# introduction verbatim is a high-performance evm-compatible layer 1 smart contract platform. verbatim makes meaningful progress towards solving the blockchain trilemma of decentralization, security and scalability. verbatim proposes the following optimizations in three major areas*,* resulting in an ultra secure and scaled proof-of-stake ("pos") blockchain, secured by multiple crypto assets: * **multiPOS**, for decentralization and security * **verbDB**, for performance and scalability * **oracle availability**, for builder optimization and secure price feeds verbatim's improvements address existing issues with regard to proof-of-stake blockchains, while preserving all of the functionality and compatibility desired of the evm. # historical background # blockchain **what is blockchain technology?** blockchain technology is a decentralized, distributed ledger system that records transactions across multiple computers. it ensures that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network. this technology is the foundation of cryptocurrencies like bitcoin but has potential applications far beyond digital currencies. **why is blockchain important?** 1. **transparency**: blockchain provides a transparent ledger of all transactions, which can be viewed by anyone with access to the network. this transparency reduces the risk of fraud and corruption. 2. **security**: the decentralized nature and cryptographic principles of blockchain make it highly secure. once data is recorded, it is extremely difficult to alter without the consensus of the network. 3. **efficiency**: blockchain can streamline processes by removing the need for intermediaries, thus reducing costs and increasing speed. 4. **immutability**: transactions recorded on the blockchain cannot be altered, ensuring data integrity and trust. 5. **decentralization**: unlike traditional databases that are controlled by a central authority, blockchain is managed by a network of nodes, making it more resilient to failures and attacks. **how does blockchain work?** 1. **transactions**: transactions are the basic units of operation on the blockchain. they are grouped together into blocks. 2. **blocks**: each block contains a list of transactions. along with the transaction data, a block includes a timestamp, a nonce (a random number), and the cryptographic hash of the previous block. 3. **chain**: blocks are linked together in a chain through their cryptographic hashes. this chain of blocks is known as the blockchain. 4. **consensus mechanisms**: to add a new block to the blockchain, participants (nodes) must agree on its validity through a consensus mechanism. **types of consensus mechanisms** 1. **proof of work (pow)**: * **mechanism**: miners compete to solve complex mathematical puzzles. the first to solve the puzzle gets to add the next block to the blockchain and is rewarded with cryptocurrency. * **examples**: bitcoin, ethereum (before transition to pos). * **pros**: high security due to the computational effort required. * **cons**: high energy consumption and slower transaction speeds. 2. **proof of stake (pos)**: * **mechanism**: validators are chosen based on the number of coins they hold and are willing to "stake" as collateral. validators are rewarded for proposing and verifying blocks. * **examples**: ethereum (after transition), cardano. * **pros**: lower energy consumption, faster transactions, and less hardware requirement. * **cons**: can lead to centralization if a small number of participants hold large amounts of the currency. 3. **delegated proof of stake (dpos)**: * **mechanism**: coin holders vote for a small number of delegates who will validate transactions and create new blocks. * **examples**: eos, tron. * **pros**: higher efficiency and faster transactions. * **cons**: potential centralization of power among delegates. 4. **proof of authority (poa)**: * **mechanism**: a limited number of validators are pre-approved to create new blocks and secure the network. * **examples**: vechain, poa network. * **pros**: high throughput and efficiency. * **cons**: less decentralized and potentially less secure. # proof-of-stake w*hat is proof-of-stake?* from the ethereum.org website: proof-of-stake is a way to prove that validators have put something of value into the network that can be destroyed if they act dishonestly. in ethereum's proof-of-stake, validators explicitly stake capital in the form of eth into a smart contract on ethereum. the validator is then responsible for checking that new blocks propagated over the network are valid and occasionally creating and propagating new blocks themselves. if they try to defraud the network (for example by proposing multiple blocks when they ought to send one or sending conflicting attestations), some or all of their staked eth can be destroyed. w*hat challenges are presented by proof-of-stake?* in today's environment, new proof of stake blockchains with their own set of validators, whether evm compatible or not, do not inherit the trust model of ethereum, or any other blockchain. these protocols are required to be actively validated and are secured by their own native token. under this assumption, proof-of-stake systems are thus limited by several factors. * **bootstrapping.** the larger the market cap of the staked assets that secure the network, the more expensive and difficult it becomes to execute an attack on the chain. new pos blockchains are required to bootstrap the network with staked capital, typically in the native token of the network. this takes significant time and significant capital to bring the security to an acceptable level. * **opportunity cost.** when validators evaluate the decision to stake in a new network, they evaluate competing staking opportunities and the yield associated with each. therefore, new networks must offer a competitive return to these stakers in exchange for their capital (security). assuming 7% required apr, a network with $1 billion staked, would require $70 million in staking rewards. significant capital is required to meet today's staking demands. * **trust model for applications**. an independently validated system built on a blockchain, does not inherit the security of the underlying chain. consider the example of a price oracle secured by $10 million in staked assets, where the threshold to attack the oracle is much lower than the cost to attack the larger chain.
