Welcome

FAQ about Zap's underlying technology

What is Blockchain Technology?

Blockchain technology is coded in accordance with game-theoretical concepts such as impartial mathematics and supports a decentralized peer-to-peer network based on a distributed ledger.

Transactional data is stored, as mentioned, in a distributed ‘database’ or ledger, known as the blockchain. The data is collected into groups known as ‘blocks’. Each block contains the hashed data of the previous block. The data is permanent and cannot be undone once it is recorded to the blockchain. Any attempt to change the blockchain ledger would be evident as the slightest change to the hashed data will return a completely different result. Various blockchains and the vast layers of technology built upon them continue to disrupt traditional centralized systems.

What are Smart Contracts?

A smart contract is a software program used to execute an agreement between at least two parties. At its core, smart contracts are a series of instructions that issue commands, define terms, set forth conditions/contingencies, and establish events that need to occur in order to trigger subsequent actions.

Smart contracts can trigger economic activity autonomously on a blockchain based on the data that is provided to it and the conditions that are set in code. These coded agreements are recorded and stored on the blockchain’s distributed ledger.

Consider the above example. A wholesaler and a farming distributor create an agreement that if the temperature of the shipment exceeds 32 degrees Fahrenheit, a discounted rate would apply to the amount paid out from the wholesaler to the farming distributor. A smart contract is created with the agreement parameters set. The smart contracts code can then be reviewed and publicly verified in a deterministic manner that is observable by all interested parties through the blockchain.

The steps are as follows

1.The farming distributor ships the products that are monitored by IoT devices that communicate with the blockchain to confirm whether or not the temperature exceeds 32 degrees Fahrenheit.

2.The wholesaler receives the product with all the parameters of the agreement smart contract fulfilled and verified.

3.The smart contract releases the full amount of the funds that were stored in escrow.

4.Farming distributor receives the funds.

What are Oracles and Why do Smart Contracts Need Them?

One issue, however, is that smart contracts are closed systems meaning that they are unable to access data from outside the blockchain network they are on. In order to solve this problem, blockchains need a device called an “Oracle.” An Oracle is the means by which off-chain information can be fed into a smart contract allowing economic activity to actuate autonomously. Oracles are essential for smart contracts to communicate with the outside world and are a necessity for the functionality of decentralized products which are dependent on accurate data. Without data, there is nothing to trigger the smart contract into acting.

What’s the Oracle Problem?

The greatest issue holding back the adoption and scalability of decentralized applications is the ability to aggregate accurate information in a decentralized way. The Oracle problem is the result of centralized Oracles which can be used to manipulate and attack decentralized networks and the smart contracts built on them. Nobody will put significant capital or assets at risk unless they have complete confidence that the data the smart contract receives is completely accurate.

The Zap Protocol Solution

Zap Protocol solves this in two ways. The first way is to lower the barrier to entry for being able to tokenize and sell one's data by offering smart contract templates with point and click functionality. This encourages a robust marketplace enabling more competition among competing decentralized services.

The steps are as follows

  1. The farming distributor ships the products that are monitored by IoT devices that communicate with the blockchain to confirm whether or not the temperature exceeds 32 degrees Fahrenheit.

  2. The wholesaler receives the product with all the parameters of the agreement smart contract fulfilled and verified.

  3. The smart contract releases the full amount of the funds that were stored in escrow.

  4. Farming distributor receives the funds.

What are Bonding Curves?

Bonding Curves are a revolutionary technology acting as the backbone for many emerging decentralized projects and protocols. Zap Protocol not only coined the term “Bonding Curve” but was the first mainnet Bonding Curve and data Oracle platform to go live. Zap Bonding Curves allow anyone to tokenize their product or service and offer it on a fully liquid decentralized market. No order books, market makers, or centralized exchanges are needed. Rather, with Zap Bonding Curves you have drag and drop capabilities when designing the pricing index that works best for the tokenized product or service you provide. All the products and services created using Zap Protocol are powered by Bonding Curves. More information on how to interact with Zap Bonding Curves can be found, here.

Zap Dapps

Decentralized applications, also known as Dapps, are open-source programs that function on top of a distributed computing system. The service is provided without a centralized server in a peer-to-peer environment managed by impartial algorithms and code.

Zap Protocol not only allows you to monetize data but provides smart contract templates that allow anyone to create their own Dapp to accomplish many DeFi use cases. Such possibilities range from the tokenization of real estate, creation of a futures market, establishing a decentralized autonomous organization (DAO), or issuing a new ERC20 token on a fully liquid decentralized exchange (DEX). Conveniently, the data necessary for the Dapps to function is easily discoverable on the Zap Protocol’s Decentralized Data Marketplace.