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Blockchain networks are regarded as highly secure, thanks to features like cryptography and decentralization. Among the various blockchain platforms, Bitcoin (BTC) is known for its exceptionally robust security setup. Few other decentralized networks can rival the world's first blockchain when it comes to secure operations and protecting users’ funds.
Despite Bitcoin's unparalleled security features, it lacks the functionality to support smart contracts and decentralized applications (DApps). In the world of DApps, smart contract chains, particularly Ethereum (ETH), have been the go-to platforms for developers and users. Unfortunately, the proof of stake (PoS) block validation model used by the majority of smart contract chains has come under some criticism due to its security vulnerabilities, particularly the potential for a 51% network takeover attack.
Syscoin (SYS), an early Bitcoin fork, is an unusual project that combines Bitcoin's renowned security with EVM-compatible smart contract functionality. Moreover, Syscoin’s stack of products includes a Layer 2 solution that provides scalability and cost efficiency that Ethereum simply can’t match.
As blockchain-based DApps continue to gain relevance in various industries, the Syscoin project, one of the oldest surviving blockchains, is experiencing a resurgence of interest from DApp developers and operators.
Key Takeaways:
Syscoin (SYS) is a modular blockchain platform that offers a unique combination of Bitcoin-inherited security, Ethereum-compliant smart contracts and rollup-supported scalability.
The Syscoin platform consists of two Layer 1 chains — the UTXO and NEVM networks — and a highly scalable and cost-efficient Layer 2 optimistic rollup called Rollux.
Syscoin’s native cryptocurrency, SYS, can be merge-mined concurrently with Bitcoin, with up to 60% of the network’s hash power provided by Bitcoin miners.
Syscoin (SYS) is a modular, dual Layer 1 blockchain platform with a UTXO/EVM architecture featuring several technologies that leverage the security of Bitcoin and the smart contract functionality of the Ethereum virtual machine (EVM).
The blockchain, forked from Bitcoin in 2014, mirrors many of Bitcoin's foundational security and architectural properties. Central to its design is the highly secure UTXO (unspent transaction output) transaction model that’s implemented by both the Syscoin UTXO chain and Bitcoin. Just as with Bitcoin, the Syscoin blockchain uses a proof of work (PoW) block validation model.
Besides the original UTXO chain, Syscoin's architecture includes another Layer 1 network — the Network-Enhanced Virtual Machine (NEVM) blockchain. The NEVM chain is compatible with Ethereum's EVM engine, used by various highly popular smart contract chains.
In addition to the UTXO and NEVM Layer 1 chains, the Syscoin ecosystem includes a Layer 2 rollup solution, Rollux, designed to provide a low-cost transaction environment, high scalability and finality, and resilience to network outages. Rollux facilitates efficient and scalable transactions for both the Syscoin UTXO chain and the NEVM network.
By leveraging these three core components — the UTXO chain, NEVM chain and Rollux Layer 2 rollup — Syscoin offers an ecosystem characterized by Bitcoin-level security (through the UTXO chain), smart contract capabilities and EVM compatibility (with the NEVM chain) and excellent scalability and transaction efficiency (via Rollux).
As mentioned, Syscoin’s UTXO network was hard forked from Bitcoin in 2014. While retaining most of Bitcoin’s underlying technical properties, Syscoin has introduced a number of improvements and additional features that differentiate its platform from a typical Bitcoin fork.
First, Syscoin features a Z-DAG protocol, a decentralized scalability solution that allows users to send and receive crypto assets with near-instant finality and at meager cost. Moreover, Syscoin launched its EVM-compatible NEVM chain in late 2021 to support smart contracts and DApps, a feature unavailable on a typical Bitcoin offshoot.
NEVM is the Syscoin ecosystem's key chain of interest for DApp developers and operators. Compliant with Ethereum standards and featuring EVM compatibility, the chain can easily integrate DApps from other EVM networks.
Although most smart contract chains and EVM-compatible networks are based on a proof of stake (PoS) block validation model, the NEVM network uses the same PoW as the Syscoin UTXO chain. In fact, NEVM uses the same native coin, SYS, as the UTXO chain, and is secured by the same merged-mining mechanism as the latter.
While the PoW block production model may be debatable, it’s often cited as being more secure than the alternative PoS system. Thus, NEVM is capable of offering smart contract functionality while benefiting from the security of the PoW algorithm.
In 2023, Syscoin debuted its Layer 2 Rollux solution, which supports both of its main chains (UTXO and NEVM). Rollux utilizes the UTXO chain's data availability layer, offering users highly efficient, low-cost and secure transactions. Transaction fees on Rollux are fractions of a cent, and transactions are confirmed within two seconds.
To be more specific, Rollux is actually a set of tools that can be used to spin off various rollup implementations. These could include both optimistic and zero-knowledge (ZK-) rollups. The first implementation of a rollup based on the Rollux suite is a Rollux optimistic rollup.
In essence, Syscoin can be described as a multi-layer, multi-network ecosystem, rather than a single blockchain environment. Its token transfer functionality via the Syscoin Bridge allows the two Layer 1 chains to communicate with each other and share assets.
Much of Syscoin’s dual chains' security, including the implementation of rollups, is a result of merged mining with Bitcoin. Under this setup, mining nodes can use the same machine to mine two or more cryptocurrencies at the same time, thereby conserving energy use. The hash power they contribute to the mining process is used by both (or all) of the merged-mining networks.
Merged mining involves the simultaneous mining of two or more cryptocurrencies using the same mining machine and hash power. Through merged mining with Bitcoin, Syscoin taps into the vast network of Bitcoin miners, with up to 60% of its hash power contributed by them. This significantly improves Syscoin's overall security, positioning the network not far behind Bitcoin in regard to security features and protection against hostile takeovers.
