PACT Master Class. Ever wondered what PACT is? Here’s your master class: What is a PACT? PACT stands for Penalty Adjudication for Cross-chain Transactions. It is an interoperability standard created by Coinweb. It is a mechanism designed to enable secure, low-cost, cross-chain transactions by ensuring fair and consistent penalty adjudication. PACTs are optimized for short- and medium-term cross-chain state machines with defined value at risk (VaR). What are the Key Properties of PACTs? > It enables cross-chain operations without an extra consensus layer. > Works for cross-chain transactions on any blockchain, including Bitcoin. > Coordinates behaviour for short- and medium-term state machines. > Highly capital-efficient when VaR is defined. > Supports any number of active PACTs with tailored collateral. > Adjudication is consistent and cannot fail due to reorgs or chain failures. > Can be used on a single chain as an alternative to certain smart contracts. What benefits does PACT create for users? > Cross-chain operations are >95% cheaper than through other interop frameworks. > If funds on the destination chain are incorrect or delayed, PACT compensates the user. > The speed of swaps is faster as there’s no extra consensus layer. > It has proven to be >45% cheaper on single-chain swaps compared to the likes of PancakeSwap. ​​ What is a Chain Transaction Sentinel (CTs)? A Chain Transaction Sentinel (CTs) is a reactive smart contract that observes state transitions on individual blockchains. It acts as an independent observer, gathering proof of what is happening on a given blockchain network. What is a Penalty Adjudicator (PA)? The Penalty Adjudicator (PA) evaluates data from the CTs to determine if the PACT rules were followed. If the rules are violated, the PA assigns blame and releases collateral to the wronged party. How Does PACT Ensure Consistent Penalty Adjudication? PACTs use reactive smart contracts (RCSs) and a consistent adjudication mechanism to ensure fairness. This means the system always observes the true state of the blockchain, even during reorganizations or failures. What are the Use Cases for PACTs? > Cross-chain swaps. > Cross-chain NFT sales. > OTC trading and token swaps. > Cross-chain staking (with zero collateral). > Bitcoin cross-chain payments. > And more... How Does PACT Handle Attacks/Hacks? PACTs are designed to mitigate attacks by: > Setting an upper limit on VaR to ensure appropriate collateral. > Using algorithms like TWAP (Time-Weighted Average Price) or moving maximums to prevent manipulation of collateral requirements. > Ensuring collateral is always sufficient to compensate the wronged party. What Makes PACTs Capital Efficient? > Collateral is only required during the active period of the state machine. > Once the state machine completes, collateral is released, reducing bound capital. > For Coinweb-native dApps, collateral requirements can be further reduced or eliminated. How Do PACTs Compare to Multi-sig Bridges? > Multi-sig Bridges: Security relies on continued trust and usage. Failures can result in total loss of collateral and confidence. > PACTs: Use consistent penalty adjudication, ensuring gentle failures where collateral is awarded to the wronged party, maintaining confidence in the system. What is the Role of Developers in PACTs? Developers define the cross-chain state machine, set up CTS contracts, and create the Penalty Adjudicator (PA). They also build dApps with user interfaces or integrate PACTs with other smart contracts in the ecosystem. What chains can PACTs be used for today? $BTC, $ETH, $BNB, $POL, $LTC, $BCH, $DOGE, $EGLD & $KUJI. More incoming... Can PACTs Be Used on a Single Chain? Yes, PACTs can be used on a single chain as an alternative to certain smart contracts, providing similar security and efficiency benefits. Where can I try using PACTs today? Today you can test PACTs using @CWAPSWAP.

Earlier today NEAR Intents services were stopped after a security incident was detected. The incident was caused by a bug in the Omni deposit and withdrawal infrastructure interaction with NEAR Intents smart contract. The preliminary report indicates the total loss of approximately $3.8M. These funds will be compensated in full. The contract-side vulnerability has been patched. The operations of the NEAR Intents and near(.)com are expected to resume within 1h. Deposits and withdrawals on the following networks will remain unavailable for an additional ~12 hours while fixes to the Omni infrastructure are completed: BSC, Polygon, TON, Optimism, Avalanche, Stellar, Monad, LayerX, Adi, Scroll and Plasma. In case users hold any assets from these chains inside NEAR Intents (for example, in HOT wallet or on near(.)com), they will be able to swap them into other assets once NEAR Intents is back up (in ~1h). The incident has been reported to law enforcement, and we are working with security and blockchain analytics partners to trace the funds and pursue recovery. A detailed report will be shared publicly in the following days.

Small progress update. MultiversX halted their network shortly after the Supernova upgrade, and Coinweb kept running smart contract deployments the entire time without interruption. This is the benefit of building on top of many chains instead of betting everything on one: no single chain's heartbeat can stop the system. We've also started exploring private swaps built using the PACT Framework, albeit very very very early stage. New price oracles are in testing now, including ARB-USD and SOL-USD, and Solana smart contract event gathering has been introduced at the core level. On the infra side: our testing SDK and core simulation got a serious upgrade, cutting some test runs from minutes down to seconds. The new Contract Kit is being hardened ahead of migrating existing contract code, and early improvements have already cut some contract-flow execution times by around 50%. Steady progress across the board.