in summary, proof of stake systems require significant capital. # bitcoin the largest crypto asset in existence today is bitcoin, with a total market cap of roughly $1.3 trillion. since bitcoin is a proof-of-work blockchain secured by work rather than capital, most of the circulating supply making up this market cap sits idle and in isolation on the bitcoin blockchain. as a result, hodlers only benefiting from price appreciation, missing out on the benefits of cash flow, or yield. given the recent approval of bitcoin etfs, institutions and traditional capital allocators now have more options to invest in bitcoin. institutions, however, typically have yield requirements, which historically have not been widely available to btc hodlers, or have been dismissed as too risky. while there are some yield generating activities currently available to bitcoiners, they typically require utilizing bridges (most problematic attack vector in crypto), or centralized custodians such as wrapped bitcoin (wbtc) to access defi opportunities on pos chains. in summary, bitcoin is digital capital that can be put to use. # verbatim as a solution verbatim is the first evm compatible layer 1 smart contract platform secured by native btc and eth through a multi-asset pos system ("multiPOS") and featuring a novel database implementation ("verbDB"). # evm compatibility proof-of-stake blockchains are secured by capital and bitcoin is capital. * **smart contracts**: the verbatim blockchain supports full ethereum compatibility. this compatibility allows developers to easily migrate or deploy new decentralized applications (dApps) on the verbatim network. * **dApp ecosystem**: developers can create and deploy decentralized applications (dApps) on the verbatim network, benefiting from evm compatibility. this opens up a wide range of possibilities for applications in finance, rwa, gaming, and more. # HotStuff 2.0 HotStuff 2.0 is an advanced consensus algorithm that significantly improves upon traditional consensus mechanisms in terms of security, efficiency, and resilience. * **overview**: HotStuff 2.0 is a leader-based Byzantine Fault Tolerant (BFT) consensus algorithm designed for blockchain networks. It provides a framework that allows for dynamic leader election, pipelined execution, and a streamlined process for achieving consensus. * **security**: HotStuff 2.0 provides robust security guarantees, protecting the network from various types of attacks, including double-spending and Sybil attacks. It achieves this through a series of cryptographic techniques and protocol-level safeguards. * **efficiency**: the consensus algorithm is optimized for efficiency, enabling faster transaction finality and lower latency. This is achieved through: * *pipelined execution*: HotStuff 2.0 employs pipelined phases where the pre-commit, commit, and decide phases are overlapped with the next consensus round, significantly reducing the time to finality. * *leader rotation*: the leader role is rotated in a predictable manner to ensure fairness and reduce the risk of centralization or leader-targeted attacks. * *simplified communication*: unlike traditional bft algorithms that require multiple rounds of communication among validators, HotStuff 2.0 reduces this to a single round trip in the common case, lowering the communication overhead. * **resilience**: HotStuff 2.0 is designed to be resilient against network partitioning and other types of disruptions, ensuring continuous network operation even under adverse conditions. it achieves this through: * *dynamic view change*: the algorithm can dynamically adjust to changes in network conditions and validator availability, maintaining consensus even when some validators are offline or behaving maliciously. * *fault tolerance*: HotStuff 2.0 can tolerate up to one-third of the validators being faulty or malicious, aligning with the standard bft model. # multiPOS overview proof-of-stake blockchains are secured by capital and bitcoin is capital. multiPOS is verbatim's innovative proof-of stake mechanism which utilizes multiple crypto assets to secure the blockchain. until now, pos chains have only utilized their own native token as the staked asset, or run permissioned (centralized) systems. by utilizing multiple staked crypto assets, the decentralization and security of the network is diversified and strengthened so long as the staked assets are larger in market cap and more decentralized. following this logic, the natural choices for staked assets on the verbatim network would be btc and eth in combination with the native token verb. the current staked asset weighting is proposed at 40% btc, 30% eth and 30% verb. as the network continues to mature, the staked assets will shift more towards the verb asset over time. btc and eth are ideal assets to backstop a network because they have the the most capital available, are the most decentralized, and the least volatile. under this architecture idle btc and eth can be utilized as capital to secure the network. the combined market caps of these assets is greater than $1.6 trillion. now, consider the amount of time and capital required for the verb token to reach an equivalent market cap. therefore, by adding additional staked assets in the form of btc and eth, the network is more secure during the bootstrapping stage. additionally, validators are not required to swap btc or eth for verb, utilize bridges, or use wrapped versions of their assets in order to begin validating the network. they can retain their btc and eth on their native chains utilizing our technology, which makes the ease of use optimal to attract the most capital. additionally, as certain price oracles will be natively validated, the oracle network is secured by the same level of capital as the overall chain, enhancing the security greatly. more on this here \[link to oracle availability]. # bitcoin state channels **btc staking with state channels** state channels are one type