Thanks to merged mining with Bitcoin, the Syscoin network is protected by the decentralized power of thousands of Bitcoin miners.
In addition to miners, there’s a second kind of specialized network participant on Syscoin — Sentry Nodes. While not involved in block production, these nodes act as an additional decentralized layer to enhance network security, provide greater stability to network operations and participate in on-chain governance.
Sentry Nodes are incentivized by rewards in SYS tokens for their work. The longer a node functions in this capacity on the network, the higher the rewards. New Sentry Nodes currently earn 52.91 SYS per block generated on Syscoin, while those with more than 2.5 years in the role are rewarded with about twice as much, or 105.83 SYS.
The EVM compatibility offered by Syscoin via its NEVM chain allows developers to easily migrate existing DApps to and from other chains that support the popular virtual engine, with some modifications. Smart contracts on NEVM use Solidity, the most popular programming language used within the Ethereum ecosystem. Thus, developing Syscoin DApps from scratch is also a familiar process for most blockchain developers.
Syscoin Platform Tokens (SPTs) are crypto tokens issued on the Syscoin platform's UTXO chain. Users can take advantage of the abovementioned Z-DAG protocol for speedy and cost-efficient transactions on the chain. The protocol operates in unison with the underlying PoW network, and relies on directed acyclic graph (DAG) technology, a distributed ledger model that records transactions as a blockchain does, but in a different manner.
We noted earlier that an essential part of Syscoin's ecosystem is the Rollux Layer 2 network. In order for a Layer 2 rollup to function, it needs to have access to a reliable and stable data availability layer — a part of the network architecture used to store data necessary for the transaction verification process.
Rollux utilizes the data availability layer offered by the Layer 1 UTXO chain. The implementation of Syscoin's data availability layer is called Proof of Data Availability (PoDA). It offers lower costs, greater transaction throughput capacity and higher resilience to network outage events than most other data availability solutions.
The Syscoin UTXO platform also allows you to create your own SPTs (see above). Key details, such as supply levels and functions, can be customized per your needs and preferences. As a UTXO-based token, SPT enjoys the security of the UTXO transaction model and other related Bitcoin benefits, such as Lightning Network and Taproot. The Z-DAG technology also facilitates swift SPT transactions at a low cost, supporting both fungible crypto tokens and NFTs.
Syscoin Bridge is a bridging solution that links the platform’s two Layer 1 chains so users can access the benefits of UTXO's security and NEVM flexibility. It can be used to seamlessly transfer assets such as SPTs between the UTXO and NEVM networks.
The Syscoin UTXO network is largely similar to that of Bitcoin and supports the technology that has given rise to the tremendously popular Bitcoin Ordinals protocol.
SYS is the native cryptocurrency of both the UTXO and NEVM chains. It’s primarily used on the Syscoin platform as payouts for mining rewards and gas fee payments. For instance, DApps on the NEVM chain pay gas fees in SYS for smart contract operations. Similarly, all of the network transactions initiated by users, e.g., Syscoin Bridge transfer fees, require SYS. Additionally, Sentry Nodes use SYS to lock in the required collateral of 100,000 SYS to operate their nodes.
SYS doesn’t have a supply limitation. The token’s total supply is around 780 million, nearly all of it in circulation.
As of early March 2024, more than ten wallets support the SYS token. Among these are popular crypto wallets like MetaMask, MathWallet and Ledger. However, most of these wallets don’t provide support for all of the networks on Syscoin — UTXO, NEVM and Rollux. The only wallet suitable for all three chains is Pali Wallet.
As of Mar 12, 2024, the SYS token was trading at $0.308, or 76.2% lower than its all-time high of $1.30 (recorded on Jan 2, 2022) and over 100,000% higher than its all-time low of $0.0002097 (recorded on Feb 22, 2015).
Long-term forecasts for SYS are all on the bullish side. PricePrediction expects the token to trade at around $0.78 in 2025 and $5.47 in 2030, while DigitalCoinPrice predicts it will reach an average of $0.78 in 2025 and $2.30 in 2030.
You might consider investing in the SYS token based on the following key factors:
The Syscoin platform is virtually unique in the blockchain world, offering a rare combination of Bitcoin-inherited security and EVM compatibility on Layer 1, along with high levels of scalability and cost-efficiency, thanks to the Rollux Layer 2 solution. The platform's unique features will keep supporting its market position and token in the future.
Syscoin, though one of the oldest existing blockchain projects, keeps innovating and adding new tools and solutions to its product suite. Over the years, the Syscoin team has introduced innovative tools, such as the PoDA data availability layer and Z-DAG protocol, to accommodate the needs of developers and end users.
In January 2024, the platform also launched another product, Zero-Knowledge Proof-of-Data Availability (zkDA) — an even more scalable data availability layer for rollups based on ZK technology. Syscoin’s continual product launches and updates demonstrate that it has a highly dedicated project team, always an enormous plus for any blockchain platform and its cryptocurrency.
Syscoin has a longstanding presence in the blockchain market, predating many other platforms. Having originated as a plain, unassuming Bitcoin fork, the platform has evolved over time to mature into a unique system boasting Bitcoin-grade security, sophisticated smart contract functionality and stellar scalability driven by rollup technology.
Looking ahead, with a dedicated and tireless team behind the project, Syscoin will almost certainly continue walking the path of innovation. This platform will keep testing the boundaries of what blockchain technology can achieve. For the present, developers have few excuses not to try out the Syscoin product suite, as it provides virtually all of the essential bits a blockchain app needs — security, flexibility and scalability — all under the same roof.
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