Exploring how to establish blockchain interoperability from the Web system (2)

This is the second in a series of articles exploring the state and future of interoperability and sidechain functions in the blockchain ecosystem. In the first part , to avoid the blockchain Balkanization, we studied the history and current state of the Web2 ecosystem to identify warnings and signs that the blockchain industry is facing similar silo agreements and data development status.

In this article, we discuss the importance of fostering an intermediate position between Balkanization and maximization, and propose that a maximum decentralized base settlement layer is needed to anchor all global transactions based on blockchain.

Multipolar argument

A common metaphor in the blockchain ecosystem is "extremism." Regardless of the type of agreement or blockchain that the term refers to, extremism is accompanied by a firm belief that there is a “war” between the blockchains, where one blockchain will dominate, all future systems And the application will be built on top of this agreement. For the world of network connectivity, extremes is not a new concept. Tim Berners-Lee of the World Wide Web is concerned that the Internet has a role in promoting extreme thinking. Tim Berners-Le compared the strong grainy, Balkan thinking with Tim Berners-Le warning both:

In fact, there are two equally frightening prospects. On the one hand is the lowest common denominator. Often represented by American fast food and comics, they lose all their richness and diversity. On the other hand, it is extreme diversity. When anyone can filter emails at will, they can read information about people who share the same points as themselves. When they see on the Internet that they can only link through the same website, they will set a barrier for themselves, so that when they see a real person in reality, they will lack common sense.

Today's blockchain ecosystem promotes both extremism and the Balkanization argument, so it risks falling into one or the other. But this is not too much. The commitment of extremism and blockchain technology is opposite. The blockchain promises that the exploiting, centralized party can be pursued for responsibility, and the user can change the rules by voting or choose other methods they wish. In February of this year, Andreas Antonopoulos also warned about blockchain extremism (especially through the perspective of Bitcoin). Antonopolous believes that the ecosystem is far from accepting extremism is unhealthy, as we will explore, "bitcoin is the only choice." Of course, this may not be possible.

Settlement argument

The arguments in this paper can be better expressed as arguments for solving problems. The argument for the solution presents a future. In the future, many blockchains can work together to meet the needs of various use cases. The key to resolving the argument is precisely this. The key to resolving the debate is that no matter which blockchain is involved, a blockchain is needed as the global settlement layer for all of these data transactions. The settlement protocol layer provides an "anchor" for the ecosystem, and if anything happens to be arbitrated on different blockchains, it establishes undeniable security and objective end.

It is worth noting that although settlement theory positions a blockchain as the root of the world, it is not optimal. Maximization is defined by exclusion; that is, the ecosystem is only legal if it wins in a blockchain. Solution parameters are defined by interoperability and inclusiveness; that is, the ecosystem is only effective when multiple coexisting blockchains run above the most dispersed rootchain. A fully interoperable network is larger than the sum of its components, allowing participants to square and square the solution space.

No matter which chain or protocol is used as an anchor for the ecosystem, it can provide security, immutability and credibility to the entire system. (In an ideal state) The basic reconciliation layer can be compared to the US Supreme Court: clean, readily available, flexible, and only required to be the final arbitrator. This analogy is for several reasons. Various other blockchain and extension solutions have their own priorities (for example, corporate privacy, or throughput of games and exchanges) that can perform their day-to-day functions while relying on a decentralized, secure mainnet layer—(real World Computer) – Use only when needed. As most cases are resolved in civil and state courts, most cases can be carried out at other levels and escalated to the Supreme Court's arbitration if necessary. The final results and solutions provided by this “Supreme Court” are not necessarily rapid, but they are real and absolute, ensuring the safety of all participants.

Global data

Pursuing an ecosystem supported by a settlement rather than a single blockchain may be a computational need rather than a philosophical preference. In other words, in reality, maximization is impossible in the near future. Currently, Bitcoin's block size contains (average) 1 MB of data. The average block time of Bitcoin is 1 block per 10 minutes, which means that 144 mb of data is stored/processed per day on the Bitcoin blockchain. At the same time, nearly 2.5 trillion bytes of data are created globally every day. It is estimated that by 2020, everyone on the planet will produce 170MB of data per second. Moreover, our data creation has not slowed down. The development of the Internet of Things and machine learning will not only create more data, but also create richer data that requires strong and appropriate analysis, organization and storage. In the next few years, data creation will grow exponentially as 4 billion of the 7.8 billion people without reliable Internet connectivity (2016) in the world are getting closer.

According to the US Treasury Department, SWIFT leads about $5 trillion in daily flow of funds ($1.25 trillion per year, about 250 working days per calendar year). Even in the early stages of adopting Bitcoin, Bitcoin traded an average of $200 million per day (significantly volatility). As an all-weather, borderless transaction layer, almost everyone in the world can eventually adopt encrypted payment as a payment method or SoV, so it is not difficult to imagine that encrypted payments will soon surpass global SWIFT (and related CHIPS, Fedwire, etc.) every day. The amount of payment.

