Burning Proof Protocol in the Cardano Ecosystem

Recently, the challenge of the Proof of Burn ( PoB ) protocol proposed for the Cardano ecosystem has been completed. This article will introduce the details of this solution, including the following aspects:

1. Overview of the Proof of Burn Mechanism and Its Applications
2. Implementing a proof of burn smart contract scheme on the Cardano network
3. The deployment and testing process of smart contracts
4. The method of achieving proof of burn through wallet transactions

Overview of Proof of Burn Mechanism

The burning of cryptocurrency tokens essentially involves sending the tokens to an inaccessible "black hole" address. This address has no private key, making it impossible to retrieve the destroyed tokens. At the same time, the public can verify that the destruction has occurred, but only knows a "secret" commitment value.

The burning mechanism has multiple uses, both to increase the value of the remaining tokens and to serve as proof of commitment for the blockchain protocol. Large-scale burns can reduce the total number of tokens in circulation, potentially triggering deflationary pressure.

The security of proof of burn is based on cryptographic hash functions. These functions are easy to compute but extremely difficult to reverse. By flipping the least significant bit of the hash function's output, a black hole address can be created, and anything sent to that address cannot be recovered.

Proof of Burn Smart Contract on the Cardano Network

Cardano smart contracts consist of three parts:

• Redeemer script: controls the spending of eUTxO
• Wallet script: Represents user operation, used to redeem funds and create new eUTxO
• eUTxO: funds held and data used for redemption

Cardano smart contracts do not have a centralized state, each eUTxO has an independent state.

The proof of burn protocol includes four types of operations:

• Burn: Send funds to the black hole address
• Verification: Confirm that the burning of a certain commitment value has occurred
• Lock: Send funds to an address with a key
• Redemption: Retrieve locked funds

By using the same redeeming format, intermediaries cannot distinguish between burn and lock transactions, thus avoiding selective censorship.

Deployment and Testing of Smart Contracts

The main steps for deploying a smart contract on the testnet:

1. Install Haskell toolchain
2. Build Plutus scripts
3. Start the Cardano node and wallet container
4. Restore wallet and get wallet ID
5. Execute burn transaction
6. Verify Burn Results

Wallet-based Transaction Burn Proof Scheme

In order to further enhance censorship resistance, burning proof can be achieved by using wallet transactions only:

1. Replace the public key hash with the commitment value hash and flip the least significant bit.
2. Use Cardano API to generate a burn address that meets the format requirements
3. Submit the transaction to the Cardano blockchain
4. Verify by checking the transactions sent to the burn address.

This method makes the only way to audit the burns to audit all Cardano transactions, greatly enhancing censorship resistance.

In the future, with the improvement of the PAB library, the combination of complex smart contract solutions with wallet scripts will be more feasible, creating a stronger anti-censorship environment.