QRC20 secure smart contracts have significant advantages over an ad hoc approach, including ease of deployment and interoperability. These tokens will become a key component for Overledger’s blockchain-based payments system designed for corporate and institutional use, writes Martin Hargreaves, Quant’s Chief Product Officer.
7 March 2022
Writing smart contracts is often a specialist and risky endeavour. It requires blockchain developers to master niche programming languages and ensure their subsequent code is resilient against attack. Poorly coded smart contracts have contributed to massive fraud and hacking losses, widespread across Ethereum. This problem continues to grow, and in 2021, cryptocurrency crime amounted to a whopping $14B*. Ethereum discourages sub-par smart contracts on its network, and it’s best practice for these to be verified with independent third parties before deployment to mainnet. However, even when this occurs, inferior smart contracts have slipped through. The external verification process can also add substantial cost and development time to blockchain projects.
Overledger and smart contract creation
Quant’s Overledger streamlines the process of creating secure, enterprise-grade smart contracts. The system leverages a user interface to choose preset attributes and functionality for the smart contract. Users can then use a REST/JSON API to conduct various payment operations through Overledger’s API. The resulting smart contracts have been rigorously tested with Quant’s team of PhDs and external experts to ensure that they are tamper-proof, resilient and production ready.
QRC20 smart contracts
Overledger’s 2.1.7 release launched the smart contract capability as a QRC20 standard for commercial stablecoins and payments. The QRC20 standard is based on Ethereum’s ERC20 rules for fungible tokens. QRC20 functions like its Ethereum standard counterpart, with the same definitions and structure for its smart tokens. QRC20 enables users to create tokens, approve them, decide how they are transferred, provide information on account balances, and set limits to the total supply.
While ERC20 tokens are designed for deployment on the Ethereum network, QRC20 tokens will be blockchain agnostic and work across multiple distributed ledger technologies (DLTs). They can be implemented on-chain (public DLTs) or off-chain (private DLTs) to enable complex operations between different DLT technologies such as cross-chain atomic swaps and multi-ledger tokens. Overledger’s DLT gateway uses an innovative and standardised REST API based on internet architecture and protocols to connect different DLTs and blockchains.
Similarly, instead of using cryptocurrency ether (ETH) as gas to conduct transactions or execute contracts, Overledger transactions are powered by the QNT utility token with seamless fiat payment options available for corporate customers.
It is important to note that Overledger is a DLT gateway and doesn’t store data or information. Instead, it works as an abstraction platform that orchestrates interactions between various ledgers. All the data is encrypted at the source and cannot be accessed or manipulated. In this way, Overledger helps facilitate a highly secure and decentralised blockchain system, catered for the security needs of corporate clients.
Overledger’s blockchain payment system
The first version (tier one) of Overledger enables users to create smart tokens that can perform basic payment capabilities such as making a credit or debit transfer or pre-approving a debit transfer. These smart contracts can then be deployed on the Ethereum Ropsten testnet.
This functionality allows straightforward person-to-person transactions, for example, as the core of a virtual currency for a reward platform, game or virtual marketplace.
Tier two will add the ability to mint and burn smart tokens that function as programmable money. Users will also be able to add secondary account owners, for example, joint or business accounts and carry out batch payments. This use case allows fintechs and projects to create open stablecoins and control the supply to target individuals, groups and companies as their user base.
Tier three will customise Overledger for use by financial institutions like retail banks. Contract owners (banks) will have an account override feature that provides full control for account balances. They can also set up whitelisting for an account, enabling the contract owner to control who can hold smart money and interact with it as a Know Your Customer (KYC) or Anti-Money Laundering (AML) control.
This use case builds on tier two, enabling fintechs and institutions to create stablecoins to facilitate regulatory compliance functions (e.g., freezing of illegal funds). Financial institutions can also set up a compliant customer onboarding process by only adding customers to the whitelist once KYC/AML checks are passed. Tier four will allow escrow or earmarking of funds without hiding the beneficial owners of funds. It will also enable more complex approvals, for example, four-eyes or six-eyes payment workflows, to protect high-value payments. The most highly functional corporate payment and approval flows could be facilitated, such as internal accounting at a large corporate entity. Enterprises could use stablecoins to carry out complex transactions where funds are held in escrow, requiring four-eyes approval (e.g., sizable purchases, acquisitions and FX transactions).
This functionality will be added to the Overledger API with the ability to create payment triggers with minimal technical effort or blockchain engineering knowledge required.
The initial releases of Overledger’s smart contracts will be on Ethereum. Quant is translating these smart contracts for other smart contract-capable and enterprise blockchains, including Hyperledger Fabric, R3 Corda, JPM Quorum and other open blockchains.
*Reuters, 6 January 2022, “Crypto crime hit record $14 billion in 2021, research shows”