On-Chain Rewards Smart Contract Decoupling Value
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Solution Overview
Problem
Existing cryptocurrency reward systems require off-chain processing, which increases security risks and costs due to the involvement of off-chain custodians and excessive on-chain storage and computation.
Innovation Solution
A blockchain-based system and method utilizing a rewards smart contract that performs on-chain cryptocurrency rewards processing, decoupling the value of rewards from deposited principal, and interacting with digital wallets and a token rewards administrator system to manage rewards tracking and distribution, thereby reducing off-chain processing and minimizing on-chain fees.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If off-chain processing is used for cryptocurrency rewards, then reward distribution can be implemented, but security risks increase and costs increase due to off-chain custodians
Solution Approach 1:
The patent extracts the custodial function from off-chain systems and relocates it to on-chain smart contracts. The rewards smart contract directly holds and distributes rewards on the blockchain, eliminating the need for off-chain custodians and their associated security risks while maintaining the reward distribution function.
Solution Approach 2:
The patent introduces an on-chain rewards smart contract as an intermediary between the reward source and users. This smart contract mediates the reward distribution process by automatically calculating and distributing rewards based on deposited principal, replacing the need for complex off-chain custodial systems.
2Productivity
If off-chain custodians are used for reward management, then reward distribution is possible, but costs increase
Solution Approach 1:
The rewards smart contract is self-service in that it automatically manages reward distribution without requiring external custodians. The contract autonomously calculates rewards based on deposited amounts, tracks reward balances, and executes distributions when users withdraw, eliminating the need to pay off-chain custodian fees.
Solution Approach 2:
The on-chain smart contract serves as a cost-effective intermediary that replaces expensive off-chain custodians. By executing reward calculations and distributions automatically on the blockchain, it eliminates intermediary fees while maintaining distribution efficiency.
3Measurement precision
If excessive on-chain storage and computation are used, then complete reward tracking is achieved, but fees increase
Solution Approach 1:
The patent segments the reward tracking data into essential and non-essential components. Only critical reward balance information is stored on-chain in the smart contract, while detailed transaction histories and intermediate calculations are performed off-chain or in memory, reducing on-chain storage and computation fees while maintaining tracking accuracy.
Data Source
AI summary
Systems and methods to at least provide rewards using a smart contract are disclosed.