of off-chain scaling solution that allows users to transact without committing each individual transaction to the bitcoin blockchain. this approach significantly reduces the burden on the bitcoin network and enables near-instant finality. A summary of how state channels work is described below: \ **establishing the channel** * **opening transaction**: two parties agree to open a state channel by creating a multi-signature address, which requires both parties to sign off on any transaction. they fund this address with an initial deposit, which is recorded on the blockchain. * **funding**: the initial deposit serves as the channel's starting balance, effectively locking up the funds in a smart contract that both parties control. #### **conducting off-chain transactions** * **state updates**: within the state channel, the parties can exchange any number of transactions. these transactions are not broadcast to the bitcoin network but are instead signed by both parties and exchanged off-chain. * **balancing**: each transaction updates the state of the channel, which reflects the current distribution of the channel's funds. #### **closing the channel** * **final state**: when the parties decide to close the channel, they create a final transaction that reflects the final distribution of funds. this transaction is then broadcast to the bitcoin network. * **settlement**: the final transaction is validated and recorded on the blockchain, effectively closing the channel and distributing the funds according to the final state agreed upon by both parties. #### advantages of bitcoin state channels * **scalability**: by moving transactions off-chain, state channels significantly reduce the number of transactions that need to be processed and stored by the bitcoin network. * **speed**: transactions within the state channel are nearly instantaneous because they do not require confirmation by the entire network. * **cost**: reducing the number of on-chain transactions lowers transaction fees, making micropayments and frequent transactions economically viable. #### examples and implementations * **lightning network**: the most prominent example of state channels in the bitcoin ecosystem is the lightning network. it uses a network of interconnected state channels to facilitate fast and low-cost transactions. #### challenges * **liquidity**: funds locked in a state channel are not available for other uses until the channel is closed (until now!) * **complexity**: setting up and managing state channels can be complex, requiring robust infrastructure and understanding from the users. * **security**: while off-chain transactions are secure when properly implemented, they rely on the integrity and cooperation of both parties. disputes require on-chain mechanisms to resolve. # how does multiPOS work? **btc staking on verbatim with state channels** 1. validators lock their btc in state channels. this process involves creating a multi-signature wallet where the btc is held securely for the duration of the stake period. 2. verbatim issues zero-interest loans against the btc collateral locked in the state channel. this mechanism allows validators to obtain liquidity without selling their btc holdings. even better, the btc remains on the bitcoin network. there is no need for risky bridges or wrapping of assets. these loans are provided in verb tokens, which are then staked on the verbatim network. 3. when the user stakes, they create a hashed time locked contract with the staking amount and slashing amount. if no malicious activity is detected, both the slashing and staking amount will be paid back to the user when the user decides to exit the pool. 4. validator rewards are paid in verb on the verbatim network. 5. when the state channel is closed, the final state is settled on the bitcoin blockchain. the locked btc collateral ensures that validators have a financial stake in behaving honestly, as any malicious activity can result in slashing of their collateral. **eth and verb staking on verbatim** eth and verb tokens can be directly staked in the network. **staking and delegation** * staking module: the staking module is the core component where validators stake their assets (btc, eth verb). this module handles the staking, rewards distribution, and slashing mechanisms. * delegation: token holders who do not wish to run validator nodes can delegate their staked assets to trusted validators. delegators earn a share of the rewards generated by the validators, while the validators take a commission for their services. * delegation process: delegators can choose validators based on performance metrics, reliability, and commission rates. this allows for a more flexible and inclusive staking ecosystem. # verbDB overview more coming soon, research paper still under development. * p**erformance optimization**: the verbatim database is designed for high-speed transactions and scalability. It employs advanced indexing and data retrieval techniques to ensure low latency and high throughput, even under heavy network load. * **scalability features**: the database architecture supports horizontal scaling, allowing the network to handle increasing amounts of data and transactions as the user base grows. # oracle availability overview * **price** **data feeds**: oracles provide reliable and timely external data feeds to smart contracts. these data feeds can include information such as price feeds, weather data, sports scores, and more. however, our data feeds will initially center around financial indicators such as the prize of gold, oil, btc, treasury rates, etc. * **block-level validation**: oracle data is validated at the block level, ensuring accuracy and trustworthiness. this validation process involves multiple validators agreeing on the data provided by the oracles, enhancing security and reducing the risk of manipulation. # verb token the verb token is the native currency of the verbatim network and is a gas token to pay for transactions on the network. users can stake verb to participate in consensus and secure verbatim. the total supply of verb at genesis is 1,000,000,000 tokens. # official links website: twitter: discord: telegram: