PONTEM x ECONIA: FIRESIDE FRIDAY RECAP

On January 13th, Pontem organized a community call with Econia – a protocol on Aptos that enables anyone in the DeFi space to access fast and secure order books.

The call was also joined by representatives from Topaz Markets, Everstake, Aptos Labs, and Mo Shaikh, the co-founder, and CEO of Aptos Labs. The discussion centered around the benefits of integrating Ledger's technology with Pontem to secure digital assets, among other intriguing topics.

You can listen to the full recording on Twitter, Discord, or YouTube.

The Benefits of Ledger's Integration with Pontem for Digital Asset Security

The recent integration of Ledger on Pontem offers a solution to a persistent problem in the crypto world: the storage of private keys. A private key is a crucial component in verifying the authenticity of blockchain transactions, but it must be securely stored to protect against malicious attacks.

Centralized exchanges have employed the use of cold wallets, which store private keys on air-gapped servers, to address this issue. However, not everyone can afford these resources. As a result, hardware wallets have become a popular alternative for secure private key storage.

Ledger is one of the most widely used hardware wallets and its integration with Pontem has been well-received. These wallets store private keys on a physical device that can only be accessed through direct interaction. This eliminates the risk of a hacker gaining access to the private key, even if the user's device is compromised.

Moreover, hardware wallets can be used in multi-sig setups, which allow multiple individuals with hardware wallets to collectively sign a single transaction. This adds a level of fault tolerance, as even if one hardware wallet is physically compromised, the funds remain secure.

Ledger's hierarchical deterministic feature also provides an added layer of security, allowing users to manage multiple wallets with a single passphrase, streamlining the process of securing digital assets.

Revolutionizing Transactions with Smart Contract Wallets

Smart contract wallets offer the potential to revolutionize the way we transact and interact with the blockchain. One of the most innovative features of smart contract wallets is their ability to delegate gas costs to another address, streamlining the process and reducing overall costs.

The concept of social recovery, achieved through the use of guardians or multi-sig mechanisms, is another important attribute of smart contract wallets. This provides a robust solution for the recovery of lost funds and the execution of transactions with multiple parties. The Argent Wallet, built on zkSync layer two, is the most widely adopted smart contract wallet in the market.

An alternative solution, off-chain multi-sig, can be implemented with the adoption of the Aptos native Multi-Ed25519 schema. The Aptos governance framework is designed specifically to support this functionality and provides a governance proposal format that allows for the submission of transactions for approval, with an on-chain record of voting and execution.

This presents a significant market opportunity for the development of solutions based on the Aptos governance framework. Audited open-source contracts will empower individuals to control contracts through a multi-sig group, with a transparent record of all transactions on the blockchain.

The added benefit is that the transaction script can be made available on public platforms, enabling individuals to verify the code and understand the calls being made.

Ensuring Security and Transparency in Transactions: The Power of Multi-Sig and Social Solutions

Traditional methods of securing transactions are often seen as insufficient and lacking the necessary transparency. This is where the concept of adding a social element to transactions comes in. By adding a social element to transactions, the process of securing transactions becomes more public and transparent. This can be achieved either on-chain or off-chain, with the former being more social and the latter being more efficient.

When it comes to institutional investors, the use of multi-sig for transaction security becomes a crucial consideration. While some institutions might already be using multi-sig, others might be hesitant to do so due to the operational complexities involved. However, it should be considered best practice for institutions to use multi-sig, as it provides an extra layer of security and helps prevent the loss of funds in the event of a security breach.

Several service providers, such as Fireblocks, Coinbase Custody, Gemini Custody, and BitGo, offer custody services that make it easier for institutions to securely store and manage their funds. However, as DeFi continues to grow and evolve, these custody solutions are expected to become even more robust and sophisticated, providing institutions with greater control and security over their assets.

In the future, we can expect to see more standardization in the use of multi-sig by institutions and increased use of multi-sig for securing DeFi transactions. The trade-off between security and inconvenience will always exist, but by embracing multi-sig and other social security solutions, institutions can ensure that their transactions are secure and transparent.

Mutability vs Immutability in Blockchain Protocols: Balancing Flexibility and Security

One of the key debates in the blockchain space revolves around the issue of mutability vs immutability in blockchain protocols.

