UTXO blockchains continue forward momentum with new collaborations

In our previous blog post, we announced the collaboration between Ergo, Nervos, Topl, and Komodo – companies forming the UTXO alliance to jointly enhance interoperability, scalability, and programmability features of the UTXO-based blockchains. Today, we are delighted to announce that Alephium and DigiByte are also joining the alliance to pioneer improvements of the UTXO accounting model.

We live in an age of rapid change and technological advancements where blockchain is the technology that streamlines transparency, trust, and enhanced security. The UTXO alliance has been created to encourage those at the forefront of this technology to engage in shared efforts and initiatives. Together we can drive further development of critical infrastructure needed to foster broader adoption of blockchain.

The strength of the UTXO model

The advancement of the UTXO accounting model is the core focus of the alliance. UTXO-based blockchains are superior to account-based models as they ensure:

• Enhanced security: the same address is not used every time a transaction is made, which makes it impossible to track the address or find out the overall balance. UTXOs are also more beneficial in terms of privacy leaks resolution.
• Scalability: UTXO ledgers allow for parallel transaction processing eliminating network congestion and are more suitable for stateless client solutions.
• Interoperability: due to the implementation of off-chain and sidechain protocols, it is easier to establish interoperability between different blockchains.
• Determinism: on the UTXO ledger, a user can predict the cost and validity of a transaction before it is processed on the chain. Transaction costs are also much lower in the UTXO model as there are no ‘gas’ fees.

Investigating UTXO properties and contributing open-source research allows us to enhance the properties of different blockchain systems, while also fostering interoperability between ledgers. Together, we are investigating scalability solutions that will allow solving instrumental questions around how to efficiently transfer data between different blockchain environments (including the amount of data used, processing speed, transaction costs, and energy usage). We’re also working on programmability, focusing on the design of new programming languages that will grant diversity in building smart contracts and DApps on UTXO-based blockchains.

Joint effort

Alephium is the first operational sharded blockchain bringing scalability, ETH-inspired smart contracts, and DApp capabilities to Bitcoin's proven core technologies while ensuring better performance and improved energy efficiency. From its technical design to its interfaces, Alephium has been created to address the challenges of accessibility, scalability, and security encountered by decentralized applications today. The immutability of the UTXO model has been the cornerstone for Alephium to tackle the scalability issue of blockchain. More specifically, Alephium proposes a stateful UTXO model which offers both layer-1 scalability and the same level of programmability as the account model. Alephium also introduces a dedicated virtual machine (VM) based on the UTXO model to address DeFi’s security issues and execution bottleneck.

Cheng Wang, Alephium founder & core developer says:

The increasingly high demand for scalable and secure DApps, and more specifically DeFi, is a great opportunity for UTXO blockchains. UTXO-based designs will be the new paradigm for DeFi development. The alliance will play a key role in driving its mass adoption.

DigiByte is an innovative, open-source, UTXO-based blockchain that is driven by the community. It provides forward-thinking solutions to ensure greater decentralization, security, speed, and scalability. Due to its secure cryptographic algorithms and enhanced speed, users can efficiently create digital assets, smart contracts, and DApps on the chain. One of the largest challenges DigiByte, and other UTXO projects, have struggled with is developer engagement. The barrier to entry for developers to build solutions on top of UTXO blockchains is high and requires a tremendous amount of domain knowledge and experience. DigiByte core protocol maintainers and contributors have been working on lowering that barrier to entry by building an approachable and easy-to-use developer toolchain & development sandbox.

GTO90, core protocol contributor & maintainer of DigiByte says:

DigiByte took UTXO to maximum performance through fast block times, real time difficulty adjustment, and multi algo mining. This improved upon the UTXO model and decentralization. Over the past several years, a number of DigiByte's innovations have been contributed to a variety of open-source UTXO blockchain projects. We look forward to working with the UTXO alliance to further innovation around and adoption of the UTXO model.

Romain Pellerin, IOHK CTO adds:

We are thrilled to see another two blockchain ecosystems joining us and the UTXO alliance, which brings us to seven founding members already. DigiByte and Alephium bring both experienced and novel lines of thinking to the alliance. This ensures diversity in the way we identify and attempt to solve common challenges. It will help each member to consolidate their state of the art and design new solutions to the latest challenges, as well as enable synergies towards more scalable, programmable, and interoperable blockchain networks.

We continue growing our collaborations to investigate different approaches to the enhancement of the UTXO model. Joining forces for the common goal strengthens our initiative while contributing to open-source research.

Input Output chose the UTXO model for Cardano because of its superior deterministic design, scalability features, and proven security. UTXO alliance members include some of the best and brightest blockchain minds in the space, committed to collaboration and growing and advancing the standard. If you’re developing UTXO-based blockchain tools and techniques and are committed to furthering this transformative technology, we invite you to join us. For more details, visit the UTXO alliance website.