Internal and external contract calls

Not all contract calls are equal.

In the context of interacting with smart contracts, calls can be classified into two types: external and internal.

External calls occur when a contract is invoked from an external source, which can be either a user transaction (e.g. a block and its transactions are being processed) or a remote procedure call (RPC, e.g. an eth_call request). External calls serve as entry points into the smart contract from the outside world, initiating a transaction or a query. Within AppLayer's BDK, to process an external call, a ContractHost object is created, which establishes the execution context based on the specified parameters.

Internal calls occur when a smart contract, already running as part of an ongoing transaction/chain of execution, calls another contract or a function within another contract. This is considered an internal process, as it happens within the chain of execution started by an external call. In AppLayer's BDK, internal calls utilize the same ContractHost object created for the initial external call. This maintains consistency and control over the execution environment, allowing for functions like commits or rollbacks within the same transactional context.

Basically, an external call creates a new "chain of execution", while internal calls only exist within that same given chain of execution, thus they cannot create new chains by themselves. A chain of execution is a sequence of calls that are executed in a given external call, always composed of an initial external call and a set of internal calls (if applicable).