators, and other participants based on their roles and SLA adherence. The EDVs must also demonstrate their operational status via heartbeat mechanisms during data write operations. At case of a failure, the staked amount will be slashed.

The PDAs hence created are encrypted with the public keys of the respective users, making them the supreme authority of their own highly sensitive user data. In actuality the protocol demonstrates an incredible data protection standard by implementing a dual encryption for these PDAs, where the data is initially encrypted using a one-time symmetric key and this key is further encrypted using the user’s public encryption key. This ensures that only the intended recipient can decrypt the symmetric key and, by extension, the PDA data. This dual-layer encryption approach ensures both the speed and security of data encryption, maintaining data confidentiality and integrity.

At the other end, data consuming organization will directly deal with the users to access their data. This starts with these organizations drafting a 'Data Request', specifying a template ID for the data, the specific data being requested and detailing the intended use of the requested data. This highlights the inherent transparency outlined by the protocol. This Data Request will be sent to the particular user, whose sensitive data they are seeking and the user now have greater visibility into the intentions of the request and the implications there forth.

The user, upon receiving a Data Request can now freely decide if or not they should grant permission to these requesters to access their sensitive data. If approved, the data owners will go on to create a proxy re-encryption key specifically for the requester. This key allows the data to be re-encrypted without revealing the original encryption key. Using the proxy re-encryption key, the requested data is re-encrypted by the storage provider on behalf of the owner and the key is securely stored in the EDVs associated with the data. The requester can then use the Gateway API to pay for the access and retrieve encrypted data from the EDV.

This very idea of returning data ownership to individuals promises a secure, user-friendly internet that respects privacy. This fosters trust between consumers and products, assuring them that their data isn't spread across the global internet. Meanwhile, products can still effectively serve their users.

Gateway is promising to open a gateway for a healthier internet data landscape.