Milestone: PoA & VM Execution

Overview

This milestone focuses on implementing Proof of Authority (PoA) consensus and Virtual Machine (VM) execution for OPNet, enhancing the Bitcoin Layer 1 with smart contract capabilities. This milestone will also include the integration of WBTC (Wrapped Bitcoin) swapping functionalities and p2p trading.

Objectives

1. PoA Consensus Implementation

   • Develop and integrate a robust PoA consensus mechanism.
   • Establish a set of validators authorized to validate transactions.
   • Implement a reward system for validators.
   • Ensure secure and efficient validation processes.

2. VM Execution

   • Develop a Virtual Machine (VM) for executing smart contracts.
   • Ensure deterministic execution of contracts to prevent variances in contract outcomes.
   • Implement isolation mechanisms using isolated-vm to sandbox contract execution.
   • Introduce a timeout mechanism based on CPU cycles to prevent DoS attacks and infinite loops.

3. WBTC Swapping Integration (PSBT) / P2P trading style (PSBT)

   • P2P trading style
   • Implement functionalities for swapping BTC to WBTC and vice versa.
   • Ensure 1:1 value correspondence between BTC and WBTC.
   • Integrate smart contract mechanisms for secure and transparent swaps.

Detailed Tasks

PoA Consensus Implementation

1. Validator Selection and Management

   • Define criteria for selecting validators.
   • Develop smart contracts for validator registration and management.
   • Implement a mechanism to regularly update the list of active validators.

2. Transaction Validation

   • Develop algorithms for transaction validation.
   • Ensure transactions are validated efficiently and securely.
   • Implement consensus rules and ensure compliance among validators.

3. Reward System

   • Develop a reward system to incentivize validators.
   • Implement smart contracts for distributing rewards.
   • Ensure transparency and fairness in reward distribution.

VM Execution

1. VM Development

   • Design and develop a VM capable of executing WebAssembly (Wasm) based contracts.
   • Ensure compatibility with OP20 and other relevant standards.
   • Implement a deterministic execution environment.

2. Isolation and Security

   • Use isolated-vm to create isolated execution contexts for each contract.
   • Implement security measures to prevent cross-contract interference.
   • Ensure robust handling of external calls and state changes.

3. Timeout Mechanism

   • Develop a timeout mechanism based on CPU cycles to limit execution time.
   • Implement monitoring and enforcement of execution limits.
   • Ensure graceful termination of contracts exceeding execution limits.

WBTC Swapping Integration (PSBT) / P2P trading style (PSBT)

1. Swap Mechanism Development

   • Develop smart contracts for BTC to WBTC swaps and vice versa.
   • Ensure atomic swaps to guarantee 1:1 value correspondence.
   • Implement mechanisms to handle edge cases and failures securely.

2. Testing and Security

   • Conduct thorough testing of the swap mechanism under various scenarios.
   • Implement security audits to identify and mitigate vulnerabilities.
   • Ensure compliance with industry standards and best practices.

Deliverables

• Fully implemented PoA consensus mechanism.
• Operational VM for executing Wasm-based smart contracts. (rust)
• Integrated WBTC swapping functionalities.
• Documentation detailing the implementation, usage, and maintenance.
• Comprehensive test cases and results.
• Security audit reports. (last)

Risks and Mitigations

• Security Risks: Conduct regular audits and testing to ensure robust security.
• Execution Variance: Ensure deterministic execution through thorough testing and validation.
• Validator Misbehavior: Implement strict rules and penalties for validator misbehavior.