SysCoin (SYS)

EVM rollups for Bitcoin

Basics

• Based in: UAE since 2022.
• Started in / Announced on:
• Testnet release:
• Syscoin mainnet launched in 2014 as a fork of Litecoin.
• Mainnet release of Rollux: June 28, 2023

History

• Is signaling for the implementation of SegWit (3-2017)
• Used to be a decentralised marketplace. Pivoted a bunch of times. It was the first protocol to combine Bitcoin's Proof-of-Work network with the flexibility of EVM-equivalence within a modular architecture that fully supports rollups with a native data availability protocol.

Audits & Exploits

• Bug bounty program can be found [insert here].

Governance

Treasury

• From a commissioned Messari report (18-3-2024):

"Base chain block rewards: At launch, 96.25 SYS was minted for each base chain block, with that amount decreasing by 5% yearly and an additional yearly reward halving. Notably, 90% of base chain block rewards go to consensus participants. Of the 90%, 25% go to miners, and 75% go to Sentry nodes. The remaining 10% is allocated towards decentralized governance that functions the same as Dash governance. Governance funds are emitted in monthly superblocks to fund proposals ratified by Sentry node voters.

Just prior to the release of NEVM, in October 2021, the Syscoin Foundation proposed a Treasury Fund to governance participants. After the proposal passed, 100 million SYS tokens (~14.8% of the total circulating supply at that time) were minted. They have been allocated to fund the continued development of the Syscoin network at the Syscoin Foundation’s discretion. A breakdown of the treasury allocations includes:

• 65 million SYS (~9.7% of the total circulating supply) has been allocated towards general core team funding and project onboarding/integrations.
• 35 million SYS (~5.2% of the total circulating supply) has been allocated towards future VC/private funding rounds."

Token

Launch

• From a commissioned Messari report (18-3-2024):

"The project had a public token sale in 2014, selling 15% of the initial token supply for over 1,500 BTC, worth around $300,000 at the time. However, the BTC raised during the sale was stolen by the escrow agent, Ryan Kennedy, the former CEO of the cryptocurrency exchange Moolah. The funds were not recovered. Despite this obstacle, the project team continued developing Syscoin and successfully delivered the product reflected in its initial proposal."

Token Allocation

• Public token sale: 304,222,858 SYS ($760,252 USD)
• Development, marketing, and operations: 40 million SYS ($99,960 USD)
• Bounties and rewards: 20 million SYS ($49,980 USD)

Inflation

• From a commissioned Messari report (18-3-2024):

"Upon launch of the network’s mainnet in 2014, SYS initially had a max supply of 2 billion tokens. More recently in 2021, the SYS supply has since been updated with the integration of EIP-1559, is currently uncapped, and is estimated to have an inflationary rate of 1.25% per year."

Utility

Syscoin’s native utility token, SYS, is used for payments, gas fees, and network security (Sentry node staking and miner block rewards).

Burns

• Has EIP-1559 implemented.

Technology

• Whitepaper or docs can be found [insert here].
• Code can be viewed [insert here].
• Consensus mechanism: merge-mining (18-3-2024) and OP stack
• Algorithm:
• Virtual Machine: NVEM
• Development language used:

Transaction Details

• Capacity (TPS):
• Latency:

How it works

• From a commissioned Messari report (18-3-2024):

"The Syscoin L1 itself serves as the infrastructure, with SYS also serving as the native coin of Rollux. Rollux uses Syscoin’s general-purpose data availability solution called Proof-of-Data Availability (PoDA) to link to Syscoin L1, which is supported by Bitcoin miners. Through the use of zero-knowledge proofs and a ZK-based light client for SYS, zkDA was established with the goal of extending PoDA to other chains.

Additionally, unlike a traditional UTXO network such as Bitcoin, users can mint fungible and non-fungible Syscoin Platform Tokens (SPTs) on the Syscoin base chain, which are UTXO-based tokens. The base chain also includes Taproot functionality identical to that of Bitcoin, and as such, Bitcoin-style ordinals can be created and transferred.

Syscoin NEVM is an Ethereum Virtual Machine (EVM) chain where smart contracts can be created and deployed. NEVM works in sync with Syscoin’s base chain layer. This is achieved by pushing the tip hash generated on the NEVM into Syscoin’s base chain blocks. Users on NEVM can mint EVM-compatible tokens, execute smart contracts, and bridge to the ecosystem’s L2 EVM rollup, Rollux. Any token standards supported by Ethereum are also supported by NEVM (ERC-20, 721, 1155, etc.).

The NEVM relies on the PoW base chain for consensus and settlement. Block hashes from the NEVM are included in base chain blocks. By interlinking these chains, Syscoin provides a single Layer-1 that leverages traditional PoW network security and Ethereum’s smart contract capability. Of note, SYS is the native coin of both chains, and its supply can be automatically bridged between both chains by users via a mechanism that uses SPV proofs to mint/burn.

