Non-Fungible Data Chains

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Decred and the State of the market is brought to you by Exitus and PhoenixGreen and joined by @matheusd_tech.

In this discussion, we'll be diving into a new proposal created by Matheus and Victor (VCTT). That looks at how Decred could build additional functionality whilst aligning with the core values of the project. Non-Fungible Data Chains.

Over the past few years there have been lots of discussion and experimentation for how to extend blockchain functionality. These include:

• Sidechains
• Layer 2's
• Layer 2 rollups
• Drivechains
• Lightning Network

The goal of all of these developments is to find ways to increase transactions per second, reduce transaction cost, reduce blockchain congestion, and enable more functionality. Each solution approaches the problem differently depending on the outcome they are hoping to achieve.

From these experiments there are serval desirable features most blockchains would like to have. Including:

• NFT's - Non-fungible tokens, ordinals / inscriptions
• Anchoring to popular projects like stable coins and meme coins
• Building new internal alt coins
• Accounting System for distribution, treasuries and organisational parameters
• Smart contracts and covenants

In general terms, Decred has taken a step back from these experiments due to some of the undesirable effects these implementations could have on security, governance, blockchain bloat, blockchain pruning and the overall complexity that would be added.

That being said, Decred and Matheus in particular has spend a lot of time and effort building our awesome Lightning Network which has added some interesting functionality including microtransactions.

Livestream agenda:

What was the catalyst for you starting this proposal?

Let’s start from a high level overview. What functionality can we expect from NFD chains and what should we not expect?

What makes NFD chains different or an improvement on other solutions like RGB or ordinals / inscriptions?

In terms of design, I thought it was interesting that you intend to utilise the staking aspect of the protocol, Can you give us a high level overview of how this will work and the benefits?

NOTES: The design proposed here has two main points: Minting and updating - (using a format similar to UTXO’s)

• Modify vote transactions to allowing starting new NFD chains (“minting”).
• Introduce a new stake transaction type to allow updating the chain.
• First chain will be called N+1

I’m interested in how this implementation could add a new possible revenue stream for VSP, how do you see this working?

Having only five new NFD chains each block seems like a good way of limiting the number of chains that can be created. Do you see any potential issues with this limit?

In terms of update limits:

• The max number of NFDUpdate transactions in a block to N (for example, 10). Does this mean that only 10 NFD chains can be updated in a block?
• Prevent multiple updates of the same NFD chain (i.e. same ordinal #) in a block. So each NFD chain can only be updated once per block?
• Impose maturity restrictions to spending to the standard outputs and to updating the same chain. What will the time frame on these likely be and why?

SPV Support with the inclusion of adding the ordinal number to the header committed block filters will make NFD chains available on mobile apps and make sure the system is fully integrated into all of our wallets.

The ability to prunable previous NFD chain states is a very desirable feature for reducing blockchain bloat, how do you see this working?

VCTT: One point I think would be interesting to discuss is the possibility of adding assets and tokens with NFD. This would enable the creation of new assets, for example, minerals that could be mined in a game. Since these assets would follow Decred's consensus rules, they could also be transacted on the Lightning Network.

This means we could have assets 'mined' in a game, or NFTs like swords and armor, related to games, which could then be traded on platforms like Bison Relay

creating a whole universe around decred!