Shiden Network (SDN) is a project built on top of the Kusama network with the aim of creating a multi-chain decentralized application layer. To do this, Shiden Network would have the ability to execute smart contracts compliant with EVM (via Solidity) and Web Assembly (WASM), which means enormous potential for advanced dApps.
CIt should be noted that Shiden Network is built to function within the parachains of Kusama, allowing you to have all the power that the Substrate framework can offer. From a high scalability, fast confirmation times, even interoperability with Substrate-based networks (as Polkadot) and great expandability.
With this commitment, Shiden Network seeks to make its way as one of the great DeFi projects of the Kusama ecosystem and, so far, its good work has paid off.
However, it must be clarified that Shiden Network is a project in a very early stage of development and, in fact, it is only the first step in the construction of a much larger structure, as we will see below ...
Shiden Network, the test network for Astar
An important point to keep in mind when we talk about Shiden Network, is that this project is just the first step of a much bigger project: Astar (formerly known as Plasm). This means that Shiden functions as a "canary network" or "testnet" for Astar, whose goal is to provide a scalable and decentralized application development platform that defines and makes Web 3.0 a reality.
Astar is a protocol that works on the Polkadot network cmade up of all those functions that have been extensively tested within the Shiden Network. Basically we can say that Astar is a superset of stable functions from Shiden, the latter being the space for rapid development of the protocol. A place so that all those interested in using the new functions of the protocol can do it before anyone else.
It is worth noting that this working system is not uncommon within the Polkadot - Kusama duet, especially if we take into account that Kusama is Polkadot's Canarian network. That being said, we can also understand why Projects like Polkadot-Kusama and Astar-Shiden have so many things in common: in the end, they are nothing more than a more advanced version and the future of their counterpart.
How does Shiden Network work?
Now that we know that Shiden Network and Astar are practically the same project, with the same motivations, it is worth noting their differences in their development cycles. Shiden goes much faster than Astar but, saving that difference, we can examine both projects and their operation from the same perspective.
Multilayer network
Shiden Network relegates its operation to a decentralized network system that works as a multilayer network. The genesis of the Shiden Network lies in Layer 1, on which it executes all the logic necessary to maintain the stability and security of the network. This layer is written and developed entirely by Substrate and is deployed on a Kusama parachain. This means that Layer 1 is a public, permissionless blockchain that anyone can join.
Just below Layer 1 are Layer 2. These child layers function as "child layers" of Layer 1 and can be used to develop different modules that allow these child layers to be used to provide access to unique features. For example, you can take a Layer 2 and develop a module that interconnects Ethereum applications with the Shiden Network, through a bridge or bridge.
Of course, the capacity of these Layer 2 is practically infinite, since they can implement even complete protocols (like the case of Plasma) or virtual machines (like the Optimistic Virtual Machine or OVM) on them. This means that Layer 2 have the necessary flexibility to become true expansion spaces so that Shiden can offer what it promises: to be a multi-chain application layer, where the generation of a dApp in Shiden can immediately allow you to offer services in other networks that are connected to the network.
A good example of the potential of this capacity can be: develop a DeFi protocol on Shiden Network, join said dApp to the necessary modules in Layer 2 within the network and thus have the ability to interact directly with Ethereum, Polygon, Binance Smart Chain, and even Bitcoin, without having to write an additional line of code. It is the maxim of: one development, multiple platforms. And that is precisely a potential that practically no current blockchain has.
OVM, the brain behind Shiden Network
Of course, to orchestrate all this it is necessary to have a very powerful brain and that is precisely the function of the OVM (Optimistic Virtual Machine). LMO is actually a set of standards that streamlines and unifies different Layer 2 protocols within the Shiden Network. Thanks to it, developers only have to worry about clearly expressing the logic of their applications, and the OVM will be in charge of enforcing these rules at all times.
In this way, the applications and smart contracts deployed in the Shiden Network can be created and executed through the dedicated client application called L1 Adapter, a scheme that many blockchain developers are used to, since it is the model that we can see, for example , in applications deployed in the Ethereum Plasma (ETH) scalability protocol. And, although it is a complex development model, for application developers, this system greatly facilitates the implementation and deployment of multi-chain applications.
