How to Build an App Connected to the Yellow Network I Steven Zeiler

Welcome everyone. Thanks for being here. Um, my name is Stephen from the Yellow Network at yellow.com where we are building a next generation of trading and um financial applications uh platform and I'm I'm very happy to present today how to build an app using the the yellow network and um hopefully You can see my screen now. Um yeah.

So uh welcome to building an app. Um the yellow network is a platform for building trust minimized or trustless applications. So, um, we all know that Bitcoin came onto the scene over a decade ago and changed the way that that people trust their money. The old way was that um, bankers control your money. They can freeze your account at any time and you need permission to move your money.

And there was a lot of security problems with trusting third parties with your money. And Satoshi Nakamoto solved that problem by making it so that you control your money and you can send to anyone at any time. And most importantly, the math replaced trust. Trust in issuing the currency, the the supply and the transfers. And then the next step from Bitcoin was when Vitalic and team created Ethereum which further eliminated the need for trusting middlemen when it comes to enforcing contract and um and applications.

So instead of needing uh lawyers and to create things like tokens and and participate in applications, um you no longer needed to trust those. You could trust smart contracts to enforce your code, remove the middleman, and have instant or at least uh close to real time enforcement of your agreements and programmable agreements. So, Ethereum's innovation was replacing lawyers and trust with smart contracts. But as every Ethereum developer knows, there are still a lot of user experience problems um with building applications on Ethereum. And the next evolution, chapter three in in the evolution of trust is the yellow network.

And the yellow network does is it replaces it replaces brokers or trusted third parties with apps or with code. Um so in in the past users would have to trust uh platforms and applications with their money like uh an exchange. you have to deposit your money in that exchange and and give give control of your funds over to that exchange or or with a game, you would need to deposit funds into a game server in order to use use the money in that that game. Um and of course on the blockchain uh things are a little bit slow to confirm and know 10 5 10 15 30 60 seconds isn't that slow but when you're making a real life application like a normal website web app mobile app that people use people expect that to be instant. So, uh, that's really a big pain point in the user experience, but even worse, um, expensive fees.

So, the Yellow Network creates a platform where people can build apps without central trusted brokers and you can create trading venues where you can rely more on the code and less on a corporation to hold your funds. And we can create games and apps that are more peer-to-peer and trustless. And most importantly, that the experience is instantaneous. Things happen as quickly as a click and for basically free, essentially no gas cost. So, uh, the pattern is clear.

Um, crypto removes trust and the yellow network takes that to the next level. and lets us build really fast, really cheap, really great user experiences on top of the blockchain infrastructure that already exists. Um, and so you've probably used dexes before and uh dexes are awesome because they give you control over your funds, but they're slow and they're expensive to transact. And if there's network congestion, your transactions might take a long time. And when you're trying to trade or traders or you're trying to build applications, these block confirmations and the slowness makes things really unpredictable sometimes.

And um in the traditional finance, traditional trading things happen in a 100 milliseconds or less, right? When you go to pay, you do Apple Pay, anything like that, trading in a traditional exchange, they're really fast. But dexes are pretty slow and that causes a lot of problems. But even worse is that you're paying a lot of fees to to transact on decentralized exchanges. So you you get to keep control on a DEX, but gas fees might be two cents, five cents, a dollar, $10, even they can go even higher depending on the network congestion.

And if you want to do lots of interactions and have a really great experience, that's going to become prohibitively expensive for a lot of people. Um and so that really reduces the the audience you can have in your application your game uh building on the blockchain. So fundamental problem here is that centralized uh platforms require trust where you have to trust them and you have to give them funds and what you want is actually to have control of your funds and control of your trade and have more trust minimized or trustless interactions. So, and and of course, um it's kind of insane how much you can pay on dexes and interacting with smart contracts, but we all love web 3 and the the power of using blockchains to settle currencies and and to have uh have digital cash. But there has to be a better way.

So, Yellow Network helps you build apps without brokers, without a central third party, a middleman. A broker is a middleman who you give your money to in order to then interact with someone else with your your ether player or the person you're trading with. And so um we can instead build applications with no middleman where people can transact directly and also maintain the benefits of instant like one millisecond super fast transactions as soon as you click a button funds are transferred or your game updates. It's very hard to build a game when when you have to wait 5 seconds, 10 seconds or more. Um, okay.

So the yellow platform gives you the ability to build these applications and what we'll what we'll cover here is the technology behind and how it works and some examples of of uh code to get you started to give you an idea of how to build with the yellow SDK and the yellow um state channels. So the the techn the fundamental technology that enables us to build this platform are called state channels and they help enable peer-to-peer interactions and um we're seeing people building trading platforms uh DeFi protocols prediction markets and different games where the users of these applications don't have to trust the developers with their money and they get a trusted platform for building real time apps um all out of the box. So um I uh I appreciate everyone being here and um yeah. Okay, I see I see a question and and feel free to to ask the questions um at any time. So someone Levon asked what yellow offers with state channels is somewhat similar to the lightning network.

