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--- en:iot-reloaded:second_generation_applications [2024/10/07 09:05] – ajurenoks
+++ en:iot-reloaded:second_generation_applications [2025/05/17 09:17] (current) – agrisnik
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 ====== Second Generation Applications ======
-**Blockchain Framework**
-A blockchain framework provides a supporting structure for developing blockchain based applications. They provide tools that help with development, deployment and support.
-Many of the popular blockchain applications provide their own frameworks. In this chapter the most important ones will be discussed.
+While first-generation blockchain applications, such as Bitcoin, primarily focused on decentralised digital currencies, second-generation blockchain applications introduced more sophisticated functionalities. These advancements allowed for broader use cases beyond simple peer-to-peer transactions, laying the groundwork for smart contracts, decentralised applications (dApps), and improved scalability. Enhanced programmability, consensus mechanisms, and adaptability to various industries often characterise second-generation blockchains.
+**Key Features of Second-Generation Blockchain Applications**
+__Smart Contracts__
+One of the innovations of second-generation blockchain applications is the introduction of smart contracts. Initially pioneered by Ethereum, smart contracts are self-executing agreements where the terms of the contract are written directly into code. Once predetermined conditions are met, the contract is automatically executed. This eliminates the need for intermediaries and significantly reduces transaction costs and delays.
+Smart contracts have diverse applications, including financial agreements, supply chain automation, real estate, insurance, and beyond. They have enabled decentralised finance (DeFi) platforms to flourish by providing services like lending, borrowing, trading, and liquidity provision in a trustless, decentralised manner.
+__Decentralised Applications (dApps)__
+Second-generation blockchains also serve as platforms for decentralised applications, or dApps, which are applications that run on a blockchain instead of centralised servers. Ethereum, again, was the first platform to popularise the use of dApps by providing a robust infrastructure for developers to build decentralised applications with the Ethereum Virtual Machine (EVM).
+dApps are transparent, autonomous, and can operate without a central authority. Their decentralised nature means they are less vulnerable to censorship and hacking, as they run on a distributed network of nodes rather than a single point of failure. This has led to various decentralised services, including decentralised exchanges (DEXs), prediction markets, gaming platforms, and more.
+__Programmability and Turing-Completeness__
+Unlike Bitcoin, which was specifically designed for financial transactions, second-generation blockchains like Ethereum introduced Turing-completeness, which means the blockchain can process any computational logic and execute any program, given enough resources. This allows developers to create complex and sophisticated blockchain-based applications that can address various problems.
+Other platforms that focus on programmability include EOS, Tezos, Tron, and Solana. All of these allow for the deployment of smart contracts and dApps. These platforms differ from first-generation blockchains because they are application-oriented rather than transaction-oriented.
+__Interoperability__
+One of the challenges addressed by second-generation blockchains is the need for interoperability between different blockchain networks. Many blockchain applications work in silos, but with the growth of DeFi and dApps, there has been a demand for different blockchain systems to communicate with each other. Interoperability solutions aim to enable blockchains to transfer data, tokens, and assets between them seamlessly.
+Projects like Polkadot and Cosmos have focused on creating interoperable blockchain ecosystems. These networks use relay chains and hubs to connect different blockchains, facilitating cross-chain transactions and enabling various blockchain networks to work together. Interoperability helps improve liquidity, expands market reach, and enhances the overall utility of blockchain applications.
+__Decentralised Finance (DeFi)__
+One of the most transformative developments of second-generation blockchain applications is Decentralised Finance (DeFi). DeFi refers to a collection of financial services and platforms built on blockchain technology that aim to recreate traditional financial systems such as banks, exchanges, and lending platforms in a decentralised and permissionless way.
+DeFi applications leverage smart contracts to create financial services like decentralised lending and borrowing platforms (e.g., Aave, Compound), decentralised exchanges (DEXs) (e.g., Uniswap, Sushiswap), and yield farming platforms. These services allow users to borrow, lend, trade, and earn interest on digital assets without relying on centralised entities. The global DeFi market has exploded in recent years, with billions of dollars locked in DeFi protocols, transforming how people access and manage financial services.
