Cardano ecosystem set to expand with custom-built sidechains

January 13, 2023 Coin Telegraph

Basho

The toolkit will allow for creators of sidechains to choose their own consensus mechanism and other application-specific features, whilst inheriting the security of the main chain.

Input Output Global (IOG) — the team behind the Cardano ecosystem — will release a software toolkit in late Jan. 2023 that will enable developers to deploy custom-built sidechains on Cardano aimed at improving the ecosystem.

The news was announced by IOHK — a blockchain engineering company founded by Charles Hoskinson and now known as IOG — on Jan.12, which also attached the official technical documentation for the sidechain toolkit.

⛓️ The #Cardano sidechain toolkit was previewed at #IOScotFest, and we’re happy to share the first iteration is out now.

Here’s the lowdown on this exciting new project! https://t.co/Ny9tQuJh5K
— Input Output (@InputOutputHK) January 12, 2023

IOG developers have already used the toolkit to construct an Ethereum Virtual Machine (EVM)-compatible sidechain public testnet as a “proof of concept,” and when the audit is complete, anyone will be able to deploy decentralized applications, create smart contracts and move tokens between different testing chains.

The toolkit will also enable the creators of the sidechains to choose their own consensus mechanism in addition to other application-specific features.

*A diagram of how value and data will be transferred between the Cardano main chain and custom-built sidechains. Source:* *Cardano.org.*

A sidechain is an independent blockchain that works adjacent to the parent blockchain, often referred to as the mainnet. Sidechains often attempt to add scalability to the mainnet which often prioritizes decentralization and security.

IOG hopes the sidechain development will “pave the way for mass adoption” on the Cardano ecosystem and “hopes to see a family of Cardano sidechains and partner chains emerging” in the near future.

Among the “partner chains” Hoskinson would like to see on Cardano is Solana, having recently stated on a Dec. 10 Ask Me Anything call that Cardano could leverage Solana’s network speed whilst Solana benefits from Cardano’s infrastructure and security.

Cardano community pumped

The news has Cardano fans pumped, with one member of the community hoping that Cardano experiences a similar price pump similar to that of Ethereum 2020-2021 when many layer-2 sidechains and utility tokens were rolled out.

2023 is the Year of #Cardano sidechains

- Midnight privacy sidechain
- Sidechains Toolkit EVM compatible
- Milkomeda, first Cardano sidechain
- ...more to come

Do you remember what happened when people started to build sidechains/tokens on Ethereum?
Take that and make it x10. https://t.co/n8KWCX2SVh
— Cardano Hieronymus (@CardanoHumpback) January 12, 2023

Another member of the Cardano fanbase called the toolkit deployment a “great move” that it will “spread the usage of Sidechains for Cardano” in the months to come:

Great move by @InputOutputHK I believe this help spread the usage of Sidechains for Cardano which is a good strategy if it evolves to use mithril / state proofs

As a core contributor to @Milkomeda_com we will continue to lead and hopefully support others to join https://t.co/auqp2TkEg1
— nicoarq (@NicoArqueros) January 12, 2023

However, IOG noted that the toolkit won’t serve as a “complete solution.”

“There are some known areas for improvement, like the bridge experience, SPO rewards mechanism and the security model. All these areas will be worked on with the community as we go – carefully and steadily – collaborating for feedback, thoughts and recommendations.”

In addition to sidechain improvements, the protocol will soon introduce parallel accounting styles as part of its "Basho phase" to improve interoperability in the Cardano ecosystem, according to the roadmap.

This isn’t the first sidechain solution that IOG has integrated on Cardano too, having already built a more basic EVM-compatible sidechain in July 2022 to get the sidechain development rolling.

Cardano also underwent its most significant hard fork — the Vasil upgrade — in September 2022, which has been said to make smart contract deployment more efficient and enable decentralized applications to run at lower costs.

The price of Cardano’s token, ADA is currently $0.3297, up 19.11% over the past week.

Bank of England opens applications for ‘proof of concept’ CBDC wallet

December 12, 2022 Coin Telegraph

Bank of England

The bank requires the wallet to execute basic features such as transacting value and requesting payments and set its budget at nearly $255,000.

The Bank of England (BOE) is seeking a “proof of concept” for a wallet that will be able to hold a Central Bank Digital Currency (CBDC).

On Dec. 9, the BOE posted a request for applications on the United Kingdom government's Digital Marketplace, a service where government organizations can solicit work for digital projects.

Simple guidelines for what the proof-of-concept wallet would have to achieve were outlined, with the wallet seemingly only needing to offer basic functionality such as a signup process, a way to update details, and show balances and transactions amongst other requirements such as displaying notifications.

Of course, the wallet also has to demonstrate it can be loaded and unloaded with a CBDC along with being able to request peer-to-peer payments through an account ID or QR code and can be used to pay online with businesses.

Key deliverables for the project are to create a mobile app for iOS and Android, a website for the wallet, an example merchant website and the back-end infrastructure to serve the wallet website and apps while also storing user data and transaction history.

“No work has been done” on a CBDC sample wallet the bank said, and it “will not develop a user wallet itself.”

The stated aims of the project are to “explore the end-to-end user journey” as the BOE seeks to “sharpen functional requirements for both the Bank and private sector” along with making the CBDC product “more tangible for internal and external stakeholders.”

A budget of $244,500, or 200,000 British pounds, for an expected five-month project was set for the proof-of-concept with the BOE slated to evaluate five suppliers. There were no applications at the time of writing.

The BOE has previously stated it is seeking to launch a CBDC by at least 2030.

The sample wallet is supportive of the BOE’s work as part of Project Rosalind, a joint experiment it’s carrying out with the Bank of International Settlements (BIS) Innovation Hub aimed at creating prototypes of an application programming interface (API) for a CBDC. The proof-of-concept wallet will also be test implemented with the Rosalind API.

