I Interviewed Unspent Phi Dev: Find All about the DeFi BCH App Built on Small Composable Contracts

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3 months ago

I had the privilege to conduct an Interview with the founder and Dev of the application, Unspent Phi, a DeFi web platform App dedicated to provide means to users create simple on-chain contracts on the Bitcoin Cash network. The interview will dispel doubts that many may have regarding the web app and also help to understand how users can benefit from the contracts that the platform offers as well as how it works.

Our interlocutor is a prominent figure in the Bitcoin Cash community, who, despite enjoying his privacy and anonymity, provided valuable and relevant information about the Unspent Phi in the interview.

First, however, it is necessary to understand what is Unspent Phi and what benefits the application can bring to Bitcoin Cash users who intend to use the platform to create simple composable contracts. Next, I will briefly develop what is Unspent Phi according to extracts based on the interview, then move on to the interview (Q&A) that the Founder and Dev of the app humble provided.

Accordingly, to our interlocutor Unspent Phi is a unique savings platform built on the Bitcoin Cash network that enables users to create their own customizable contracts for periodic payments. In the interview with the Dev and founder of Unspent Phi, I learned more about the core features and benefits of the platform, the technology behind it, and how the app ensures security and privacy for its users.

The app does not aim to grow the user's money, but instead allows users to get their own money back with a negative return on investment. The whole concept is a "get rich slow" scheme, and there are novelty or utility contracts available as well. The contracts can also be chained together for more complex outcomes.

The technology behind Unspent.app is based on BitcoinScript, also known as CashAssembly or OP codes. The contracts developed are specific to Bitcoin Cash, as it has introspection operations that allow scripts to refer to all inputs and outputs of the current transaction, as well as total transaction values.

Nothing better than to understand what's all about Unspent Phi, directly from our interlocutor so, seat back to read and understand why the App has capabilities to become a very useful tool to create simple DeFi on-chain composable contracts on Bitcoin Cash network:

🎤.Can you explain the main features and benefits of Unspent.app for someone who is not familiar with it?

🛠️: The core feature is periodic payments at regular intervals, specifically the annuity and perpetuity contracts.

Users get paid from their own money, by putting some savings into a contract they created themselves. There are also some novelty or utility contracts. And the simple contracts may be chained for more complex outcomes.

The app won't "grow" your money, but every rich person got some money and didn't spend it. So it still aims to get people rich (with a negative return on investment) when they get their own money back (subtracting miner and executor fees). The whole thing is a get rich slow scheme.

🎤.How did you come up with the idea for Unspent.app, and what inspired you to create this platform?

🛠️: The idea for small composable contracts arose while integrating CashScript into mainnet-js. It was spurred on, in part, by Vitalik's implication that miner extractable value (MEV) wouldn't scale on a UTXO chain in the Bankless 114 podcast. The confetti was inspired by a description of the Robinhood app in an online course about blockchain; some tactical omissions by that former lecturer also inspired the Howdy Doody orange grove themed fundraiser.

🎤.Can you describe the technology behind Unspent.app and what makes it unique from other Defi platforms?

🛠️: The core technology is BitcoinScript, also called CashAssembly or OP codes. It's using logic available to unlock value from unspent transaction outputs (UTXOs) on Bitcoin Cash. The contracts developed are specific to Bitcoin Cash because it has [introspection operations](https://gitlab.com/GeneralProtocols/research/chips/-/blob/master/CHIP-2021-02-Add-Native-Introspection-Opcodes.md) which allows scripts to easily refer to all inputs and outputs of the current transaction, as well as total transaction values.

In simple terms, the "phi" contracts are like a timed safe where the parameters can be configured by the funder. The core contracts pay to predefined addresses, so it still works if everyone knows the parameters of the contract. Anyone can hit the button on the time locked safe and money will go to the intended recipient. The party that hit the button also gets a small reward.

They aren't all timelocked. Some are faucets, some record data, some split inputs across address.

In contrast to an account-based DeFi contract, introspection opcodes are very limited but efficient by only referencing transaction data already provided. The data is needed to process the transaction anyway. Since the full-node gets this data with the transaction, it's really fast and scalable to reference this information and check if the transaction is valid.

