Components of a Contract Operation

Let's now deep-dive into all the components of a contract operation, which are capable of changing the state of the contract and which are ultimately verified client-side by the legitimate recipient in a deterministic manner.

               +---------------------------------------------------------------------------------------------------------------------+
               |  Contract Operation                                                                                                 |
               |                                                                                 +-----------------------+           |
               |                                                                                 | ChainNet              |           |
               |  +-----+         +-----------------------+          +----------------+          | +-------+ +---------+ |           |
               |  | Ffv |         | ContractId | SchemaId |          | TransitionType |          | | Chain | | Network | |           |
               |  +-----+         +-----------------------+          +----------------+          | +-------+ +---------+ |           |
               |                                                                                 +-----------------------+           |
               |  +-----------------------------------------------+  +------------------------------------------------------------+  |
               |  | Metadata                                      |  | Global State                                               |  |
               |  |                                               |  | +----------------------------------+                       |  |
               |  | +-------------------------------------+       |  | | +-------------------+ +--------+ |                       |  |
               |  | |          Structured Data            |       |  | | |  GlobalStateType  | |  Data  | |     ...     ...       |  |
               |  | +-------------------------------------+       |  | | +-------------------+ +--------+ |                       |  |
               |  |                                               |  | +----------------------------------+                       |  |
               |  +-----------------------------------------------+  +------------------------------------------------------------+  |         +------+
               |                                                                                                                     +---------> OpId |
               |  +-----------------------------------------------+  +------------------------------------------------------------+  |         +------+
               |  | Inputs                                        |  | Assignments                                                |  |
               |  |                                               |  |                                                            |  |
               |  | +-------------------------------------------+ |  | +--------------------------------------------------------+ |  |
               |  | | Input #1                                  | |  | | Assignment #1                                          | |  |
+------+       |  | | +----------+ +----------------+ +-------+ | |  | | +----------------+ +-------------+ +-----------------+ | |  |       +--------------+
| OpId +--------------> PrevOpId | | AssignmentType | | Index | | |  | | | AssignmentType | | Owned State | | Seal Definition +--------------> Bitcoin UTXO |
+------+       |  | | +----------+ + ---------------+ +-------+ | |  | | +----------------+ +-------------+ +-----------------+ | |  |       +--------------+
               |  | +-------------------------------------------+ |  | +--------------------------------------------------------+ |  |
               |  |                                               |  |                                                            |  |
               |  | +-------------------------------------------+ |  | +--------------------------------------------------------+ |  |
               |  | | Input #2                                  | |  | | Assignment #2                                          | |  |
+------+       |  | | +----------+ +----------------+ +-------+ | |  | | +----------------+ +-------------+ +-----------------+ | |  |       +--------------+
| OpId +--------------> PrevOpId | | AssignmentType | | Index | | |  | | | AssignmentType | | Owned State | | Seal Definition +--------------> Bitcoin UTXO |
+------+       |  | | +----------+ +----------------+ +-------+ | |  | | +----------------+ +-------------+ +-----------------+ | |  |       +--------------+
               |  | +-------------------------------------------+ |  | +--------------------------------------------------------+ |  |
               |  |                                               |  |                                                            |  |
               |  |       ...           ...          ...          |  |     ...          ...             ...                       |  |
               |  |                                               |  |                                                            |  |
               |  +-----------------------------------------------+  +------------------------------------------------------------+  |
               |                                                                                                                     |
               +---------------------------------------------------------------------------------------------------------------------+

With the help of the comprehensive diagram above, it's important to point out that any contract operation is composed of some components related to the New State and some components that reference the Old State being updated.

The Old State is referenced through Inputs, which point towards previous assignments of related State Transitions and are not found in Genesis.

The New state is represented by:

• Assignments, which are composed by:

  • Seal Definition.
  • Owned State.
• Global State, which can be either mutated or added.
• Metadata, which are only available locally to the current operation.

In addition, we also have several operation-specific fields:

• Ffv or Fast-forward version a 2-byte integer indicating the version of the contract, following the RGB rules of fast-forward versioning. The version of the contract can be updated according to the issuer's choices and needs at certain points in the contract's history, such as concerning inflations.
• TransitionType a 16-bit integer indicating the type of Transition expressed by the operation encoded in the Contract Schema and representing the manifestation of the Business Logic of the contract. It's not present in Genesis.
• ContractId the 32-byte number that references the OpId of the Genesis of the contract. Naturally, it's only present in State Transitions, but not in Genesis.

• SchemaId is a field found only in Genesis, instead of the ContractId. It's a 32-byte hash of the contract Schema used in the contract.
• Testnet is a boolean variable indicating the use of Bitcoin Testnet or Mainnet. It is only present in Genesis.