“There is no single ledger, no matter how fast or how large it is, it can or is suitable for recording all “chain-on” business logic between all transactions or operating parties.”

It is not necessarily expected that every ounce of data or each unit of currency will eventually appear on the blockchain. However, even if a small portion of the world's future data and funds are traded or stored on the blockchain, data and processing requirements will quickly exceed current speeds and prevent the limitations of most decentralized protocols – even future expansion mechanisms. In the near future, our world will have to deal with large amounts of data, which requires us to explore more powerful and sustainable distributed ledger technology. Promoting a diverse, interoperable future, rather than a single future, ensures that we continue to support the exponential growth of global information without relying on a blockchain to scale to global data creation and trading.

Select a settlement layer for an interoperable blockchain ecosystem

Choosing the right foundation for an interoperable ecosystem is largely attributed to one feature: decentralization. Even the moderately centralized base solution blockchain is dangerous because we repeat the same mistakes of Web2, but the consequences are much more serious. For example, when we mark global assets, well-funded financial institutions and traders will spare no effort to manipulate the market for profit or political advantage. It is impossible for us to make the market of the next generation economy as fragile as in the traditional economy and have deep liquidity. As the basic settlement layer of the global economy, we can only choose the most dispersed basic trust layer.

Another way to consider the importance of sedimentation is to use it as a gearbox for multi-layer ecosystem layers and blockchains, which prioritize different characteristics. Just as the gears in the engine let the engine run at different speeds, the various layers in the ecosystem can run slower when they need maximum dispersion, even systems based on old database technology can see it as the first gear, and Maximize higher-end throughput, such as exchanges that process thousands of transactions per second.

Scalability and billing layer

About Scalability: Layer 2 mechanisms and sidechains to optimize throughput help address scalability issues, a major challenge for all blockchains. The scalability trilemma points out that a decentralized system can only prioritize up to two of the following three attributes: scalability (performance based on speed and capacity), decentralization, and security.

How to increase transaction throughput to thousands of transactions per second without forcing each node to become a supercomputer or to accommodate unsustainable state data volumes? Ethereum's Tier 2 solution (including equal-to-Plasma chains and state channels) can improve scalability in the short term by moving some computations out of the main network. Detailed transactions will occur on these sub-chains and status channels, and only their hash values ​​will be exported to the main chain. We can think of it as a scoring system. A professor scores the exam based on how many wrong answers each student answers, but they only enter the final exam scores in the gradebook. At the end of the semester, the professor averages these test scores as the final grades of the course and submits them to the Registrar for archiving, which we can consider as the clearing layer for the final transaction on the blockchain. The details of the calculation are not necessary to view or understand the final hash map.

In the long run, a more comprehensive solution is needed to spread more stateful storage, processing, and transactional fixed workloads to all nodes in the network. Using a layered mechanism (such as the ongoing mechanism on Ethereum) to improve scalability can alleviate the limitations of scalability, making mainnet the best of a diverse, interoperable blockchain ecosystem. A feasible solution layer.

Conducive to the activeness of a temporary network split in security and consistency and availability, only Ethereum has enough computational expressions (excluding Bitcoin) and scattered as a root chain can anchor a variety of different types of network architectures from Plasma-linked Ethereum games Or an AC side chain that can handle throughput of 65,000 transactions per second or higher.

In the case of temporary network splitting, preference for security and consistency of activity and availability, only Ethereum has sufficient computational expressiveness (excluding bitcoin) and is sufficiently decentralized to act as a network architecture that can anchor various types. The root chain comes from the Ethereum sidechain of the Plasma connection, which can be used for games or exchanges to handle 65,000 transactions per second or higher throughput.

Quantitative decentralization: scattered transactions per second

Decentralization is a basic blockchain concept, but how to actually determine or quantify decentralization and how to assess the potential of a blockchain rather than another blockchain is more complicated. Currently, transaction throughput per second is the most popular competitive indicator for comparing blockchains, but this emphasis on speed ignores the basic characteristics of decentralization.

In Balaji Srinvasan's 2017 quantitative decentralization, he proposed using the Gini coefficient and the medium factor to attach an objective decentralization metric to the blockchain. The logic of the blockchain characteristics (ie node decentralization) can be compared by applying Srinvasan measurements and represented numerically. We propose a metric that can be called DTPS or scatter transactions per second. The purpose of DTPS is to incorporate the decentralization of blockchain into the ecosystem debate, which is to determine the transaction throughput of one blockchain and the transaction throughput of another blockchain. "EOS can process 4,000 transactions per second, but Ethereum can only handle 14 transactions." The argument is often refuted. "The concentration of EOS's agreements jeopardizes security and governance." "However, there is no way to do this." Incorporate into a single comparable statistic to combine decentralization close to the target with the target TPS.

DTPS is the product of the number of transactions per second (TPS) multiplied by the "distributed quotient" (DQ).