On one hand, mutability offers the ability for protocols to evolve and adapt to new threats and opportunities. This is seen as an important feature in a rapidly changing technological landscape, where protocols must be able to respond quickly to new challenges. However, this also means that there is a risk of introducing vulnerabilities into the system, as upgrades may not always be thoroughly tested or secure.

One solution to this problem is the use of white hat bounties, where individuals are incentivized to find and report vulnerabilities in blockchain protocols. This acts as an immune system of sorts, helping to identify and eliminate potential threats to the network.

However, this approach also comes with its own set of trade-offs, as it requires a level of trust in the individuals reporting the vulnerabilities, and there is always a risk that a would-be attacker may try to exploit the bounty system for their gain.

Another solution is to create simpler protocols that only perform one or two functions, and can be "frozen" once they have been thoroughly tested and are considered secure. This reduces the risk of introducing vulnerabilities but also limits the ability of the protocol to evolve.

The issue of mutability vs immutability is particularly pressing for complex projects and requires careful consideration of trade-offs. The use of multi-sig and reputable upgrade authorities can help to mitigate some of these risks, but there is always a possibility that a vulnerability may be missed, or that an underlying upgrade to the L1 may introduce new risks.

On the other hand, permissioned blockchains, which require a central authority to control access and upgrades, have been criticized as being unnecessary and potentially vulnerable to attacks. From an engineering perspective, they offer little advantage over traditional databases and lack the security benefits of decentralized, permissionless blockchains.

Price Discovery on Chain: The Future of Transparent Markets

The idea of price discovery on chain is a game-changer in the world of finance and markets. It is a concept that could potentially revolutionize the way we view and participate in these markets. With price discovery on chain, the markets would be much more transparent, reducing the likelihood of market manipulation and insider trading. Addresses could be easily tracked, making it easier for investors to trust the prices they see.

One of the biggest benefits of price discovery on chain is that it eliminates parasitic dynamics that exist in traditional markets. One example of this is high-frequency trading (HFT) firms that typically set up shop next to the servers of large centralized exchanges like Binance.

This gives them a latency advantage, allowing them to make trades faster and essentially arbing the positions on the book. On a blockchain, this type of parasitic behavior is not possible as the speed of light imposes a latency requirement. This ensures that legitimate economic information is incorporated into the price discovery process, making the markets more stable.

Salient Features of the Aptos Chain

Aptos offers many innovative primitives to developers and users alike. With Aptos, it is possible to do key rotation with a vanity address, which provides an added layer of security for private keys.

A key feature of Aptos is its focus on latency, with transactions occurring at the speed of light. This is a major improvement, and it opens up new use cases, such as high-frequency trading strategies.

Aptos is based on the Move language, which opens up the door to new use cases and revenue streams, as developers can leverage Aptos's capabilities to build next-generation applications that deliver high-performance parallelism and optimistic concurrency.

Its use of optimistic concurrency enables transactions to be executed in parallel, without having to check ahead of time if they will collide with each other. This makes it easier for developers to build on Aptos, freeing them from the constraints of having to declare different regions of the global state.

Aptos empowers decentralized protocols to deliver an unprecedented level of performance as compared to centralized platforms, making it an attractive choice for institutional and individual users alike. This could lead to the widespread adoption of DeFi protocols, as people start to see the benefits of decentralized technology over centralized systems.

The Future of Privacy in Finance: The Introduction of Veil Coins

Privacy and security are leading features of cryptocurrencies and DeFi, and a new concept is taking this to the next level - Veil coins. These coins allow for truly private transactions, using a cryptographic notion called Pedersen commitments which is similar to zero-knowledge proofs.

The Veil coin operates by depositing funds into an "envelope" that can be transacted between users without anyone knowing the net amount.

The idea is that the original deposit into the envelope is made by big players and the rest of the transactions occur between smaller players without anyone knowing the original amounts. This offers a level of privacy that is highly sought after by institutions that don't want to give away their strategies.

Despite the challenges of incorporating Veil coins into DeFi, the concept is considered to be a big step forward in the right direction. It allows for configurable privacy, depending on the use case, and gives people the ability to maintain control over their assets. The future of Veil coins could also see trusted central counterparties, like Circle, facilitating these transactions.

Bringing the Metaverse to Life with NFTs in Gaming

The integration of NFTs and gaming is a promising development in the ever-evolving digital landscape. The potential applications of NFTs within the gaming industry are vast and can transform the way we interact with virtual assets.