• ChainNet is an object that describes the context in which the contract should operate; it is composed by Chain (e.g. Bitcoin, Liquid) and Network (e.g. Mainnet, Testenet). It is only present in Genesis.
• Metadata that allows you to declare temporary variables that are useful for validating complex contracts, but that do not have to be recorded as state properties.

Finally, through a custom hashing methodology, all of the fields in the Contract Operation are summarized into an OpId commitment that is placed in the Transition Bundle.

We will cover each contract component in a dedicated subsection. The complete memory layout of each component of a contract operation is given here.

OpId

Each Contract Operation is identified by a 32-byte hash called OpId, which is, precisely, the ordered SHA-256 hashing of the element contained in the State Transition. Each Contract Operation has its own customized commitment and hashing methodology.

ContractId

As an important additional feature, the ContractId of a smart contract is calculated by using the OpId of its Genesis and applying to it a Reverse byte order operation plus a Base58 encoding.

Contract State

Before addressing each state component, it's essential to clarify through which elements a Contract State is expressed in the RGB protocol. Specifically, in RGB, the State of a contract is fully expressed by:

• A single Global State

• One or more Owned State(s) that are controlled by some contract participants

Global States are embedded into Contract Operation as a single component block, while Owned States are defined inside the Assignment construct where they are stored alongside the pertaining Seal Definition.

State update methods and rules

An important feature of RGB, which affects both Global and Owned States, is the way the state is modified. Basically, States may exhibit two different behaviors:

• A Mutable behavior, in which each state transition discards the previous state and assigns a new one.

• An Accumulating behavior, in which each state transition adds a new state to the previous state.

In all cases where the Contract State is neither Mutated nor Accumulated, the respective components are left empty, meaning that no repetition of data takes place in a Contract Operation.

The choice between mutable or accumulated state is set inside the Business Logic encoded in the Schema of the contract and cannot be changed after the Genesis.

The table below provides a summary of the rules regarding the permitted modification of Global/Owned States by each Contract Operation, if allowed by contract schema:

	Genesis	State Transition
Adds Global State	✓	✓
Mutates Global State	✗	✓
Adds Owned State	✓	✓
Mutates Owned State	✗	✓

As a final consideration of this section, in the following table we provide a summary of the main scope-related properties that the various kind of state data elements exhibit in the RGB protocol.

	Metadata	Global state	Owned state
Scope	Defined per contract operation	Defined per contract globally	Defined per single-use-seal (Assignment)
Who can update	Not updatable	Operation creators	Controlled by right owners (parties able to close single-use-seal)
Time scope	Defined just for a single operation	State is defined after/as a result of the operation	State is defined before the operation (when the seal definition is embedded in the previous operation)

Global State

The purpose of Global State can be summarized by the following sentence:"nobody owns, everyone knows" in that it defines certain general features of the contract that must be publicly visible. A Global State is always a public state, and can be written in Genesis by the contract issuer and later modified in state transition by a legitimate party defined in the contract schema.

The Global State is usually made available by contract issuers or contract participants and distributed through both centralized and decentralized public networks (e.g. websites, IPFS, Nostr, Torrent, etc.) in form of a contract consignment. It's important to note that the availability of the Global State is incentivized only by economic means of using and sharing the contract to the wider public: the parties involved are committed to bear the cost of the necessary storage solution that enables the accessibility of this kind of contract data.

Each component of a Global State consists of a 2-field structure that includes:

• A GlobalType which embeds a deterministic reference to the global propriety expressed in the Schema.
• The actual Data expressing the property.

For example, the Global State of a newly issued Non Inflatable Asset, which is encoded in the Genesis, contains:

• The ticker.

• The full name of the token: name.

• The precision of decimal digits: precision.

• The issued supply of the token: issuedSupply.

• A text with some legal disclaimer: terms.

Assignments

Assignments are the core constructs responsible for the Seal Definition operation and related Owned State to which that Seal Definition is bound. They are the central part that enables the rightful transfer of a digital property, described in the Owned State, to a New Owner identified by the possession of a specific Bitcoin UTXO. An Assignment can be compared to a Bitcoin Transaction Output, but possibly embedding more expressiveness and potential.

Each Assignment consists of the following components:

• The AssignmentType which is the identifier of the digital property that is stored in the Assignment (e.g. assetOwner, which identifies a token allocation with its amount).

• The Seal Definition which is a sub-construct containing the reference to the UTXO.

• The Owned State which specifies how the properties associated with the AssignmentType are modified.

Seal Definition

The first main component of the Assignment construct is the Seal Definition which points to the new owner of the allocation in the form of txptr, vout and blinding.