DQ is a measurement method reminiscent of Srinvasan's Nakamoto Coefficient, which attempts to quantify the characteristics of a blockchain (or a system like Visa), which means decentralization. DQ can be measured between 0 and 1, where 1 indicates complete dispersion and 0 indicates complete concentration. DTPS is designed to consider all transactions that occur on the public primary network, as well as transactions that occur in parallel through sidechains, stateful channels, and other extension or transaction throughput mechanisms.

The current problem with DTPS is the decentralization and subjectivity of transactions per second, especially in terms of scalable solutions that do not exist on the main network. Therefore, this paper introduces the initial conceptual framework of DTPS and positions it as “measurement in progress” and makes significant assumptions in the calculations that follow. We invite the ecosystem to collaborate on how to collect, validate and build more quantifiable dispersive factors to achieve agreed methods and definitions for DTPS.

If we look at the DTPS on the first tier of multiple blockchains or on the public mains, we will begin to see the opportunities and challenges of defining this metric. The DTPS on the main network is relatively easy to determine. However, DQ is more complex and contains more variables. By looking at the number of node and wallet owners, we can begin to determine which blockchains are more dispersed than other blockchains. Putting these blockchains in the range of 0 (completely concentrated) to 1 (completely dispersed, this theoretical limit, not a realistic benchmark), (for now) is more arbitrary. To achieve this "measurement in progress," let's set the value of Bitcoin (currently considered the most dispersed network) to 0.8. Therefore, we can approximate the DQ of other blockchains: ETH = 0.7, LTC = 0.5, TRON = 0.3, XRP = 0.2, EOS = 0.1. For example, Visa's DQ (and therefore DTPS) is zero. With those arbitrary DQs, we get a DTPS snapshot that only considers Layer 1:


BTC = 0.8 * 7 = 5.6 DTPS

ETH = 0.7 * 15 = 10.5 DTPS

LTC = 0.5 * 56 = 28 DTPS

TRON = 0.3 * 1200 = 360 DTPS

XRP = 0.2 * 1000 = 200DTPS

EOS = 0.1 * 4000 = 400 DTPS

VISA = 0.0 * 65,000 = 0 DTPS

When we start thinking about a Layer 2 extension solution developed on top of these mainstream networks, we get a more complete but (currently) more subjective DTPS view. Subjectivity comes from the TPS of the Layer 2 expansion solution currently under development. By considering the understanding/predicted number of TPS for existing Tier 1 extension solutions, we can see different snapshots of DTPS:


BTC = [0.8 * 7] + [0.8 * 300] = 245 DTPS

= [main network] + [lightning]

ETH = [0.7 * 15] + [0.7 * 65,000] + [0.7 * 400] + [0.3 * 10] = 45,000 DTPS

= [Mainnet] + [Plasma] + [State Channels] + [Consortium]

LTC = 0.5 * 56 = 28 DTPS

TRON = 0.3 * 1200 = 360 DTPS

XRP = 0.2 * 1000 = 200DTPS

EOS = 0.1 * 4000 = 400 DTPS

The nuance of the Layer 2 scaling transaction per second is only half of the input required for a more complete DTPS view. Decentralized quotient (DQ) also requires the sharing of ecosystem thinking to achieve a certain number of indicators: 1) can be collected reliably and consistently; 2) represents a certain degree of decentralization; 3) can (relatively) compare blocks equally chain. Srinvasan proposed some of these indicators in quantitative decentralization, and we believe there are other indicators to consider:

If, as a community, the blockchain ecosystem is able to agree on objective measures of the above indicators, then we can get an acceptable DQ definition that applies to various blockchain protocols.

The purpose of DTPS is not to establish a blockchain as completely “good” to a certain extent, but to give the ecosystem a better understanding of which chain might be better suited as the basic settlement layer for an interoperable ecosystem. In addition, DTPS provides users with a more comprehensive understanding of the different system value propositions when considering the chain of business, personal or government functions. By establishing a basic settlement layer where all blockchain transactions "anchoether" their affairs, the ecosystem's DTPS rises sharply and grows exponentially with each sidechain or link blockchain connected to the rootchain. The result is a different blockchain ecosystem, each of which may be suitable for a particular use case, but they are safe in their respective DTPS.

Why choose Ethereum

We should always imagine and fight for the future beyond the possibilities, but we must also maintain a realistic attitude towards the future of blockchain technology. Continuing to focus on maximizing will not allow the emerging blockchain industry to go too far. If the agreement teams continue to fight against each other instead of collaborating in parallel, we will reach an unsafe, unsustainable, Balkan blockchain. The ecosystem will not be able to achieve its huge promise. The best answer lies in the middle ground: a thoroughly decentralized, programmable base billing layer on which interoperable blockchains can accommodate a single use case without compromising security or privacy requirements. Only through decentralization and interoperability can the real future of blockchain drive be realized. The underlying billing layer can and should be the blockchain protocol that emerges as the most decentralized, programmable, and secure way. In the current state of the ecosystem, Ethereum has become the best choice for this role.

Author: Everett Muzzy, Mally Anderson

Compilation: Sharing Finance Ma Ming Editor: Sharing Finance Neo