Contracts

We explain very briefly here what the blockchain Tezos is, what smart contracts are, what addresses and operations are, etc.

Tezos in a nutshell

The economic protocol of Tezos handles a ledger of transactions as a blockchain. In a nutshell: a replicated database with strong access control, immutable entries and resilience to malicious users.

Those transactions consist in the exchange of assets (tokens) between peers of the network. Each peer has an address and an account (an amount of tokens), but a physical person can be several peers.

Public-key cryptography is used to secure the identity of the senders of transactions and to ensure that past transactions are not tempered with. An address is the hash of the peer's public key.

The business logic between the peers is not recorded in the chain, that is, the knowledge of what they agree should trigger transfers of tokens. The economic protocol of Tezos offers the possibility to record in the chain that logic as a smart contract.

Smart contracts in a nutshell

A smart contract is a peer that also has a program associated to a private storage. That storage is writable only by the contract, but is publicly readable. The smart contract is executed each time a specific transaction is sent to its address. The transaction may include some parameters.

Any call to a contract in a block is replicated by all the nodes in the chain, to check whether the block is valid before including it in their local view of the head of the chain. Once the block is validated, it is broadcasted by the underlying peer-to-peer, gossip network (as usual). The validation of smart contracts therefore adds a delay in the validation of a block: the execution time of all the smart contracts in it must fit the interblock time for the chain.

Therefore, each smart contract is allowed a given and fixed quantity of computation, measured in gas.

Each instruction has an associated cost expected to be proportional to the wall-clock time and an ad hoc estimation is given by the node's client.

A node is a server process that is accessed by a command-line client or RPCs. A node comprises a view of the chain so far, the context of the chain (a map from addresses to token amounts, used to validate transactions), and the mempool.

When the execution exceeds the alloted gas, it is stopped, its effect on the storage is rolled back, a failed transaction is included in the block, and thus fees are collected to discourage spamming attacks.

The economic protocol sets limits on gas per block and per transaction. Each smart contract has a code size and a storage size, which are allocated on every node on the chain (in their context). To limit the memory needed to synchronise the chain and store it, a fee is set per byte and collected when a contract is deployed (originated, in Tezos parlance).

It is only at the normal termination of a contract that the effects of a contract becomes atomically visible to the network: the storage may appear modified and a list of operations may have been returned (transactions, contract creations and delegate settings) and validated. In particular, a smart contract can transfer tokens to other smart contracts, enabling the design of complex distributed applications in Tezos. Note that, in Tezos, a transaction (transfer of assets) is a special case of operation, and smart contracts can also trigger the creation of other contracts and set delegates for accounts.

Operations that are produced by a smart contract are said to be internal, as opposed to the external transactions that a smart contract may receive.