• txptr is a more complex object than a simple hash of a Bitcoin Transaction. In particular, it can have two distinct kinds:

  • Txid: a regular bitcoin transaction identifier

  • WitnessTx: "self", a special value that allows to reference the witness transaction for the current transfer. This is required because the anchor contributes to the txid, leading to a circular dependency

  The WitnessTx value only applies to operations that have a witness transaction, which is not always the case. So we have different names for seals depending on whether it's allowed:

  • Genesis seal, created by Genesis, always needs to point to an existing txid since there is no witness transaction.
  • Graph seal, in which both kinds are supported:

    • Txid, which leads to what we call a "blinded transfer"

    • WitnessTx, that results in a so-called "witness transfer". This is useful for instance in Lighting channel updates and when the recipient doesn't have any available UTXOs.

• vout is the transaction output number within the Transaction which txptr refers to. The txptr field together with vout field constitute an extension of the standard outpoint representation of Bitcoin transactions.

• blinding is a random number of 8 bytes, which allows the seal data to be effectively hidden once they have been hashed, providing privacy to the recipient at least until the allocation is later spent again.

The concealed form of the Seal Definition is simply the SHA-256 tagged hash of the concatenation of the four fields:

SHA-256(SHA-256(seal_tag) || SHA-256(seal_tag) || txptr || vout || blinding)

Where:

• seal_tag = urn:lnp-bp:seals:secret#2024-02-03

Notes:

• A BlindSeal in which TxPtr is bound to be a Txid is called GenesisSeal

• A BlindSeal in which TxPtr can be either a Txid or the special value WitnessTx is called GraphSeal

Owned States

This second Assignment component is responsible for defining and storing the data assigned by the Seal Definition. Before proceeding with the features of Owned States, a brief digression about Conceal/Reveal feature of this construct is necessary. Unlike the Global State, Owned States come in two forms:

• Public Owned States: in which related data must always be kept and transferred in a revealed form by their owner recursively. For example, they may apply to some image files that must be bound to ownership, but are always publicly shown. This form can be described by the phrase: "someone owns, everybody knows".

• Private Owned States: in which related data is kept hidden and revealed only if it is part of the history for validation purposes. For example, the number of tokens transferred in a token contract is generally kept private. This form can be summarized by the sentence: "someone owns, nobody knows".

In RGB, an Owned State can only be defined with one of the three StateTypes: Declarative, Fungible, Structured:

• Declarative is a StateType with no data, representing some form of governance rights that can be performed by a contract party. For example, it can be used for voting rights.
• Fungible is the StateType that allows for the transfer of fungible units such as those in a token contract; it consists of a single amount field.

• Structured is a State Type that can accommodate ordered and limited data collections of arbitrary content, which can be used as input for complex contract validation schemes. Its maximum storage size is limited to a maximum of 64 KiB.

The diagram below shows a summary of the three state types with their content:

  State                 Content

+---------------------------------------

                     +---------------+
                     |               |
  Declarative        |   < void >    |
                     |               |
                     +---------------+

+---------------------------------------

                     +---------------+
                     | +-----------+ |
  Fungible           | |   Amount  | |
                     | +-----------+ |
                     +---------------+

+-------------------------------------

                     +---------------+
                     | +-----------+ |
  Structured         | | Data Blob | |
                     | +-----------+ |
                     +---------------+

In addition, a summary of the technical characteristics of each StateType is provided in the table below:

Item	Declarative	Fungible	Structured
Data	None	64-bit signed/unsigned integer	Any strict data type
Type info	None	Signed/unsigned	Strict Types
Size limits	N/A	256 Byte	Up to 64 kByte

Inputs

Similar to Bitcoin Transactions, Inputs represent the "other half" of the Assignment construct. They have the basic role of referencing Assignments from a previous State Transition or Genesis. Inputs are not present in Genesis and consist of the following fields:

• PrevOpId containing the identifier of the previous Assignment operation being referenced.

• AssignmentType containing the identifier of the contract property being modified by the referenced Assignment.

• Index is the index number of the Assignment being referenced within the Assignment list of the PrevOpId. The Index is calculated implicitly from the lexicographic sorting of the hashes of the Concealed Seal of the referenced Assignments.

The validation procedure of RGB, in addition to checking the correct closure of the Seal, is also responsible for checking the consistency between the inputs and outputs, particularly for the Fungible StateType. In this case, the validation procedure, embedded in the AluVM script part of the Schema, checks that the amount of tokens of each Input of a specific AssignmentType matches the number of tokens of the Assignments with the same AssignmentType.

As a natural property, Genesis has no Inputs as well as all State Transitions that don't change some Owned States of any kind. For example, a State Transition that changes only the Global State has no Inputs.

Metadata

The metadata construct is a particular field that contains all the information that is not useful to be stored as part of the contract state history. It has a maximum size of 64 KiB and can be used, for example, to host temporary data from a complex contract validation procedure by the AluVm engine.

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