+__Governance and Decentralised Autonomous Organisations (DAOs)__
+Second-generation blockchain applications have introduced new models for decentralised governance, most notably in the form of Decentralised Autonomous Organisations (DAOs). DAOs are blockchain-based entities governed by a set of rules encoded in smart contracts. Token holders typically have voting rights and can collectively decide the organisation's direction, including funding, development, and protocol changes.
+DAOs aim to provide a transparent, decentralised governance model, eliminating the need for traditional hierarchical structures. Many DeFi projects and blockchain ecosystems have adopted the DAO model for decision-making processes. For instance, MakerDAO is a popular DAO that governs the Maker Protocol, which allows users to generate the Dai stablecoin.
+**Examples of Second-Generation Blockchain Platforms**
+__Ethereum__
+Ethereum is the most notable second-generation blockchain platform. It is designed to go beyond cryptocurrency by providing a general-purpose framework for building decentralised applications. Ethereum's ability to execute smart contracts and support decentralised applications has made it the go-to platform for innovators in DeFi, NFTs, and beyond.
+__EOS__
+EOS is another second-generation blockchain platform known for its high scalability, faster transaction speeds, and user-friendly development tools. EOS aims to address the scalability issues faced by Ethereum by offering higher throughput and lower transaction fees, making it a popular choice for developers building high-performance dApps.
+__Cardano__
+Cardano is a second-generation blockchain platform that provides a secure and scalable infrastructure for decentralised applications and smart contracts. It uses a unique Proof of Stake (PoS - selects validators in proportion to their quantity of holdings in the associated cryptocurrency) consensus mechanism called Ouroboros, designed to be more energy-efficient than Ethereum's original PoW. Cardano's research-based development approach emphasises formal verification to ensure the security and correctness of its blockchain protocols.
+__Polkadot__
+Polkadot is a platform designed to enable different blockchains to work together. It introduces the concept of "parachains," which are parallel chains that can interoperate with each other. Polkadot's interoperability aims to solve the fragmentation problem by connecting various blockchains, enabling them to exchange information and assets seamlessly.
+__Solana__
+Solana is known for its high-performance blockchain, which is capable of handling thousands of transactions per second. It uses a novel consensus mechanism called Proof of History (PoH - a technique which ensures that historical data is accurate and hasn't been tampered with), which enables fast block confirmation times. This makes Solana suitable for high-frequency trading, gaming, and other high-demand dApps.
-**Bitcoin Blockchain**. The Bitcoin Blockchain framework is the foundation for the world’s first and most well-known cryptocurrency, Bitcoin. It is based on the 2008 whitepaper published by Satoshi Nakamoto. This framework has remained highly popular due to the continuing prominence of Bitcoin. It is designed with a strong emphasis on security and immutability, making it ideal for secure financial transactions. However, because of its high level of decentralization and the large user base, Bitcoin’s processing speed is relatively low, averaging around 7 transactions per second. The framework operates on a Proof of Work (PoW) consensus algorithm, requiring miners to solve complex cryptographic puzzles to validate transactions and secure the network. While highly secure, this also contributes to the slower transaction throughput and significant energy consumption.
-**Ethereum Blockchain** Ethereum is an open-source blockchain framework that supports distributed applications. It was proposed in 2013 and has become one of the most widely used blockchain platforms for building decentralized applications and smart contracts.
-Ethereum is designed with three core components:
-  - //Smart Contracts:// These are self-executing contracts with the terms of the agreement directly written into code. Smart contracts allow for decentralized automation of agreements, reducing the need for intermediaries in transactions and ensuring transparency.
-  - //Ethereum Virtual Machine (EVM):// The EVM is a decentralized computation engine that executes smart contracts and runs decentralized applications. It is responsible for processing smart contract instructions, and its ability to execute arbitrary code makes Ethereum a versatile platform for various use cases, from financial services to supply chain management.
-  - //Proof of Stake (PoS):// While Ethereum initially launched using a Proof of Work (PoW) consensus algorithm, it transitioned to Proof of Stake with Ethereum 2.0. In PoS, validators are chosen to propose blocks based on the number of tokens they hold and are willing to "stake" as collateral, which significantly reduces the energy consumption associated with the network and improves scalability.

en/iot-reloaded/second_generation_applications.1728291955.txt.gz · Last modified: 2024/10/07 09:05 by ajurenoks