Um and that is that is a lot kind of true. The lightning network is a way to make instant payments and instant transfers of information and money on top of the Bitcoin network. And the yellow network enables the yellow brokers enable that same kind of thing but across multiple different chains and um especially focused around Ethereum compatible chains and with more chains coming. So it's kind of analogous to the lightning network but more of a generic platform for building apps. Lightning Network is one app which allows you to transfer Satoshi's and Yellow Network is a platform for building apps like that.

Um so uh please let me know if if anyone has heard of state channels before or if there are any um layer two uh that you have used before. And of course if you've experienced problems or slowness with dexes or smart contracts but the um the yellow architecture is to multi-chain. So we connect to a bunch of different chains. So far seven chains and there will be more uh coming online as we have developers asking asking for access. Um, and the yellow network or the yellow broker creates a unified experience across all of these chains where you can get a single balance of stable coins or other assets and um there it's all connected in through state channels to the various blockchain.

Um, and the way that works is the yellow network has deployed smart contracts onto each blockchain. And so there's two contracts. The first is a custody contract. And this is how you securely lock funds into the network. When you when you deposit into the yellow custody contract, it you your funds onchain are now available for use offchain within any of the applications on the yellow network.

So you you lock your assets in and it's different from from depositing your funds in an exchange like Binance where there you're just you just give them your funds. But in the yellow custody contract, they're locked in a contract. And um you still maintain a high level of control of your funds because there's a second contract that it works with called the adjudicator which enforces the rules and allows you to dispute any any problems with the fund. So if if you if if there's any issue with the yellow network or the yellow network goes down or there's something unfair happening, you can prove cryptographically and withdraw your funds on your own. And that uses the adjudicator contract.

Um and so how does how does this work? Um, basically you deposit into the custody through a state channel and then you get you get your assets once they're in the channel. A channel is like uh an on and off ramp into the yellow network. And once your assets are in the yellow network, you can use them in the all the applications in the yellow network and trade instant instant trades, instant uh transfers and secure multiplayer applications that people are building. Um and on the same way the state the channels to the blockchain allow you to withdraw your funds out of the network back onto the chain they came from or onto another chain.

Um and so you can you can withdraw on your own without a having to ask permission. So with a a traditional trading environment like um Binance, Kraken, when you want to withdraw, you request from them to withdraw and then they send you your money. But with the yellow network, you you create you you you create a withdraw action on the smart contract and that lets you withdraw your own funds without permission back into the chain. Um, Huhas says, "What's the Solia adjudicator contract? I want to deposit."

Um the contract addresses are listed in our documentation and I can I can post a link to there um shortly. But uh for each for each chain there is a a specific contract address and um we have our SDK provides some tools to easily interact with the the uh various contracts. So you get a nice highlevel developer tool experience for calling the the contract. Um yeah. So the most crucial part about the about the yellow network compared to a more um a different platform is that it has trustless onchain settlement.

So you can withdraw your own funds if anything happens to the application or the network. Even if the yellow network entirely goes down, using your Ethereum keys or your base keys or using your your own keys, you can withdraw your funds. So you maintain a high level of control uh over your assets and that lets us build a much more secure and much more reliable platform for developers and you never really have to trust yellow. Um and then on top on top of that yellow provides a unified ledger. So, if you've used if you've used um let's say if you deposit USDC to Binance, you uh no matter which chain you deposit on, Binance credits you with USDC.

You deposit 100 USDC, you get USDC. And that's the same way that the Yellow Network works. Um you get a unified balance. So as an application developer, you don't have to know which chain your users are using um where the funds are coming or even where they want to settle ultimately settle their funds to which chain. You don't have to know anything about that.

You get a unified balance. So you can just use Tether or USDC or ETH or other supported assets within your application without having to worry about the underlying blockchains? Is um is avalanche chain supported? Avalanche chain uh that is EVM compatible then it it can very easily be supported. Um I I admittedly don't don't know the answer.

Uh let's see. Here we go. So we don't have Avalanche chain supported yet, but um I assume we can deploy the same smart contract to that chain. And most chains with smart contract support uh can be supported by the yellow network. whenever there's a a developer use case or um an economic reason to add a a chain, we can add that chain.

So, we support these seven chains so far. Polygon base, Binance Chain, Ethereum, uh Lineia, and some more. All right. So, um, the Yellow SDK is, uh, makes all of this possible and easy, and it's built on the same principles as onchain transactions. It uses the same cryptographic signatures as normal onchain transactions.

