Application of Proof of Burn Protocol in the Cardano Ecosystem

Recently, the Iagon team successfully developed a proof of burn (PoB) protocol suitable for the Cardano ecosystem. This protocol aims to address the issues raised by Charles Hoskinson. This article will provide a detailed introduction to this innovative solution.

Overview of the Proof of Burn Mechanism

Burning proof is essentially sending tokens to an inaccessible "black hole" address. This mechanism has multiple uses, both to increase the value of the remaining tokens and to serve as proof of commitment for the blockchain protocol. While burning a large number of tokens may create deflationary pressure, Iagon is committed to developing an uncensorable token burning protocol.

The security of proof of burn is based on cryptographic hash functions. These functions are easy to compute but difficult to reverse, ensuring the security of transactions. By flipping the least significant bit of the output of the cryptographic hash function, a black hole address can be created. Anything sent to that address will be difficult or impossible to recover.

The Burn Proof Mechanism in Cardano Smart Contracts

Cardano smart contracts consist of three parts:

1. Redeemer script: controls the spending of eUTxOs
2. Wallet script: represents the user operation, used to redeem funds and create new eUTxOs.
3. eUTxOs: holding funds and data point ( datum )

The proof of burn mechanism in Cardano smart contracts includes four possible operations:

• Burn: Send funds to the black hole address
• Verification: Confirm that the burning of a certain commitment value has occurred
• Lock: Send funds to an address with a key
• Redemption: Retrieve the locked funds

Deployment of Smart Contracts

To deploy a smart contract on the testnet, you need to perform the following steps:

1. Install the Haskell toolchain
2. Build Plutus script
3. Start Cardano node and wallet container
4. Restore wallet and obtain wallet ID
5. Execute token burn
6. Verify Burn Result

From Smart Contracts to Wallet Scripts

In order to further enhance security and censorship resistance, Iagon has proposed a solution that solely utilizes wallet scripts. This method can prevent selective blocking of burn transactions, making censorship more difficult.

To achieve this, the hash of the public key needs to be replaced with the hash of the commitment value, and the least significant bit of the commitment value must be flipped. In addition, the Cardano API library is needed to generate a burn address that conforms to the Cardano address structure and CRC checksum.

Summary

The burn proof protocol developed by Iagon provides an innovative solution for the Cardano ecosystem. While wallet scripts are currently recommended, more complex smart contract solutions may emerge in the future with the implementation of the PAB library, further enhancing censorship resistance. The development of this technology will bring more possibilities to the Cardano ecosystem.