When you hear hybrid smart contracts, you might think it’s a mix of two elements, and you’d be spot on.
The term relates closely to the contracts we often see in the blockchain realm.
So, what makes a Hybrid Smart Contract special? It operates like the typical blockchain contracts, but with a unique twist.
Plus, it’s driven by two decentralized systems. Such as the familiar Blockchain and the Decentralized Oracle Network (DON).
Most of us know that standard smart contracts Oracles are used to connect to external data sources. This allows them to handle tasks outside their usual setting.
Certainly, let’s simplify and reformat the information:
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The Need for Hybrid Smart Contracts
For some time now, people have turned to Blockchain smart contracts as a way to address the flaws in the traditional centralized hybrid work contract systems. These we see in business and legal areas.
In these centralized systems, there’s often an imbalance. One side tends to have more resources, a better grasp of the contract’s workings, and more influence.
Trust in this setup is usually based on the reputation of a brand. And that doesn’t always guarantee transparency or consistency.
Here, you have to use Blockchain smart contracts. They shifted trust from being about reputation to being about math.
Everything in these contracts, from how they’re made to how they’re carried out, is based on the Blockchain.
This decentralized approach means no single person or group can easily tamper with them. But, they’re not perfect. There are two things to consider, such as:
Limitation of Traditional Smart Contracts
Smart contracts are known for being reliable, consistent, and transparent. They work on a simple principle. if certain conditions are met, then a specific action takes place.
But there’s a catch. The information that sets these conditions usually comes only from the Blockchain. This limitation means smart contracts can’t easily connect to data from the outside world.
Chainlink’s Hybrid Smart Contracts
This is where Hybrid Smart Contracts come into play. They offer a way to keep the decentralized spirit of smart contracts. but also connect them to a Decentralized Oracle Network (DON) instead of just one centralized Oracle.
Both the Blockchain and the DON have their strengths, and when combined in a Hybrid Smart Contract, they can achieve things neither could do on their own.
How Chainlink’s Hybrid Smart Contracts Operate
Imagine you’re using a hybrid smart contract and you need some data from outside the Blockchain. Here’s how Chainlink smart contracts step in to help:
1. Requesting Data
When the Blockchain needs external data, it sends a request to Chainlink. In response, Chainlink set up its own contract on the Blockchain. It’s known as the Chainlink Service Level Agreement (SLA) contract.
This SLA contract then creates three more specific contracts such as,
- Reputation Contract: Think of this as a quality checker. It looks at the history of an oracle node to see how it’s performed in the past. If a node doesn’t have a good track record, it’s left out.
- Order-Matching Contract: This one’s job is to forward the data request from the Blockchain to the trusted oracle nodes. These nodes then place their bids to fulfill the request. The contract then selects the best nodes for the job.
- Aggregating Contract: This is where the magic happens. The contract sends the data request to the Oracle nodes in a language they understand.
2. Ensuring Data Credibility
Now, because the Aggregating contract sends its request to several nodes, it gets multiple responses. This is a good thing because it helps verify the data.
For example, if five nodes respond and three give the same answer while two differ, it’s clear that the two differing nodes might be making an error.
3. Finalizing the Data
After checking the data’s credibility, the Aggregating contract combines the information to produce a final, accurate result.
Even though all this checking and validation happens outside the Blockchain, Chainlink uses extra security measures. Because it wants to ensure the data is as reliable and secure as if it were on the Blockchain.
Understanding Hybrid Smart Contracts: On-Chain vs. Off-Chain
To get a clear picture of how hybrid smart contracts work, we need to dive into the roles of its two main components. They’re the on-chain blockchain activities and the off-chain tasks.
1. On-Chain Activities
The Blockchain keeps a continuous record, like a diary. It shows who owns what. Also, it deals with secure transactions, allowing users to send and receive value. Once a transaction is made, there’s no going back.
It ensures that the DON’s activities outside the Blockchain are running smoothly by setting rules and resolving any issues.
2. Off-Chain Tasks
The DON acts like a bridge. It collects information from outside sources and makes sure it’s safe and accurate before sending it to the smart contracts on the Blockchain.