All this abstraction carried out by the OVM is possible thanks to Substrate which offers the necessary tools to handle these types of scenarios, since this work approach (that of multiple networks subdivided with their own rules and consensus) has been the backbone of its development.
In simple words: Substrate is made for this and, therefore, it offers these types of tools natively, which makes it easier for developers, something that OVM takes full advantage of.
Lockdrop, incentivizing network actors
Lockdrop, is the name given to the economic incentive mechanism low risk that is used within Shiden. This mechanism uses the concept of "opportunity" instead of legal tender (or assets) as collateral within the network. The idea is that this mechanism is used to issue tokens with monetary value.
The mechanism is quite complex at a mathematical level (Shiden's whitepaper has a complete explanation of it), but basically, the lockdrop can be seen as a fixed-term staking made by a holder of Shiden tokens (SDN) in a proportion according to their level of participation within the system. Thanks to the tokens obtained, they have the "opportunity" to participate in the network, either by serving as a node within the network or by carrying out operations within it.
This model is perfect considering that Kusama (the network where Shiden Network works) uses the NPoS (Nominated Proof of Stake) consensus protocol for its funtionability. Thus, the "opportunity" holders can choose or be chosen as validators of operations within the Shiden Network and ensure the proper functioning of the network at all times.
dApps Rewards or dApps Staking
dApps Rewards or dApps Rewards, is a mechanism that rewards smart contract developers or administrators in a
continuously. When the Shiden network is used and new blocks are generated, the system releases the reward for the block generated and 50% of it is directed to the developers of the dApps deployed in the network. So Shiden Network pays dApps developers to deploy their applications on the network. Or rather, it has created an incentive system within the network with the aim of helping dApps so that they can be developed and financed.
Of course the system is not universal, as this would make bad actors want to take advantage of it in order to get free money. So to avoid this problem, Shiden Network has designed an interesting structure. First, an administrator or operator of the smart contract of the dApp must be chosen. This operator is the one who will receive the rewards on behalf of the dApp.
Now, to receive that reward, the community has its final word by voting or nominating the dApp operator for the reasons it deems necessary. This nomination or voting system works thanks to the lockdrop system, so to nominate, you must deposit money into the Shiden network, get "opportunity" tokens and use them to make your nomination. Operators will receive the rewards from the network based on the number of votes they receive, and if they are not nominated, they will receive nothing.
Thanks to this system, the Reward dApp works as a recognition for those dApps that offer useful and quality services to the community. It is the award for good work, a show of support and, certainly, a very interesting way to financially incentivize the development of dApps in a network. And on the other hand, nominators also receive a small incentive, in the form of a variable APY, for voting in favor of those dApps that add value within the community.
The Token Shiden (SDN)
The Shiden token (SDN) in any case, is a token of the utility type within the network. Its main function is to allow the lockdrop mechanism and incentives for all network participants. In fact, we can define the functionalities of the token within the following four lines:
- Staking for consensus, rewards for validators and nominators.
- For Comission's payment within the network.
- Allows the use of the dApps Rewards system to incentivize dApps creators.
- Voting or nomination system within the ecosystem.
The total issuance of SDN tokens is limited to 71.336.892, which will be issued through a deflationary issuance policy.
Conclusions
Shiden Network and its sister network Astar, present us with a unique proposal within the Kusama / Polkadot ecosystem. Not only for the unique ability that presents us when deploying dApps on multiple chains very simply and fully integrated with Substrate technology, but also, for your incentive policy for dApps creators, something that has no equal in any other blockchain.
And, the dApps Rewards system is unique and perhaps the most striking capability of the protocol. Not only because of the immense support it provides for dApps developers, but also because of the opportunity it offers users to nominate and place their trust in said dApps, while also allowing them to receive benefits for such trust.
Additionally, it should be noted that Shiden is a project that is in full development and its evolution goes hand in hand with what Kusama can offer us.