Syscoin Sentry Nodes are incentivized full nodes for both the base and NEVM chains, operating on the same machine and providing a second layer of services to the network. Apart from recording and hosting full copies of the network’s state, Syscoin Sentry nodes provide a decentralized means of finality through multi-quorum chainlocks via BLS signatures. The Syscoin team intentionally designed this structure to stay true to their core belief in PoW blockchains. Rather than relegating back to a pure PoS system, Syscoin uses these nodes for finality through a carefully thought-out process of chainlocks."

Fees

Transaction fees across the base chain and NEVM are sent to miners and Sentry node operators in a 50/50 split. Of note, the project team has implemented EIP-1559, introduced by Ethereum in 2019, which enforces a fee-burning mechanism for gas fees paid by users and/or smart contract deployments.

Upgrades

• From a commissioned Messari report (18-3-2024):

"Syscoin progressed by revamping its platform and product offerings by developing Syscoin 2.0 and 3.0 between 2017 and 2019. Within that period, the team introduced various technical updates, such as transitioning the network’s Scrypt-based chain to SHA-256 with merged mining, integrating customized Sentry nodes, and developing the Zero-confirmation Directed Acyclic Graph (Z-DAG) scalability upgrade.

In May 2019, the Syscoin project team announced the launch of the Syscoin 4.0 mainnet which would include a number of upgrades including Taproot. These events led up to the introduction of Syscoin’s Network-Enhanced Virtual Machine (NEVM), brought live to mainnet on Dec. 6, 2021, in version 4.3. Immediately afterwards, Syscoin Foundation began focusing on the next steps: enshrining data availability within the Syscoin protocol."

Merge Mining

• From a commissioned Messari report (18-3-2024):

"Currently, over 50% of the Bitcoin mining hash power is used to mine Syscoin blocks, as can be seen by comparing the Bitcoin and Syscoin hashrate charts."

Staking

• From a commissioned Messari report (18-3-2024):

"Sentry nodes need to stake 100,000 SYS to participate in supporting network functionality. Sentry node operators to keep their nodes running and their collateral in place by rewarding additional SYS. The rewards are doled out first after one year and then reach full maturity after 2.5 years, which brings a 100% bonus over the base rewards. Currently, nearly half of Syscoin’s ~2,700 Sentry nodes are operating at full maturity (over 2.5 years)."

Scaling

• From a commissioned Messari report (18-3-2024):

"Z-DAG is a throughput scalability solution created by Syscoin’s Lead Developer, Jag Sidhu. This allows transactions broadcasted to the network to be relayed to their destination before requiring verification, providing peer-to-peer “fast transactions” or “micro transactions” of SPTs, including the native token, SYS, on the Syscoin base chain."

Data Availability

• From a commissioned Messari report (18-3-2024):

"As of March 23, 2023, the Syscoin base chain also provides a native data availability protocol and associated fee market called Proof of Data Availability (PoDA). PoDA is designed to support any kind of rollup, including optimistic and ZK-based ones, and it can be used by both EVM and non-EVM systems. While PoDA serves the same basic purpose as Ethereum’s proto-danksharding (EIP-4844), it differs in regards to how data is stored, presented, and pruned, as well as in how fees are calculated. For example, PoDA uses Keccak cryptography instead of KZG polynomial commitments required in Ethereum’s danksharding design."

Roadmap

• Can be found [Insert link here].
• According to the Syscoin 4.0 Whitepaper, one of Syscoin’s main focuses is developing more scaling solutions.

Usage

• From a commissioned Messari report (18-3-2024):

"In terms of network activity, Syscoin still has a significant road to cover compared to its peers. Active wallets on the Syscoin NEVM total just over 40,000, and over 200 tokens have been launched/created on the network. To give a frame of reference, Ethereum has over 219 million wallets. Syscoin’s L2, Rollux has seen more network activity, averaging over 50,000 daily transactions in the last month."

Competition

L2s on Bitcoin, DA layers.

Team, Funding and Partners

Team

• Full team can be found [here].
• Syscoin Foundation
• SYS Labs
• Jagdeep Sidhu; "In 2015, Lead Core Developer and now Foundation President Jagdeep Sidhu joined the project."
• Willy Ko

Funding

• From a commissioned Messari report (18-3-2024):

"The project had a public token sale in 2014, selling 15% of the initial token supply for over 1,500 BTC, worth around $300,000 at the time. However, the BTC raised during the sale was stolen by the escrow agent, Ryan Kennedy, the former CEO of the cryptocurrency exchange Moolah. The funds were not recovered. Despite this obstacle, the project team continued developing Syscoin and successfully delivered the product reflected in its initial proposal."

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