It also handles various calculations for smart contracts and other advanced solutions.
Abilities of Hybrid Smart Contracts
Hybrid smart contracts come with some impressive features. They combine the best of the Blockchain with the added benefits of a Decentralized Oracle Network (DON).
Let’s take a look at what they can do:
1. Keeper Networks
Keeper Networks can be visualized as automated robotic assistants designed specifically for the digital realm.
Their primary function is to oversee and manage routine operations that ensure the seamless functioning of a smart contract.
The beauty of these networks is their ability to operate without causing any disruptions or issues for the end-user. They make the experience smooth and hassle-free.
2. Off-Chain Reporting (OCR)
Off-chain reporting is commonly referred to as OCR. It’s an innovative method employed to collate responses from Oracle nodes within the Decentralized Oracle Network (DON). What sets OCR apart is its efficiency.
Instead of bombarding the Blockchain with multiple transactions, OCR consolidates all the necessary information and transmits it in a single transaction. This not only streamlines the process but also results in significant cost savings.
3. Scalable Computation
Scalable Computation is a feature that empowers smart contracts with the capability to process vast amounts of data both swiftly and economically. These contracts are designed to intermittently synchronize with the Blockchain.
They leverage cutting-edge technological advancements to do so. This ensures that large-scale computations don’t become a bottleneck, ensuring swift operations at reduced costs. Great work though!
4. Verifiable Randomness Function (VRF)
The Verifiable Randomness Function, or VRF, is a sophisticated tool that generates random numbers. However, these aren’t just random numbers.
VRF ensures that these numbers are not only secure but also verifiable for their authenticity and accuracy.
This dual functionality ensures transparency and trustworthiness, confirming that all operations are conducted with integrity.
5. Privacy in the DON
The Decentralized Oracle Network (DON) places a high emphasis on user privacy. Recognizing the importance of safeguarding sensitive information, the DON employs a range of specialized techniques and tools.
Hence, these mechanisms ensure that only essential data is made accessible to smart contracts, while the remainder is kept under wraps, ensuring confidentiality and privacy.
6. Fair Sequencing Services (FSS)
Fair Sequencing Services, abbreviated as FSS, play a crucial role in ensuring the equitable processing of transactions.
So, by establishing a systematic order for transaction processing, FSS eliminates the possibility of any undue advantages. This ensures a level playing field, where all participants adhere to a standardized set of rules.
Also, it promotes fairness and equity.
Make Your Hybrid Smart Contracts with Webisoft
Webisoft stands as a premier choice for hybrid smart contract development. It brings to the table deep expertise in crafting gas-efficient and secure custom contracts suitable for major blockchain platforms.
Moreover, their offerings are not only tamper-proof, ensuring genuine transactions, but also highly customizable to cater to specific business needs.
With proficiency across diverse blockchain technologies like Ethereum and Solana, Webisoft offers a holistic and flexible approach to smart contract development, making it a reliable partner in the blockchain domain.
Wrapping Up
So, Hybrid Smart Contracts Explained here in a detailed way. Remember how traditional contract systems often rely on the reputation of a brand? Well, these change the game.
Instead of relying on reputation, they’re based on logic. They operate on decentralized networks that are not only secure but also adaptable, private, well-connected, and dependable.
Explore the world of hybrid smart contracts with Webisoft. Let’s shape the future of blockchain together. Connect with us now!
FAQs
Why are hybrid smart contracts important?
They bridge the gap between on-chain and off-chain data, allowing smart contracts to interact with real-world data and events, expanding their use cases.
What is a Decentralized Oracle Network (DON)?
A DON is a network of oracle nodes that fetch, verify, and relay information from external data sources to blockchain smart contracts.
How do hybrid smart contracts maintain security and trust?
By leveraging the decentralized nature of both blockchain and DON, hybrid smart contracts ensure data integrity, transparency, and tamper resistance.
Are hybrid smart contracts more expensive to use than regular smart contracts?
While hybrid smart contracts might involve additional steps, they can be cost-effective in scenarios where off-chain data is essential for contract execution.
