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The L2 Ledger

Each chain in IOTA Smart Contracts contains its own L2 ledger, independent of the L1 ledger. Smart contracts can exchange assets between themselves on the same chain, between different chains, and with addresses on the L1 Ledger.

Imagine that you have a wallet with some tokens on the L1 ledger, and you want to send those tokens to a smart contract on a chain and later receive these tokens back on L1.

On the L1 ledger, your wallet's private key is represented by an address, which holds some tokens. Those tokens are controlled by the private key.

In IOTA Smart Contracts the L2 ledger is a collection of on-chain accounts (sometimes also called just accounts). Each L2 account is controlled by the same private key as its associated address and can hold tokens on the chain's ledger, just like an address can hold tokens on L1. This way, the chain is essentially a custodian of the tokens deposited in its accounts.

Deposit and Withdraw Tokens

The following test demonstrates how a wallet can deposit tokens in a chain account and then withdraw them.

Note that the math is made somewhat more complex by the gas fees and storage deposit. You could ignore them, but we include them in the example to show you exactly how you can handle them.

func TestTutorialAccounts(t *testing.T) {
env := solo.New(t, &solo.InitOptions{AutoAdjustStorageDeposit: true})
chain := env.NewChain()

// create a wallet with some base tokens on L1:
userWallet, userAddress := env.NewKeyPairWithFunds(env.NewSeedFromIndex(0))
env.AssertL1BaseTokens(userAddress, utxodb.FundsFromFaucetAmount)

// the wallet can we identified on L2 by an AgentID:
userAgentID := isc.NewAgentID(userAddress)
// for now our on-chain account is empty:
chain.AssertL2BaseTokens(userAgentID, 0)

// send 1 Mi from the L1 wallet to own account on-chain, controlled by the same wallet
req := solo.NewCallParams(accounts.Contract.Name, accounts.FuncDeposit.Name).
AddBaseTokens(1 * isc.Million)

// estimate the gas fee and storage deposit
gas1, gasFee1, err := chain.EstimateGasOnLedger(req, userWallet, true)
require.NoError(t, err)
storageDeposit1 := chain.EstimateNeededStorageDeposit(req, userWallet)
require.Zero(t, storageDeposit1) // since 1 Mi is enough

// send the deposit request
AddBaseTokens(gasFee1) // including base tokens for gas fee
_, err = chain.PostRequestSync(req, userWallet)
require.NoError(t, err)

// our L1 balance is 1 Mi + gas fee short
env.AssertL1BaseTokens(userAddress, utxodb.FundsFromFaucetAmount-1*isc.Million-gasFee1)
// our L2 balance is 1 Mi
chain.AssertL2BaseTokens(userAgentID, 1*isc.Million)
// (the gas fee went to the chain's private account)

// withdraw all base tokens back to L1
req = solo.NewCallParams(accounts.Contract.Name, accounts.FuncWithdraw.Name).
WithAllowance(isc.NewAssetsBaseTokens(1 * isc.Million))

// estimate the gas fee and storage deposit
gas2, gasFee2, err := chain.EstimateGasOnLedger(req, userWallet, true)
require.NoError(t, err)
storageDeposit2 := chain.EstimateNeededStorageDeposit(req, userWallet)

// send the withdraw request
AddBaseTokens(gasFee2 + storageDeposit2). // including base tokens for gas fee and storage
AddAllowanceBaseTokens(storageDeposit2) // and withdrawing the storage as well
_, err = chain.PostRequestSync(req, userWallet)
require.NoError(t, err)

// we are back to the initial situation, having been charged some gas fees
// in the process:
env.AssertL1BaseTokens(userAddress, utxodb.FundsFromFaucetAmount-gasFee1-gasFee2)
chain.AssertL2BaseTokens(userAgentID, 0)

The example above creates a chain and a wallet with utxodb.FundsFromFaucetAmount base tokens on L1. Then, it sends 1 million tokens to the corresponding on-chain account by posting a deposit request to the accounts core contract on the chain.

Finally, it sends a withdraw request to the accounts core contract to get the tokens back to L1.

Both requests are affected by the gas fees and the storage deposit. In some cases, it is possible to ignore these amounts if they are negligible compared to the transferred amounts. In this case, however, we want to be very precise.

Deposit Requests

1. Request to Deposit Funds

The first step in the deposit request is to create a request to deposit the funds with solo.NewCallParams.

2. Add Base Tokens

In the example above we want to deposit 1 Mi, so we call AddBaseTokens(1 * isc.Million).

This instructs Solo to take that amount from the L1 balance and add it to the transaction. This is only possible for on-ledger requests.

3. Calculate Gas Fees

Once the chain executes the request, it will be charged a gas fee.

We use chain.EstimateGasOnLedger before actually sending the request to estimate this fee.

4. Estimate Storage Deposit

On-ledger requests also require a storage deposit. We use EstimateNeededStorageDeposit for this. As the 1 Mi already included is enough for the storage deposit there’s no need to add more.

5. Add Gas Budget to the Request

We adjust the request with the gas budget and the gas fee with WithGasBudget and AddBaseTokens, respectively.

6. Send the On-Ledger Request

Finally, we send the on-ledger request with PostRequestSync.

7. The Chain Picks Up the Request

Any attached base tokens (1 Mi + gas fee) are automatically credited to the sender's L2 account.

8. The chain executes the request

The gas fee is deducted from the sender's L2 account.

9. The Transfer is Complete

We have exactly 1 Mi on our L2 balance.

Withdraw Request

The process for the withdraw request is similar to the deposit process, with two main differences:

1. Ensure the L1 Transaction Can Cover the Storage Deposit

As the storage deposit is larger than the gas fee, we must ensure that the L1 transaction contains enough funds for the storage deposit. These tokens are automatically deposited in our L2 account, and we immediately withdraw them.

2.Set the Request's Allowance

We use AddAllowanceBaseTokens to set the allowance of our request. The allowance specifies the maximum amount of tokens the smart contract can debit from the sender's L2 account.

It would fail if we posted the same deposit request from another user wallet (another private key). Try it! Only the address owner can move those funds from the on-chain account.

You can also try removing the AddAllowanceBaseTokens call. It will fail because a smart contract cannot deduct funds from the sender's L2 balance unless explicitly authorized by the allowance.