Um, and it allows for multi multi-party applications with multi- signature. So you can build apps like auctions or escrow betting even multiplayer games that have tokens or or stable coins in the game. And especially people are building trading platforms and prediction market platforms where they want very fast instant transactions. Um, and it's a pretty simple API, so you don't have to get too far into the low level of of blockchain programming even in order to build an application on the yellow network. Um, and yes, can Yellow support test net?

Yes, yellow supports uh several different test nets and we have a test net um we have YUSD for test nets. So um you can get uh us YUSD stable coin on and then withdraw it to the various test nets and that makes it easy to build without having to even spend any fees on gas. um when you're onboarding or offboarding funds from the network. Um okay. So once when you're building your application, the the key uh the key concept is what we call an app session, which allows your app to um have mult have their players and their participants bring funds into your application and use them according to a set of rules that you define.

So, it's really good for um negotiating a deal, trading um any peer-to-peer application. And the the users have to sign off on changes to the application state or updates to the to the balances of funds that they have between uh and they sign off with their normal um keys. So like their their normal Ethereum fees and all of their updates can happen within this app session instantaneously with no gas fees and only if the users after they finish with the app. If they want to withdraw their funds off the platform, then they will pay a gas fee to withdraw. But any action interactions within your app session have no gas fees and zero latency essentially.

Um, Favore says, "Will there be popups?" Um, we have so far no. People are building applications where you can authorize um a session with your funds and then once you authorize a session key, you can interact instantaneously and sign transactions without a popup to your wallet. So there's a popup one time when you authorize the application session and then after that you can interact freely without popups. So it really makes the experience a whole lot better for it for all kinds of applications.

Um thanks for all the questions everyone. So the first step is we have our um our SDK is so yellow TS is a tool that I've I've personally worked on that uh makes it easy to connect to the yellow network and manage your connection. And this Nitrolyte package, let's see if I can zoom in. Nitrolyte package. This is the tool set for the yellow protocol.

um and for interacting with the state channels and building up all of the messages. Um and then VM we use a lot for this is the library for interacting with Ethereum uh keys and signing creating signatures so that we can securely authenticate. So the first thing the first thing you do is you connect to the node and then you authenticate your wallet by signing a a um Ethereum standard uh message authenticating your your wallet and then you get a session key that becomes your serer for for the application and then you don't have to prompt anymore. Oh and by the way this works in both the browser and in the backend. So you can create server-based applications or you can create um entirely browser based applications or a combination of both.

Um great. So when you're building your application essentially you define your app and you say who's participating in the application. Um and then uh who those are the signers that you want to have in your app and you give them weights so that um and you define a quorum so that you know how many signatures are required in order to approve an update to the state which could be an update to your game state, an updated negotiation or it could be a balance transfer between between parties. And you can have more than two. You can have various different um different players and you have a quorum.

And then when you want to update the state, you have the you start your session and then you have the users sign the state. And this happens in memory. So you don't have to prompt the user again. And we have functions for creating state update messages that then are signed by the various participants. And you could have two parties or you could have three parties.

For instance, you have two players plus a server where one player and the server have to sign off or both players have to sign off. Um, and you can have that all happen in real time. Um, and very easy with our SDK. This these functions are coming from our SDK. So rather than doing a a calling a contract on chain like you would uh with an onchain transaction, you call a state update in the yellow uh broker and that updates the state but first it verifies the signatures.

So in this case when you have multiple parties who are signing you um you first have one party sign and then you need to have the other parties sign and attach both signatures and then send that update to the yellow bro uh broker node and the state will update and um all updates happen. They require a quorum of signatures and it's cryptographically verified. And when you're when you're done with the application, you can close the session and have people uh the players sign off to close the session and then their funds are released back into their normal their normal balance. Um so here's in summary the complete flow. You connect to the node and authenticate with your Ethereum keys and then your users join a session, an application session that you've defined.

They can interact, play the game, update the state, uh update balances, and they all sign off on all of these updates. So, it's all cryptographically verified and secured. And when they're done, they sign off and close the the state. And now you have a a trustless instant application with real real time playability and uh no blockchain fees during the application. So um thank you very much for for listening and learning today.

Uh we cover the basics of the yellow network and um we have uh telegram channels where a lot of developers are currently participating. We have a yellow accelerator that we just launched our cohort for Q1 and uh we'll have more um more accelerator sessions every quarter where people are building their apps and there are there are prizes and uh pitches and we help promote their apps and um all of this is instant no gas fees and very much trustless. So, um I here you can see a link to my code tutorials that I've been making and we have a lot more information on our documentation page at yellow uh docs.yello.org.

So, um thank you and we have about one minute left for any additional questions. Um any privacy obfuscations happening here? All of the all of the application interactions are not happening onchain, they're offchain. So there's an an additional element of privacy there. All right, I'm at the end of my 30 minutes.

Uh thank you everyone for joining.