Preliminary Construction of Monero Sidechain with Embedded Smart Contracts

layout: fr
title: Preliminary Construction of Monero Sidechain with Embedded Smart Contracts
author: Xavier
date: May 10, 2025
amount: 100 Monero
milestones:
  - name: Architecture Design
    funds: 5% (5 Monero)
    done:
    status: unfinished
  - name: Smart Contract Development
    funds: 45% (45 Monero)
    done:
    status: unfinished
  - name: Developer Documentation
    funds: 20% (20 Monero)
    done:
    status: unfinished
  - name: Security Enhancements & Phase II Planning
    funds: 30% (30 Monero)
    done:
    status: unfinished
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Project Background and Motivation(What)

As a leading privacy-focused cryptocurrency, Monero's core strength lies in providing anonymity and untraceability. However, the absence of smart contract functionality on its mainchain limits applications in decentralized finance (DeFi) and decentralized autonomous organizations (DAOs). Many developers and users are compelled to migrate to other blockchain platforms that support smart contracts but compromise privacy features.

This project addresses this critical gap in the Monero ecosystem. By constructing a sidechain with embedded smart contracts, we aim to extend Monero's capabilities while preserving its privacy advantages, thereby attracting more developers and users to the ecosystem.

Technical Implementation

Sidechain Architecture

We propose a parallel sidechain architecture using two-way pegging mechanisms for asset transfers between mainchain and sidechain. The sidechain will adopt Proof-of-Stake (PoS) consensus to enhance transaction throughput and reduce energy consumption.

Smart Contract Platform

The sidechain will support dual development paradigms:

1. EVM Compatibility: Solidity support for seamless migration of existing Ethereum smart contracts
2. Rust Native Support: Providing Monero developers with memory-safe, high-performance contract development

Privacy Protection

The sidechain inherits Monero's core privacy technologies including Ring Signatures, Stealth Addresses, and Ring Confidential Transactions (RingCT). We will explore privacy-preserving smart contract execution through zero-knowledge proofs (ZK-SNARKs) to obfuscate contract inputs/outputs.

Deliverables(Proposal)

Architecture Design Phase

• Developer Roster: Complete list of core developers and community contributors
• Technical Whitepaper: Detailed architecture specifications including consensus mechanism and cross-chain communication protocols
• Security Analysis: Risk assessment report with mitigation strategies
• Consensus Algorithm Prototype: Proof-of-concept implementation

Smart Contract Development Phase

• Development Toolkit: Complete toolchain including compiler, debugger, and deployment utilities
• Contract Templates: Privacy-preserving token standards, anonymous voting contracts, and DEX prototypes
• Testnet Deployment: Operational test network for contract validation

Documentation Phase

• API Specifications: Comprehensive RPC interface documentation
• Developer Guide: Step-by-step tutorials from environment setup to contract deployment
• Sample Projects: Reference implementations demonstrating various contract types

Security & Phase II Planning

• Audit Report: Third-party security audit results
• Vulnerability Fixes: Implementation of audit recommendations
• Phase II Roadmap: Cross-chain interoperability plans and performance optimization strategies

We commit to supporting the community in every way possible.

Development Team(Who)

Core team members:

• Xavier: Blockchain Engineer (Technical Lead)
• Tom: Hedge Fund Manager (Economic Modeling & Community Outreach)

We will collaborate closely with Monero core developers to ensure mainchain compatibility.

Community Engagement

1. Weekly Updates: Development progress reports on GitLab/GitHub
2. Discussion Forums: Regular online/offline community meetings
3. Developer Incentives: Bug bounty programs and contribution rewards

Risk Management

1. Technical Risks: Mitigated through code reviews and third-party audits
2. Security Risks: Addressed via pre-launch audits and vulnerability disclosure program
3. Adoption Risks: Countered through transparent development and community education

Note: This is Phase I implementation. Mainnet integration will be addressed in Phase II. Any remaining funds will be redistributed through Monero's Community Crowdfunding System (CCS) should the project fail.