What is Smart Contract 2.0?

The invention of smart contracts was a game changer in the blockchain and DLT space. It enabled the automation of processes and the creation of decentralized applications (dApps) on blockchain and DLT networks. This invention has made blockchain and DLTs expand their impact on different industries and not just be confined to the application of cryptocurrencies. It facilitated numerous applications and use cases for DLTs in supply chain management, decentralized autonomous organizations, voting systems, financial services, and more. In this blog, we will explore the potential of Smart Contract 2.0 and how it is revolutionizing the way we conduct business.

• A Brief on Smart Contract 1.0
• What is Smart contracts 2.0?
• Industry updates in Smart Contracts 2.0
• Looking Ahead: The Future of Smart Contract 2.0

A Brief on Smart Contract 1.0

Nick Szabo, a computer scientist and cryptographer known for his research in digital contracts and digital currency, first suggested the idea of smart contracts in 1994 as a mechanism to electronically facilitate, validate, and enforce contract negotiation or performance. Smart contracts automate various transactions, such as transferring assets between parties, without intermediaries. It is a powerful tool that can automate many transactions and reduce the need for intermediaries. Below, you can find a sample smart contract code written in Solidity, a programming language for writing smart contracts on the Ethereum blockchain.

pragma solidity ^0.8.0;

contract SimpleSmartContract {
    address payable owner;

    constructor() public {
        owner = msg.sender;
    }

    function transferOwnership(address payable newOwner) public {
        require(msg.sender == owner);
        owner = newOwner;
    }

    function() external payable {
        require(msg.value > 0);
        owner.transfer(msg.value);
    }
}

This simple contract allows anyone to send Ether to the contract address, and it will transfer the ether to the contract owner. If not properly coded, smart contracts can break the company that published them. One of the largest cryptocurrency thefts took place in August 2021. Digital currency valued at $613 million was stolen from Poly Network by hackers. They took advantage of a flaw in Poly Network’s smart contract. They further compromised the security of the company’s smart contracts by taking advantage of this security flaw. If you are launching a dApp, you should be aware of the most common smart contract vulnerabilities and how to prevent them.

What is Smart Contracts 2.0?

All technologies undergo improvements with time until it gets saturated or obsolete. The smart contract is a fairly new invention. Smart Contract 2.0 is the next generation of smart contract technology built on top of the original concept of smart contracts. Some of the key features of Smart Contract 2.0 are;

1. Increased capabilities: Facilitates the automation of more complex and sophisticated contract logic. It enables the creation of dApps that can perform a wider range of functions than simple asset transfer.
   
2. Enhanced scalability: It is more efficient and can handle many transactions. This is important for supporting dApps with high-volume transactions.
   
3. Improved security: Offers new security features such as formal verification, which allows for mathematical proof of the correctness of the contract code.
   
4. Interoperability: Allows different blockchain networks to communicate, enabling the cross-chain transfer of assets and information between different platforms.

The code below is an example of a smart contract 2.0 written in Solidity.

pragma solidity ^0.8.0;

contract SimpleSmartContract2 {
    address payable owner;
    mapping(address => uint) balances;
    event Transfer(address indexed from, address indexed to, uint value);

    constructor() public {
        owner = msg.sender;
    }

    function transferOwnership(address payable newOwner) public {
        require(msg.sender == owner);
        owner = newOwner;
    }

    function deposit() public payable {
        require(msg.value > 0);
        balances[msg.sender] += msg.value;
    }

    function transfer(address payable recipient, uint amount) public {
        require(balances[msg.sender] >= amount && amount > 0);
        balances[msg.sender] -= amount;
        recipient.transfer(amount);
        emit Transfer(msg.sender, recipient, amount);
    }
}

The above smart contract is a bit more advanced than the previous example. It allows a user to deposit ether and then allows to transfer it to any other user; it also uses a mapping to track the balance of each user. It also emits an event when a transfer is made for external listeners. This contract has more complex functionality than the previous example.

Industry Updates in Smart Contracts 2.0

Hedera Hashgraph is one of the pioneers in developing Smart Contracts 2.0. Hedera’s Smart Contracts 2.0 solution enables developers to process contracts with speed, scalability, and predictable fees. It makes Hedera a low-cost and highly scalable network for all EVM Solidity developers and enables new opportunities for programmable digital assets on Hedera.

Hedera Hashgraph greatly enhanced the performance metrics of its Smart Contracts Services with the launch of Smart Contracts 2.0. The company combined the knowledge from open-source EVM smart contracts developer communities, the Hashgraph consensus algorithm, and a new innovative approach to launch Smart Contracts 2.0.

Hedera’s smart contract 2.0 was able to scale the EVM with 13x faster transactions as compared to the Ethereum mainnet. It also offers complete finality of transactions within seconds. Additionally, its smart contract 2.0 is resistant to frontrunner attacks, where the validator can prioritize some transactions over others. Hedera’s smart contract 2.0 makes it a perfect ecosystem for financial markets and DeFi projects.

Due to its capacity to incorporate elements of the Hedera Token Service and other Hedera services, Smart Contracts 2.0 have increased programmability in addition to the improvements in efficiency. As of right now, Hedera smart contracts can call native HTS functions from within them, combining the flexibility and cost-effectiveness of Hedera Token Service with the arbitrary deterministic logic of Solidity smart contracts. They support burning, minting, associating, dissociating, and transferring on HTS.

Looking Ahead: The Future of Smart Contract 2.0

Smart contracts 2.0 represent a major leap forward in blockchain technology, offering new capabilities and possibilities that were not previously possible. With features such as off-chain computation, increased scalability, and improved security, these smart contracts can revolutionize industries and change the way we conduct transactions. As technology continues to mature, it is important to stay informed about the latest developments and consider the potential impact on business and society. The future of smart contracts 2.0 is certainly something to keep an eye on, and we can expect to see exciting new applications and use cases emerge in the coming years. With all this in mind, it is clear that smart contracts 2.0 will significantly impact many aspects of our lives, and it will be interesting to see how the industry develops and how smart contracts 2.0 will be utilized in the future.