Smart Contract Execution

Smart contracts on RuneVM are executed using a state transition function that verifies the validity of transactions using zero-knowledge proofs (zkProofs). This process involves several critical components and steps to ensure that all transactions are secure, efficient, and deterministic.

• State Transition Function: The state transition function in RuneVM is designed to manage the changes in the state of the blockchain. Each smart contract execution results in a state transition, where the inputs are processed, and the corresponding outputs are generated. This function ensures that the transition from one state to another is valid and complies with the predefined rules of the smart contract.

• zkProofs (Zero-Knowledge Proofs): RuneVM utilizes zkSNARKs (Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge) to verify the correctness of transactions off-chain. zkSNARKs allow the system to prove the validity of a statement without revealing the underlying data. This ensures that the transactions are private and secure, as the details of the transaction are not exposed during verification. Only the proof, which is much smaller in size, is committed to the blockchain.

• Deterministic Execution: The virtual machine (VM) in RuneVM is designed to ensure deterministic execution of smart contracts. This means that the outcome of executing a smart contract is always the same, regardless of the order in which transactions are processed. Deterministic execution is crucial for maintaining the integrity and predictability of smart contracts, as it ensures that all nodes in the network reach the same conclusion when processing transactions.

• Gas Management: Similar to Ethereum, RuneVM uses a gas mechanism to manage computational resources. Each operation within a smart contract consumes a certain amount of gas, which is paid by the user executing the contract. This prevents abuse of computational resources and ensures that the network remains efficient. The gas cost in RuneVM is optimized using zkRollups, which aggregate multiple transactions into a single proof, reducing the overall gas consumption.

• Security and Integrity: The execution of smart contracts in RuneVM is governed by strict security protocols. The use of zkProofs ensures that only valid transactions are committed to the blockchain, preventing fraud and unauthorized actions. Additionally, smart contracts define a set of rules and conditions under which they operate, and these rules are enforced by the VM during execution. This ensures that all transactions conform to the predefined conditions, maintaining the integrity of the contract.

• Interoperability with Bitcoin Runes: Smart contracts on RuneVM can interact directly with Bitcoin Runes, enabling the creation of complex financial applications such as decentralized exchanges (DEXs), lending platforms, and automated market makers (AMMs). This integration leverages the liquidity and stability of Bitcoin while utilizing the advanced functionalities of RuneVM.