9. Ethereum Transactions and Smart Contract

Overview

• Data such as account balances aare not stored directly in the blocks of the Ethereum blockchain. Only the relevant hash values are stored directly in the blockchain.
• Ethereum use the Account/Balance Model
  • Simplicity: more intuitive - smart contract keep track of states to perform different tasks
    • UTXO's stateless model force transactions to include state information so that complicates the design of the contracts
  • Efficiency: only needs to validate that sending account has enough balance

 

Ethereum Account

Ethereum Account

• Account is made of a cryptographic pair of keys: public & private
  • help prove that a tx was actually signed by the sender
• Private key is used to sign tx
• User hold private keys - the funds are always on Ethereum's ledger

 

Two Types of Account

EOA (Externally-owned account)

• controlled by anyone with the private keys
• creating account costs nothing
• can initiate transactions
• tx btw EOA can only be ETH/token transfers
• made up of a cryptographic pair of keys: public and private keys that control account

Contract Account

• a smart contract deployed to the network, controlled by code
• creating a contract has a cost because it's using network storage
• can only send tx in response to receiving a tx
• tx from EOA to contract account can trigger code which can execute different actions
• don't have private keys. instead, controlled by the logic of the smart contract code

Both account types have the ability to
- recieve, hold, send ETH & tokens
- interact with deployed smart contracts

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Ethereum Transactions

Transactions

• cryptographically signed instructions from accounts.
  • account will initiate a tx to update the state of the Ethereum network.
  • the simplest tx = transferring ETH from one account to another
• refers to an action initiated by an EOA
• Tx which change the state of the EVM need to be boadcast to the whole network.
• Any node can broadcast a request for a tx to be executed on the EVM
  • after this, validator will execute the tx and propagate the resulting state change to the rest of the network.

Information included in Tx

• recipient: receivng address
  • if EOA: transfer value / if contract account: execute the contract code
• signature: identifier of the sender
• nonce: sequencially incrementing couter which indicates the tx # of the account !== nonce in PoW
• value: amount of ETH to transfer (in Wei: 10^9 wei = 1 ETH)
• data: optional field to include arbitrary data
• gasLimit: maximum amount of gas units that can be consumed by the tx
• maxPriorityFeePerGas: maximum amount of gas to be included as a tip to the validator
• maxFeePerGas: maximum amount of gas willing to be paid for the tx
  • inclusive of baseFeePerGas and maxPriorityFeePerGas

 

Types of Transactions

Regular Transactions

• Transaction from one account to another

Contract deployment transactions

• Transaction without a 'to' address, where the data field is used for the contract code

Executioin of a contact

• Transaction that interacts with a deployed smart contract
• 'to' address is the smart contract address

 

Gas

Transactions cost gas to execute

• simple transfer tx = require 21000 units of gas
• Gas = Gas Fee * Gas amount = (baseFeePerGas + maxPriorityFeePerGas) * gas amount
  • base fee will be burned to manage supply for price (to avoid over-supply)
  • validator keeps the tip

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Smart Contract

Smart Contract

• computer programs stored on the blockchain
• terms of an agreement into computer code that automatically executes when the contract terms are met.

 

Properties of Smart Contracts

Automatic execution

• outcome is automatically executed when the conditiosn are met -> no need to wait for a human to execute
• 👉 Smart contracts remove the need for trust.

Predictable outcomes

• human can interpret a traditional contract in different ways -> lead to failure
• Smart contracts remove the possibility of different interpretations
  • execute precisel based on the conditions written within the contract's code
• given the same circumstances, the smart contract will produce the same result

Public record

• Smart contract is useful for audits and tracking because they're on a public blockchain
• anyone can instantly track asset transfers and other related information.

Privacy protection

• Smart contract can protect your privacy
• Ethereum is a pseudonymous network = tx are tied to a unique cryptographic address, not your identity

Visible terms

• You can check what's in a smart contract before you sign it.
• public transparency of the terms in the contract means that anyone can scrutinize it

 

Use cases of Smart contract

Smart contracts can do essentially anothing that other computer programs do.

• stablecoins, NFT, currency exchange, decentralized gaming ...

 

Smart Contracts Language

• Ethereum Smart contracts can be programmed using relatively developer-friendly languages

Solidity

• Object-oriented, high-level language for implementing smart contracts
• similar with C++
• Statically typed (the type of a variable is known at compile time)
• Supports: Inheritance, Libraries, Complex user-defined types

Vyper

• similar with Python
• Stroing typing
• Small and understandable compiler code
• Efficient bytecode generation
• Has less features than Solidity with the aim of making contracts more secure and easier to audit.

Remix

• Remix IDE allows developing, deploying, and administering smarts contracts