On Dec. 9, the Chancellor of the Exchequer, Jeremy Hunt, shared a number of reforms to Britain’s financial services sector which included consulting on proposals for the establishment of a CBDC.

Zksync Devs Plan to Launch Layer 3 Scaling Solution Called ‘Opportunity’ in Q1 2023

October 29, 2022 Bitcoin.com

SWIFT partners with Chainlink for cross-chain crypto transfer project

September 29, 2022 Coin Telegraph

blockchain adoption

The project will connect SWIFT's network to nearly every blockchain to allow traditional finance players access to digital and traditional assets on the one network.

Interbank messaging system SWIFT has partnered with price oracle provider Chainlink (LINK) to work on a proof-of-concept (POC) project which would allow traditional finance firms the ability to transact across blockchain networks.

Chainlink co-founder Sergey Nazarov announced the project at its SmartCon 2022 Conference in New York on Sept. 28 alongside SWIFT strategy director Jonathan Ehrenfeld Solé.

SWIFT is using the Cross-Chain Interoperability Protocol (CCIP) in an initial proof of concept.

CCIP will enable SWIFT messages to instruct on-chain token transfers, helping the SWIFT network become interoperable across all blockchain environments.https://t.co/8GOBNhzwCk pic.twitter.com/Pvm0Cex45e
— Chainlink (@chainlink) September 28, 2022

At the conference, Solé said there is “undeniable interest from institutional investors into digital assets” adding these traditional finance players want access to digital and traditional assets on one platform.

The POC utilizes Chainlink’s Cross-Chain Interoperability Protocol (CCIP) allowing SWIFT messages to instruct token transfers across nearly every blockchain network which, according to Nazarov, will accelerate adoption of distributed ledger technology (DLT) blockchains across capital markets and traditional finance.

The SWIFT interbank messaging system is the most widely used platform for traditional cross-border fiat transactions, connecting over 11,000 banks around the world. In August the system recorded an average of 44.8 million messages per day.

However, transactions on SWIFT's network can take several days to complete and the company has also been exploring blockchain and DLT technology and central bank digital currencies (CBDCs) to facilitate faster payments.

Chainlink added this collaboration with SWIFT allows financial institutions to gain blockchain capability without replacing, developing, and integrating new connectivity into legacy systems, something it said would require substantial modifications with an “exceptionally high” cost.

Mastercard CEO Michael Miebach said at a panel session in May on CBDCs that he doesn’t expect SWIFT to exist in five years, likely due to the rising competition from CBDCs for cross-border payments and settlements.

Mastercard later clawed back the statement, noting that Miebach simply meant that SWIFT's operations will continue to evolve from its current form.

Central Bank of Sri Lanka completes proof-of-concept KYC platform

October 28, 2021 Coin Telegraph

Coin Telegraph

Sri Lanka’s recent economic uncertainty seems to be the driving force behind its interest in cryptocurrency and the government's new exploration into KYC technology.

A report presented to Sri Lankan central bank governor Ajith Nivard Cabraal on Monday detailed the results of a now-completed Know-Your-Customer, or KYC, proof-of-concept project.

The project Sri Lanka's central bank, also known as the CBSL, included 3 collaborators who developed the Blockchain-based KYC platform concept. The KYC platform was also tested by the CBSL and 10 regional and international commercial banks, including Amana Bank, Bank of Ceylon, Cargills Bank, Commercial Bank of Ceylon, DFCC Bank, Hatton National Bank, HSBC, National Development Bank, People’s Bank and Standard Chartered Bank. The team initiated the project in July 2019, and completed development and testing of the experimental platform on June 10 of this year.

“We invited software companies to develop a shared KYC PoC free of charge, as a national project. The response to join this project, both locally and internationally, has been extremely heartening and we are happy to say that we have finalised selecting suitable applicants to begin development shortly,” stated Central Bank Director Payments and Settlements D. Kumaratunge.

The project was part of a larger Sri Lankan government initiative, titled Vistas of Prosperity and Splendor, under the country's National Policy FrameWork. As reported by Crypto Daily UK, the Minister of Project Coordinating and Monitoring Namal Rajapaksa, proposed a new “Crypto Committee” to oversee the exploration into the possibilities of using blockchain and cryptomining into Sri Lanka’s plans to create a more digital society.

Like many countries around the world, Sri Lanka has suffered serious economic impacts due to the ongoing global pandemic. Government statistics suggest that the country is now recovering from its -16.4 GDP growth back in Q2 2020. It has lost over $400 million in income from the tourist industry, however, and $1.3 billion from overseas employment during the pandemic.

Sri Lanka’s recent economic uncertainty appears to have been the driving force behind its interest in cryptocurrency and the government's new exploration into KYC technology. The volume of the Sri Lankan Rupee on the peer-to-peer exchange Paxful went through the roof in 2021. The country’s spike in cryptocurrency trading and investing led the Sri Lankan government to issue a warning to the public regarding the hazards of investing in cryptocurrencies.

The Sri Lankan Government's crypto-centric exploration echoes the regulatory actions of other governments around the world. A tax provision in U.S. President Joe Biden’s stalled Infrastructure bill has worried many in the U.S. blockchain industry. Also reported by Reuters in July, the EU announced the forming of a new agency to crack down on money laundering and to increase transparency in cryptocurrency.

The CBSL has taken a stronger regulatory steps in recent years since it had been put on the G7’s intergovernmental Financial Action Task Force, or FATF “Grey List” in 2016 for non-compliance in 4 areas: International Cooperation, Supervision, Legal Persons and Arrangements and Targeted Financial Sanctions on Proliferations. The country was taken off FAFT’s grey list in October of 2019.

Proof-of-Concept