HSuite is building for DeFi builders with Smart Node technology

HSuite has taken aim at what they see as fundamental weaknesses within current decentralized finance (DeFi) solutions in the market: the limitations inherent in smart contracts; and, limited on-ramp opportunities for the web2 audience, specially developers. These are weaknesses the team at HSuite believe are keeping more users and enterprises on the sideline when it comes to greater participation in web3 – and they believe that they have developed a solution for this. Let’s take a closer look at each, starting with HSuite’s answer to smart contract limitations.

Enhancing Smart-Contracts

Smart contracts play a critical role in enabling secure and transparent peer-to-peer financial transactions in DeFi. They essentially function as digital agreements that contain predefined terms and conditions. When these conditions are met, the smart contract automatically executes the specified actions. One of the main benefits of this is that it eliminates the need for intermediaries like banks or brokers who benefit from inefficient processes and fee structures.

Smart-Nodes change the game for better

While smart contracts offer undeniable advantages in automating financial agreements and fostering trustless transactions, their inflexibility and potential for vulnerabilities pose significant challenges for DeFi's continued growth. Once deployed on-chain, modifying their code becomes a complex and potentially risky process. And once deployed, the expertise needed to make any modifications is often in limited supply. This inflexibility can pose challenges if they need to adapt to a fast paced or evolving market. Additionally, smart contract vulnerabilities have been exploited in the past, leading to significant financial losses. HSuite’s solution to a dependency on smart contracts was the development of “Smart Node” technology.

The gateway to web3

Smart Nodes, unlike smart contracts which reside directly on-chain, are highly customizable programs deployed within virtual machines that sit just above the mainnet layer, or layer 1, and are hosted in the cloud. The team at HSuite term Smart Nodes a “layer 1.5” technology due to their position just above the mainnet and able to then facilitate transactions between the mainnet and third party applications. Because of this architecture, Smart Nodes can leverage cloud resources for more intensive computations, enabling them to handle much more complex tasks, which is very important.

No more technical limitations

Another reason why Smart Nodes are able to support more complex tasks is that they are not restricted by the memory limitations that smart contracts have. Memory limits create a trade-off between functionality and efficiency for developers and when exceeded, can also have cost implications that can be negatively impactful. Smart Nodes, by having zero memory limitations, empower developers to design complex DeFi applications without worrying about exceeding memory constraints. This allows developers to build richer functionality, more intricate features, and ultimately, a more powerful and versatile DeFi experience.

Limited scalability is another important issue about smart contracts. As transaction volume increases on a distributed ledger (DLT), smart contract execution can slow down and become expensive. By leveraging the processing power of decentralized cloud resources, Smart Nodes can achieve "infinite scalability". All of which offer massive value to any enterprise use case.

Solving the oracle problem between multiple entities and chains

Smart Nodes, again thanks to their unique position, are able to overcome another limitation of smart contracts, their dependence on oracles and what is termed “the oracle problem”. The oracle problem revolves around a very simple limitation – blockchains have no secure way to interact with external systems or sources of data. Oracles are intended to act as a bridge between a blockchain network and any external data sources and systems, but unfortunately vulnerabilities exist with these. For one, if an oracle goes down due to technical issues or gets compromised, the entire flow of data between the mainnet and oracle grinds to a halt. Smart contracts relying on that data stall or make decisions based on outdated information.

Another issue with oracles is security. If a malicious actor gains control of an oracle, they could manipulate the data being fed to the blockchain. This could lead to incorrect asset prices for DeFi applications, triggering unfair contract executions, or even disrupting cross-chain communication entirely. Smart Nodes solve the oracle problem entirely.

With Smart Nodes, transactions can occur on or off chain, as well as across chains. Meaning, Smart Nodes can access any blockchain, DLT, or any internet connected data source. Also, if a Smart Node goes down, there are additional nodes available to take its place. This level of redundancy ensures no single point of failure and provides ultimate flexibility for any applications that use a Smart Node.

Simplifying development transition to web3

For web2 developers, the transition to web3 can be somewhat challenging due to limited on-ramp opportunities that can make this move seamless. It's not just about learning new scripting languages and technologies, but also becoming more comfortable with the fundamental shift toward decentralization and how that works in the context of DLTs. Much of how HSuite has been able to better enable web2 developers can be attributed to their Smart Node technology. Let’s take a deeper look.

As mentioned, Smart Nodes sit above the protocol layer of the DLT. Why is this important for developers? Through this architecture, Smart Nodes are able to act as an abstraction layer, shielding developers from the complexities of the underlying DLT infrastructure and giving them a more familiar and user-friendly environment to work in. This way, they can focus on building applications without needing deep knowledge of DLT protocols or network management.

Additionally, smart contract development requires familiarity with new languages like Solidity. Learning these languages from scratch can be a significant barrier. With Smart Nodes, developers are able to use familiar web2 tools and languages like Javascript and Python. This allows them to seamlessly transition their expertise into the web3 space without a complete overhaul of their skillset and still build innovative decentralized applications.

Why Hedera?

HSuite has been able to take a truly innovative approach to DeFi by leveraging the Hedera network. Why is that? At its inception, the Hedera network was designed with performance, scalability, security, and sustainability at its core. All of which align with the goals of the HSuite team.

This doesn’t only apply to their Smart Node technology. The team at HSuite have developed a suite of groundbreaking features that unlock the network's full potential for users that include a Token Manager, DAO Engine, and more. All of which can be white labeled, allowing businesses to seamlessly integrate them into their own platforms. This flexibility really makes it easier for broader enterprise participation and creates an opportunity for growth of the DeFi ecosystem. Let’s take a deeper look at why HSuite looked to Hedera.

Taking advantage of the Hedera Consensus Service (HCS) which can support transaction volumes at Hedera native speeds of over 10,000 transactions per second, it is way bigger than Hedera Smart Contract service which is Ethereum virtual machine compatible, doing so only supports up to 300 transactions per second.. More than enough to satisfy even the most intensive enterprise use cases.

Also, thanks to the transparency of Hedera’s low, fixed fee structure, users can eliminate guesswork associated with transaction costs, allowing them to focus on core development and integration. This offers massive value for high throughput applications.

Because HSuite's Smart Nodes, operating directly on top of the Hedera network, are able to leverage Hedera’s native services, they benefit from the security of the network. Hedera prioritizes enterprise-grade security and guarantees transaction validity even in the face of bad actors. This robust security framework empowers users to confidently build and deploy mission-critical applications on the Hedera Network.

Finally, Hedera’s commitment to sustainability was also in line with the values of the team behind HSuite. Their Smart Node technology has yet another benefit over smart contracts, and that is in energy consumption. Smart Nodes require significantly less energy and therefore reduce carbon emissions compared to traditional smart contracts running on other networks.

What’s next for HSuite?

Currently, HSuite has partnered with Scicom MSC Berhad, a leading global business process outsourcing provider, to create a secure and scalable digital identity application for Education Malaysia Global Services (EMGS), which supports all of the international students in Malaysia’s public and private higher education systems. This application is using HSuite's Smart Node technology to provide EMGS with a more efficient, secure, and private way to manage student identities.

HSuite is also expected to make available two editions of their Smart Node technology: one edition that caters to their strong developer community, which is already deeply entrenched in the web3 space and pursuing innovative use cases; and another which will be focused on an enterprise audience, will offer a variety of SDKs for enterprise developers so they have a familiar user experience and can be immediately productive. This edition will also provide the option for enterprises to have their own completely private network.

HSuite is poised to revolutionize DeFi on the Hedera network through their innovative Smart Node technology that is enabling a web2 audience to succeed with web3 innovation.