With the Ethereum Virtual Machine (EVM), the interpreter for ETH, there is more sophisticated data storage and higher logic available, which is very powerful and much easier to develop contracts quickly. However, the downside to those more advanced features is that some are expensive to compute (or process data) at scale, so the network imposes a penalty on using them in the form of varying gas fees. The fees affect everyone on the network, even people trying to do the simplest transactions. They're solving this with L2 chains, but BCH is staying flat.

This UTXO approach isn't trying to copy the early success of the ethereum approach. (It's called Phi in the app, or ₿∙ϕ, as a meme to differentiate it from DeFi). The EVM was designed to scale fast and break things. The Bitcoin Virtual Machine was designed initially to scale globally for peer to peer payments and never break.

So unspent.app assumes that fees will always be 1 sat per byte or less. It was designed on the assumption that blocks will never be consistently full and a fee market will never develop on Bitcoin Cash.

🎤.How do you ensure the security and privacy of users' data and transactions on Unspent.app?

🛠️: As far as user data, users may publish or store their contract parameters in a space on the blockchain. The contract data is stored in a special prune-able part of a transaction called an OP_RETURN. Once the contract is published, anyone may step a spendable transaction forward. That data also becomes public if the contract is ever spent.

The beneficiary contracts always send to the same addresses. Address reuse negatively impacts user security and privacy. However, if a user has a CashAccount, or has publicly posted an address, it's a similar level of privacy and security.

There is no user login. There is no backend unspent service. There is nothing handling user secrets, personal information or wallet keys. Bots are encouraged. The app is a statically served web page, meaning it can be served from IPFS or a folder on a computer.

Transactions are secured by whatever version of the BitcoinVM miners are running. If a malicious miner attempted to spend a timelock contract in advance, or route payments to the wrong parties, it would be up to node software to prevent it.

Protecting user funds is the primary concern of this savings app. There are many cool things the app doesn't do (and will likely never do) out of an overabundance of caution to protect users.

There are no price oracles in unspent.app, because our world has huge currency traders with decades of experience and vast wealth amassed before bitcoin was even invented. They trade on volatility rather than price, and they control (or know) what the prices will be.

These highly connected market makers can sell derivative contracts on any currency to bankrupt anyone who bets against the dominant currency. They do this while collecting premiums on other contracts which hedge against volatility in the dominant currency, it's a market underpinning essentially all global trade (~$80T).

So there is no fiat connection because there is no way a novice user could be protected from an extremely powerful malevolent actor. There isn't even a way to protect an experienced trader nor some exchange owners, apparently.

Another issue with oracles is that it's trivial to configure a contract that will probably last much longer than the vast majority of crypto firms. 

For social attacks, there is no function to withdraw the principal of a contract. If there is a new propaganda campaign or clever slander for Bitcoin Cash, users of the timelock contracts will have to exit periodically rather than all at once. If there is a fork, and both forks support introspection, users would have decide with their coins over time which to support more.

There are no multi-party or escrow contracts. One anonymous party pretending to be two parties is a common way users lose all their money with escrow.

There could have been a potential issue with malicious actors adding data to a transaction that causes an address collision. For the first-class contracts this potential issue is avoided by having all data provided by introspection, rather than an input to the unlocking contract.

🎤.What kind of feedback have you received from users of Unspent.app, and how have you used that feedback to improve the platform?

🛠️: The most common feedback is utter confusion. There has been some work reducing the information of the contract page.

The app does a bit of "gate-keeping" right now, in that most users must have an address already to use the app.

That app is still in an early stage where users could potentially do something unexpected to lose funds, so ideally, there would just be a small set of users that can brick funds and report how they did it.

In the general population, most people don't have a non-custodial wallet ready to collect fees or try the app.

Most crypto people want a "stable" feature or to trade somehow.

🎤.Can you tell us about any future developments or updates planned for Unspent.app?

🛠️: There will be a contract to collect dust, so that someone can go on the app collecting small executor fees then send those coins automatically in one transaction to a savings contract.

