The vision of a new monetary system powered by , freed from the concerns and issues of fiat currencies or centralized entities is a shared belief among developers of digital currency and . However, without the underpinnings of real-world practicalities — fast transaction speeds, high volumes, sound economics, robust security and ease of use across mobile and other access points — it may remain just that, a mere vision with no substance.
The Market-Fit conversations for products are more complex and nuanced than for . This arises from having to navigate institutional inertia from intermediaries — central banks, credit card and merchant or trade finance entities and government bodies — and to establish reliable, transparent infrastructure and accountability for rapid, cogent transactions across borders and business domains. Practical considerations mean flexibility to adjust transaction speeds for different risk profiles, systems, or dollar values and building in configurable economic incentives based on operator reputation, size of transactions, etc. Ultimately, practical means trustable design that could work reliably, repeatedly under real-world conditions for real people in real places and over digital networks.
At Alacris.io, our approach to help projects and developers meet these exacting but pragmatic needs is to build the technology, the economics, the security and trustless designs, right into Legicash. By design, LegiCash is a fundamental building block for the emerging sub-ecosystem. However,it is just one component along with other building blocks for the whole ecosystem we are creating as an operating system company.
The two key building blocks of Legicash are the Side Chain Marketplace and Mutual Knowledge Base, which work together with the Main Chain ( in our first implementation) utilizing the key principles of Consensus as Court System and Right to Exit to establish a fast, practical architecture that is secure with infinite theoretical scalability.
Key benefits of this innovative architecture are:
- Speed: Through off-loading speed-sensitive transactions to sidechains and by assigning Consensus as Court System to settle slow and more expensive dispute resolutions
- Scaling: Spawning Side Chain Operators (facilitators) and Marketplace as needed
- Trustlessness (decentralization): Through repudiable facilitators, and economic incentives
- Security: Through formal methods and through always-on data-availability network
- Flexibility: Configurability for challenge periods, risk, bond amounts, and base layer porting
Side Chain Operator and the Side Chain Marketplace:
Legicash’s Side Chain, designed as the industry’s first Formally Verified side chain, is at the core of our scaling solution. Each Decentralized Application (DApp) is assigned its own Side Chain Marketplace and supports as many Side Chain Operators as needed. These operators or facilitators offer a standardized smart contract to work as an intermediary service provider that can work with both and merchants (represented by Alice and Bob in the diagram). The facilitator posts a large bond to signal their good faith, which is subject to forfeiture if they fail to abide by the contract rules.
Facilitators can issue transactions quickly because they manage their own centralized side and effectively act as underwriters by posting bonds. Transactions on this are signed by both the sender and the facilitator. When sending money to pay a merchant, the customer checks that the merchant indeed accepts payment through the facilitator. Assuming the merchant works with the same side chain operator, the sender and the facilitator both sign off on the transaction and send it to the merchant. The merchant “verifies,” performing due diligence on the Mutual Knowledge Base (MKB) to prevent double spending, but otherwise can trust the facilitator. The entire process takes fraction of a second. For settlement, the facilitator will batch transactions and register an update consisting of a short, headers-only state (data) of the side onto the main . Thus, all these facilitated transactions are finally confirmed on the main chain, albeit in batches. A side benefit from Legicash is the overall costs of transactions also decrease due to side chains managing the high volume and using the MKB for larger data traffic, while keeping the traffic to the main chain much lower.
As evident, these transactions mirror the authorization process of credit card purchases (“the verification step”) and final postings (settlement) to the bank in today’s fiat world.
There are different levers available for setting the batch size, the incentives (fees) and penalties (bonds) for the operators (i.e, a merchant bank or a consumer bank etc). Meaning different projects can adapt the Legicash design to their market needs. In fact, if a facilitator is highly reputed and has no incentive to go rogue, the bond can be theoretically eliminated. Also, by limiting the transaction value to less than posted bond value, and by affording users the “Right to Exit,” the design uses economic disincentives to prevent double spending and operator malfeasance.
Effectively, the merchant and the customer can do fast transactions directly on the side chains without waiting for the slow and expensive Distributed Consensus, although there is flexibility for the high value transactions — , car purchases, etc — to be settled directly based on Consensus.
Mutual Knowledge Base:
MKB is Legicash’s data availability network. Primarily a registry maintained by multiple registrars that record all transactional data for the DApp from all participants and for all events. This effectively is a public record (registry) of all mutual knowledge: knowledge about all the side chains and available to all. This is accomplished by a set of registrars (notaries) who sign contracts to keep data public. One immediate benefit of this design is it eliminates the block-withholding attacks since all data is recorded and always available.
The Mutual Knowledge is to be contrasted with the Consensus, which is an official record and history of events across the main chain and contains Common Knowledge.
The big problem of distributed ledgers is double spending, i.e, competing records about the very same being transferred to two or more different recipients in as many transactions equally signed by the account holder. The MKB is designed to be sufficient to detect double spending almost immediately: if recipients broadcast transactions about they receive, everyone can see the multiple spending attempts and acknowledge the dispute between claimants. Additionally, there are also economic disincentives to prevent double spending for most transactions that don’t need consensus. Examples are the high-volume, low-value everyday spending such as for groceries, restaurants, gas or even the monthly Netflix subscription.
Principle of Consensus as Court:
As discussed, our design provides projects a practical platform for using the MKB and Side Chain Marketplace to structure and process high-volume, fast transactions. The data needs are covered sufficiently by the MKB network and the speed needs are covered by the side chains integrated to the MKB. Under the principle of Consensus as Court, we see the role of Consensus as chiefly for settlement, for dispute resolution in case of double spending or breaches of contracts, with the smart contract code effectively acting as the “judge”.
By using repudiable facilitators and other design elements, we obtain speed without sacrificing trustlessness. Under this principle, we have offloaded everyday transactions to the side chains supported by the MKB and if there is ever a dispute, a “judge” is invoked via a smart contract. This “legal” process, while relatively slow, can proceed automatically, and eventually leads to transgressors being punished and victims compensated.
Principle of Right to Exit:
The repudiability of a service provider is the ability for users to individually switch to another service provider with no switching costs, questions asked, conditions, or hidden fees. This right to exit, alone, ensures that facilitators and miners cannot collude to swindle users out of their money. Not only do they have to stay honest and not double spend, censor transactions, or rig procedures, they also must remain competitive and not raise their fees arbitrarily, provide poor service, or fail to keep sufficient reserve funds as bonds posted to guarantee fast payments, etc. Otherwise, their can leave, even without their cooperation.
If no existing service provider is satisfactory, users can even become their own service provider and become a new competitor because there is no barrier to entry. Even if all the data centers of a particular facilitator or miner are destroyed or captured, the protocol ensures that the existing users can move all their to a different side chain, or to the main chain. Repudiability as designed into Legicash is comprehensive and ensures competitive markets continue to function regardless of willful attacks, negligence or accidents.
Legicash and the challenge
Building practical features into Legicash is one of the ways Alacris.io contributes to the larger community that is making fast crypto economy transactions real. The Formally Verified design of the Side Chain and Repudiability and other designs and principles are part of an even broader theme for the other projects at Alacris. In our mission to tackle the challenges of wider and stimulate the ecosystem overall, we focus on ease of development, speed to market, flexibility and security. It is early in development, but we will soon be ready to discuss the architecture and pragmatic designs around Automated Cascaded Formally Verified methods for producing the entire DApp — Smart Contracts, Oracles, Clients and other components needed to have real, secure, functional applications in .
Published at Fri, 24 May 2019 12:01:57 +0000
