Kadena's Pact Capabilities: A Secure Future for Smart Contracts

Pact is a human-readable, secure, and highly customizable smart contract language that differentiates our blockchain from other ecosystems. Pact 5 is expected to be out in Q1 2025. The overhaul coming with Pact 5 ensures our performance overall is faster in many areas. Some executions are two to three times faster, others are ten times faster.

Ahead of the launch of Pact 5, we wanted to take time to discuss one of the features of Pact that makes us stand out — capabilities. Capabilities provide developers with the flexibility to define specific authorizations that are embedded in smart contracts.

In other words, capabilities define and manage permissions that authorize or deny access to smart contract operations. Today we’ll dive deeper into what capabilities are, the types of authorizations you can create by using capabilities, and how developers can use capabilities to build customizable and secure applications.

What Are Capabilities in Pact?

Unlike traditional permission models, Pact’s capabilities allow developers to define granular authorizations that control exactly what users and contracts can do. Capabilities are Pact’s answer to the complex security needs of modern smart contracts. However, that’s not all they are. The parameters for constructing capabilities can be as endless as whatever your idea is for a dApp.

Capabilities allow developers to set specific permissions, allowing a high degree of control over contract actions. Capabilities express conditions in the language – the condition can be whatever you want. Furthermore, capabilities provide a level of security built into the language that enables users to pick and choose what exactly is going on when they’re signing for transactions. The structure of capabilities gives you enhanced control and transparency over the actions authorized within contracts.

Why Capabilities Matter for Institutional and TradFi Applications

Capabilities are particularly beneficial for institutions and enterprises that require high-security standards for handling valuable transactions. For these users, capabilities provide a level of customization and security necessary for managing large-scale financial applications.

The security model allows for many complex conditions. They can express more complicated transaction logic more safely. This is essential for institutions handling high transaction volumes or large sums of money, where the cost of a security breach can be devastating. By allowing institutions to define and enforce detailed transaction rules, capabilities make Pact an appealing choice for enterprise applications.

Use Case: Real-World Assets

Capabilities have broad applications, from simple asset transfers to complex, multi-step transactions. For instance, Pact’s language allows developers to create contracts that include complex permissions, such as requiring multi-signature authorization before funds can be transferred during an asset sale. You can require that if it’s a key set with at least five keys, four must be signed before the transaction is executed.

This level of control over authorizations has practical applications across different sectors. In finance, for example, institutions can leverage Pact's capabilities to enforce multi-step transaction approvals, ensuring that huge transactions comply with regulatory and organizational requirements. Furthermore, capabilities can be utilized to create more secure dApps that safeguard users from typical attacks and unauthorized actions.

Capabilities and the Future of Security in Blockchain

The capabilities feature in Pact is not just about customization — it’s about creating a safer, more reliable blockchain environment for developers and users. Capabilities can serve as a powerful tool for preventing vulnerabilities and securing assets on-chain. You can prevent funds from being drained by using capabilities.

With Pact, Kadena has created a security model that goes beyond basic permissions, offering a dynamic framework for developing secure applications. You can give yourself and your users a whole layer of security at the language level. This design philosophy ensures that security is a built-in feature of Pact, empowering developers to create applications that protect users from both known and unknown threats.

For example, Pact itself guards against things like re-entrancy bugs, which is usually how funds get drained off of DEXs in large-scale attacks

A New Era of Customizable, Secure Smart Contracts

Capabilities just allow you to express conditions that are as flexible as your idea could be. With Pact, Kadena is paving the way for a future where blockchain applications are not only powerful but also secure and adaptable.