There will be a simple hodl contract, similar to mainnet-pat's hodl plugin for Electron Cash.

The p2sh32 address format should enable a safe Will or deadman contract.

This set of contracts is version 1. There was a version 0 set of contracts last summer that were command line only. Those v0 contracts will be picked up in the app and supported forever. There will be a version 2 set of contracts to handle final payments better.

Also: software upgrades for May 2023, adding a simple wallet, a local database, ettc.

The updates will be boring, simple and small unfortunately.

🎤.What do you see as the future of BCH and blockchain technology, and how do you think Unspent.app will play a role in that future?

🛠️: The CHIP process is the most exciting non-feature of Bitcoin Cash. There is a lot of potential out there just looking backwards at the features it's already gotten us.

So unlocking some basic features possible with introspection was a looking backward or retrospective activity. CashTokens will be awesome, but we're probably not going to see the true potential until the tooling is ready and people start trying to do things that haven't been done yet.

If Unspent.app is marginally successful, there may be a dozen slicker apps that try to replicate the functionality in a less scalable or more centralized way on other chains, or traditional finance.

It would be cool to have many sets of ₿∙ϕ contracts on Bitcoin Cash.

🎤.Can you walk us through a typical user journey on Unspent.app, from creating a simple on-chain contract on BCH to further steps in redeeming it?

🛠️: The app is still for "small" amounts of value. And it's still a bit cumbersome at the moment as more protections are built in.

To start, a user needs a cashaddress from their chosen wallet.

If they want a time locked contract, such as an annuity or perpetuity, they can use a rough period of 1000 blocks for a week or 4000 blocks for a month.

They can use the default executor fee (1200), which has some extra sats to join multiple inputs.

The core contracts (annuity & perpetuity) have a graph feature to show the schedule of payouts for a sample amount of 0.1 BCH.

If users are happy with the payout schedule and fees, they may "Broadcast" their parameters using the provided button for free. They'll see a loading icon then some confetti if successful. Right now, users should also write down the data used to create the contract, either on paper, or by saving the string of data under "Phi Contract Parameters" under "Contract Details".

When the user sends funds to the contract, it will update the contract schedule to show when the contract runs out of money. The contracts can be called per input, or with all inputs. So the schedule graph is per input.

If a user doesn't get paid on time, they can return to the app and execute the payout themselves. Eventually, the hope is to have enough people claiming executor fees on the app that most contracts will be paid automatically.

🎤.How does Unspent.app compare to other Defi simple contracts platforms in terms of fees and ease of use?

🛠️: At current prices, the miner fees are fractions of a penny. With the efficiency provided by introspection, fees may be in the range of 150-350 sats.

However, executor fees for submitting a transaction can be a high fraction of value on small initial inputs. An annuity paying 1000 sats with a 4000 sat executor fee will only pay 20% of the value sent to the beneficiary. However for meaningful amounts, the executor fees usually total about 0.5-1.5% of the total principal.

There are also faucet contracts that can still payout some sats two months after app launch (if the user selects inputs). There is still a "free" broadcasting contract.

It's possible for anyone with a phone to be paid some satoshis for doing useful work on behalf of someone else. I'm not quite sure what product or service I'd compare that to in hard or soft finance today.

🎤.Lastly, what advice would you give to someone who is just getting started with cryptocurrency and wants to use Unspent.app as their BCH DeFi simple contracts platform of choice?

🛠️: Keep value small and create a backup of your contract parameters before funding the contract!

Bottom Line

In summary, Unspent.app is a unique savings platform that provides users with the ability to create their own customizable contracts for periodic payments on the Bitcoin Cash network. The technology behind the platform is based on BitcoinScript, and the contracts are designed to be simple and efficient.

The platform does not aim to grow user funds but rather allows users to save their own money with a negative return on investment. The security and privacy of user data and transactions are ensured by the nature of the blockchain and the lack of a backend service. Unspent.app is a platform that encourages users to take control of their own finances and save for their future.

I am hopeful that most of the key points of Unspent Phi were duly clarified by the interview and if you want to explore or create a simple onchain contract on the Bitcoin Cash network you can access the platform at the following web address:


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