Smart contracts need to be increasingly complex as they service more users and broader use cases. Today, advanced interactions require pre-transaction logic that can dynamically bring together information about the user, historical states, offchain data, and data from other blockchain networks. For example, a DeFi application needs an effective way to deal with incoming assets that have been stolen from another ecosystem. Or similarly, a privacy protocol needs mechanisms to ensure that users avoid commingling their assets with those of blacklisted users without being forced to KYC.

Application builders turn to unconventional approaches when incorporating arbitrary computation into pre-transaction logic. User interfaces, centralized transaction mechanisms (e.g. deposit screeners and routers), and smart contract designs are used, each adding their own set of challenges. Users can easily bypass a UI by interacting directly with the application’s smart contracts or creating their own interface. Centralized infrastructure, on the other hand, risks central points of failure and censorship by requiring members of the community to trust centralized authorities. And lastly, developers spend valuable time regularly building and maintaining smart contracts to respond to the evolving nature of onchain and offchain activities.

To abstract away these complexities, a better structure is needed that is adaptable, community-owned, devoid of central points of failure, and designed for the modern needs of smart contracts. And most importantly, one that respects the open and decentralized nature of underlying blockchains like Ethereum.

Introducing Aethos—A Decentralized Policy Engine for Smarter Contracts

The Aethos Network is a generalizable policy engine built for smart contracts. Leveraging the agility of offchain computation and consensus mechanisms, the network powers:

• Pre-transaction policies, set at the smart contract level, in which transactions are only executed if they adhere to defined rules set for the corresponding smart contract

• A trust-minimized rulemaking system for application developers to implement policies that are enforced by a network of economically incentivized operators

• Access to onchain and offchain data such as historical flow of funds, blockchain analytics, verifiable credentials, allowlists, etc.

• Client-owned and modifiable policies issued by specific individuals, a group, or a DAO

We envision a growing need for onchain and offchain information that can be used for unique pre-transaction qualifications—eventually forming an open marketplace of data providers and policies. Below are a few possible solutions unlocked by the Aethos Network.

Fostering Community-Aligned Liquidity in DeFi

Exploits remain a critical open issue in DeFi. Hackers can take stolen assets and deposit them into a DeFi application to generate yield or obfuscate their funds. These assets are commingled with other users’ assets effectively poisoning the well. Using the Aethos Network, a DeFi application, such as a restaking protocol, can set policies to block stolen assets from being deposited into a corresponding smart contract to ensure that the liquidity meets the community’s standards.

Preventing Movement of Sanctioned Assets

Infrastructure, such as token bridge applications, can be used by sanctioned entities. In response, a token bridge application team based in a regulated market may wish to block the flow of assets originating from sanctioned addresses. Using the Aethos Network, core developers can implement a policy to leverage historical blockchain data and prevent certain asset transfers.

Embedding Token Policies

Asset issuers take advantage of the programmable features of blockchain technology when launching digital assets. A real world asset or stablecoin project, for example, may need to embed custom policies such as rate limiting, geofencing, or dynamic blacklists. Asset issuers can leverage the Aethos Network to add policies into token contracts and delegate the ownership of these policies to other partner entities as needed.

Unlocking New Items in Web3 Games

Gaming environments involve unlocking new worlds or items after specific conditions are met, such as reaching a certain level or completing certain missions. Gaming projects can use the Aethos Network to seamlessly enable in-game asset unlocks based on onchain and multichain data without updating their smart contracts—they would simply need to update their policy via the Aethos Network.

Launching Rollups with Integrated Identities

New rollups may want to offer a range of different identity solutions that applications can easily integrate. Emerging applications on the rollup can utilize the Aethos Network to incorporate different identity solutions, both natively on the rollup and on other EVM chains, without needing to manually integrate each individual identity solution into their smart contract.

How Aethos Works

The Aethos Network validates that transactions adhere to predefined application-specific policies by utilizing a network of economically incentivized and geographically distributed operators. When integrating the Aethos Network, developers create a policy for their respective application. This is a detailed set of criteria that defines the necessary conditions for a transaction's acceptance—policies are customizable and fully owned by the application. In addition, developers define the minimum threshold of signatures, issued by operators, necessary for onchain transaction verification. Operators reference the latest policy for the transaction's target application and issue signatures if the transaction adheres to the policy.

Application developers have the option to adopt either the Single or Dual Transaction Model. In the Single Transaction Model, transactions are validated before being submitted, whereas in the Dual Transaction Model, transactions are validated post-submission. The Single Transaction Model is designed for atomic transactions and is best suited for policies involving specific historical activities, such as the holding of onchain/offchain identities or past participation in an NFT community. The Dual Transaction Model is best suited for robust flow of funds checks. Regardless of the chosen model, transactions are accompanied by signatures, albeit at different stages of the transaction process.

As an Actively Validated Service (AVS), the Aethos Network harnesses EigenLayer’s decentralized infrastructure to bolster the policy engine’s security and decentralization. With over $7B in TVL, EigenLayer’s shared security model gives application builders confidence in the integrity of their policies through proven cryptoeconomic safeguards predicated on Ethereum. Moreover, EigenLayer's dual staking model introduces the potential for integrating additional assets to enhance economic security as the Aethos Network evolves. This flexibility, combined with the economic security of Ethereum, provides the foundations for the Aethos Network to be the leading trust-minimized policy engine for more complex smart contracts.

Conclusion

Blockchain technology is a mass coordination tool to create networks and self-governing communities. But as network activity becomes more complex, a comprehensive framework is needed to implement rules and policies at the smart contract level; one which is dynamic, cannot be easily bypassed, avoids creating highly centralized execution environments, and can be community-owned.

At Aethos we are responding to this need by building the first decentralized policy engine designed specifically for the blockchain industry to implement policies into application logic. And crucially, a dynamic system that spreads ownership across all participants to meet the limitless range of future use cases across DeFi, infrastructure, social, and more.

If you’re interested in learning more about the Aethos Network or partnering with us, reach out to us by email and follow us on Twitter!

Graphic Credit: Peter Nowell Design