One of the most promising use cases for NFTs is in ticketing, offering a secure and transparent alternative to traditional event ticketing systems. The ability to fractionalize and trade tickets like stocks creates a more dynamic and vibrant market, providing exciting opportunities for price discovery on-chain.

NFTs also offer a unique opportunity in bringing the metaverse to life, providing gamers with unique digital assets that can be used within a gaming environment and allowing for more immersive, dynamic, and interactive experiences.

A leading player in the gaming industry, Metapixel, recognizes the potential of NFTs in gaming and has partnered with Aptos to leverage its high-throughput and low transaction fees. With Aptos' secure and scalable technology, millions of gamers can interact in real-time, making it an ideal platform for gamers.

In the near future, there is a likelihood of increasing adoption of NFTs by more platforms in the gaming industry to enhance the gaming experience and bring the concept of the metaverse to reality.

Financial Independence through Web 3: New Opportunities for Creators

With the rise of decentralized platforms and the increasing use of cryptocurrencies, creators now have new opportunities to monetize their work without being restricted by traditional centralized gatekeepers.

One of the key benefits of Web 3 is that it enables anyone, anywhere in the world, to participate in the digital economy without requiring access to a bank account or a credit card. This has particularly important implications for individuals who previously faced barriers to entry into the traditional economy.

For example, young people can now earn money by playing video games, performing tasks, and participating in online content creation. This offers them a new path to financial independence and the ability to learn about the different ways to make a living in the Web 3 economy.

In addition to offering new opportunities for creators, Web 3 is also challenging traditional gatekeepers in several ways. For example, many exchanges now require users to provide personal identification to comply with regulations. However, the play-to-earn games and airdrops that are becoming increasingly popular in the Web 3 space provide alternative ways for people to get involved in the digital economy without having to go through centralized on-ramps.

The rise of Web 3 represents a significant shift in the way we think about and interact with digital content and the global economy. As more and more people embrace these new technologies and platforms, we will likely see a more inclusive and democratized future for digital creators and consumers alike.

Regulating Cryptocurrency: Navigating the Challenges

One of the key benefits of cryptocurrency and blockchain technology is its ability to be censorship-resistant. This means that individuals and organizations can securely and anonymously transact without fear of government intervention. This opens up a world of opportunities for individuals living in countries with restrictive governments, where access to the traditional financial system is limited or even non-existent.  

However, the censorship-resistant nature of cryptocurrency and blockchain technology also has its downsides. It provides a means for criminal organizations to operate beyond the reach of law enforcement. This has led to calls for regulation, and there is an ongoing discussion about how best to balance the need for security with the need for freedom.

However, while the front end of a crypto app can be blocked, the CLI (command line interface) can still be used, making it difficult to fully regulate. However, some countries, such as China, have placed a ban on crypto. While it remains to be seen if these countries will be successful in enforcing their bans, the fact remains that the regulation of crypto is becoming increasingly important.

Ethereum, for example, has a network of validators who can either include or exclude transactions from sanctioned addresses. This can lead to censorship or slower transactions, raising questions about the benefits and drawbacks of such practices. Bitcoin, on the other hand, has a different mechanism for censorship resistance, relying on large ASCI devices for proof of work. This makes it potentially harder to censor.

Despite these challenges, the potential for innovation in the field of cryptocurrency and blockchain technology is immense. The technology is still in its early stages and its full potential has yet to be realized. Regulation is inevitable, but it's important to ensure that it does not stifle innovation.

ABOUT ECONIA

Econia is a protocol that enables anyone in the DeFi space to access fast and secure order books. It is designed to offer much higher performance than existing on-chain order books while maintaining the same level of security and scalability.

Econia is powered by the Aptos blockchain, and its main purpose is to enable the creation of high-performance decentralized markets and exchanges. It supports both centralized and decentralized exchanges, and its features include low latency, high throughput, and a robust on-chain order book.

ABOUT PONTEM

Pontem is a product development platform that enables global financial inclusion through blockchain technology. Pontem is developing infrastructure and decentralized tools for the fastest and most scalable Layer 1 blockchain – Aptos

Pontem Wallet is a gateway to the Aptos ecosystem available for Chrome,  Firefox, and iOS. Pontem Wallet users can send and receive tokens, connect to decentralized applications, and explore the Aptos ecosystem.

As a result of its partnership with Aptos, Pontem has developed foundational dApps like the Move Playground IDE, Liquidswap AMM, and ByteBabel code translator.