VISVESVARAYA TECHNOLOGICAL UNIVERSITY

BELAGAVI-590018, KARNATAKA

TECHNICAL SEMINAR REPORT

ON
“ETH Relay: A Cost-efficient Relay for Ethereum-based Blockchains”
Submitted by
HARSHAVARDHAN
1CR21EC408
Under the guidance of

Asst.Prof. Raveesh Hegde

Designation: Associate Professor
Department Of Electronics and Communication Engineering
February – April 2024

Department Of Electronics and Communication Engineering

CMR INSTITUTE OF TECHNOLOGY

#132, AECS LAYOUT, IT PARK ROAD, KUNDALAHALLI,
BENGALURU-560037

1
DEPARTMENT OF ELECTRONICS AND COMMUNICATION ENGINEERING

CERTIFICATE

This is to certify the TECHNICAL SEMINAR REPORT entitled “ETH Relay: A Cost-efficient
Relay for Ethereum-based Blockchains”, prepared by Mr. HARSHAVARDHAN,
bearing USN 1CR21EC408, a bona fide student of CMR Institute of Technology, Bangalore
in partial fulfilment of the requirements for the award of Bachelor of Engineering in
Electronics and Communication Engineering of the Visvesvaraya Technological University,
Belagavi-590018 during the academic year 2023-24.

This is certified that all the corrections and suggestions indicated for Internal Assessment have been
incorporated in the report deposited in the departmental library. The TECHNICAL SEMINAR
REPORT has been approved as it satisfies the academic requirements prescribed for the said degree.

------------------------ -----------------------
Signature of Guide Signature of HOD
Asst.Prof. Raveesh Hegd Dr. Pappa .M
Associate Professor Professor & HOD
Dept. of ECE, CMRIT Dept. of ECE, CMRIT

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 ACKNOWLEDGEMENT

The satisfaction that accompanies the successful completion of any task would be incomplete
without mentioning the people whose proper guidance and encouragement has served as a
beacon and crowned my efforts with success. I take an opportunity to thank all the distinguished
personalities for their enormous and precious support and encouragement throughout the
duration of this seminar.
I take this opportunity to express my sincere gratitude and respect to CMR Institute of
Technology, Bangalore for providing me an opportunity to present my TECHNICAL
SEMINAR REPORT.
I have a great pleasure in expressing my deep sense of gratitude to Dr. Sanjay Jain, Principal,
CMRIT, Bangalore, for his constant encouragement.
I would like to thank Dr. Pappa .M, HOD, Department of Electronics and Communication
Engineering, CMRIT, Bangalore, who shared his opinion and experience through which I
received the required information crucial for the mini project.
I consider it a privilege and honour to express my sincere gratitude to my guide
Asst.Prof.Raveesh Hegde, Associate Professor, Department of Electronics and
Communication Engineering, for the valuable guidance throughout the tenure of this review.
I also extend my thanks to the faculties of Electronics and Communication Engineering
Department who directly or indirectly encouraged me.
Finally, I would like to thank my parents and friends for all their moral support they have given
me during the completion of this work.

HARSHAVARDHAN
(1CR21EC408)

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 ABSTRACT

In the landscape of blockchain technology, Ethereum has emerged as a leading platform for
decentralized applications (dApps) and smart contracts. However, the scalability limitations of
Ethereum's mainnet have become increasingly apparent, hindering its ability to handle growing
transaction volumes and maintain low fees. To address these challenges, this paper introduces
ETH Relay, a novel cost-efficient relay designed specifically for Ethereum-based blockchains.

ETH Relay leverages a layered approach to improve scalability and reduce transaction costs. At
its core, the relay operates as a secondary network layer, facilitating off-chain transactions and
communication between Ethereum-based blockchains and external networks. By offloading
transactions from the mainnet, ETH Relay alleviates congestion and reduces gas fees, making
blockchain interactions more accessible and affordable for users and developers alike.

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CONTENTS

CERTIFICATE 2

ACKNOWLEDGEMENT 3

ABSTRACT 4

INTRODUCTION 6

TECHNOLOGIES USED 7

PROPOSED SYSTEM 8-10

CONCLUSION 11

REFERENCES

5
Chapter 1

INTRODUCTION

The ETH Relay addresses a critical challenge faced by Ethereum-based blockchains: the high
cost and latency associated with relaying transactions and data between different chains. As the
Ethereum ecosystem continues to expand with the emergence of various layer 2 solutions,
sidechains, and interoperability protocols, the need for a cost-effective and reliable relay
mechanism becomes increasingly pronounced.

The ETH Relay leverages a combination of novel consensus mechanisms, cryptographic

techniques, and network protocols to facilitate seamless and efficient communication between
Ethereum-based chains. By optimizing the relay process, the ETH Relay significantly reduces
the overhead costs and latency, thereby improving the overall performance and scalability of
interconnected blockchain networks.

Moreover, ETH Relay is designed to be highly adaptable and compatible with various Ethereum
Improvement Proposals (EIPs) and network upgrades, ensuring seamless integration with
existing infrastructure and future developments within the Ethereum ecosystem. This flexibility
allows developers to leverage ETH Relay as a robust and scalable solution for building next-
generation DApps and decentralized financial (DeFi) protocols.

In addition to its technical prowess, ETH Relay is committed to upholding the core principles of
decentralization, censorship resistance, and user privacy. By decentralizing the relay
infrastructure and implementing robust security measures, ETH Relay aims to foster a more

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resilient and inclusive ecosystem for Ethereum-based blockchains, empowering developers and
users to participate in the decentralized revolution.

It has become
a concomitant development of wearable
technologies. This
paper includes a review of technologies
essential for the
development of fabrics with
incorporated functionality, with
an emphasis on sensor applications.
Fabrics which are imbued
with sensing properties are called smart
fabric sensors (SFSs);
these are sensitive to multiple physical
and chemical stimuli
such as changes in temperature,
pressure, force, and electrical

7
current, among others. Sensing
elements can be incorporated
into fabrics at any level depending on
the structural fabric
element being modified or sensitized.
SFSs are part of th
It has become
a concomitant development of wearable
technologies. This
paper includes a review of technologies
essential for the
development of fabrics with
incorporated functionality, with
an emphasis on sensor applications.
Fabrics which are imbued
with sensing properties are called smart
fabric sensors (SFSs);

8
these are sensitive to multiple physical
and chemical stimuli
such as changes in temperature,
pressure, force, and electrical
current, among others. Sensing
elements can be incorporated
into fabrics at any level depending on
the structural fabric
element being modified or sensitized.
SFSs are part of th
It has become
a concomitant development of wearable
technologies. This
paper includes a review of technologies
essential for the
development of fabrics with
incorporated functionality, with

9
an emphasis on sensor applications.
Fabrics which are imbued
with sensing properties are called smart
fabric sensors (SFSs);
these are sensitive to multiple physical
and chemical stimuli
such as changes in temperature,
pressure, force, and electrical
current, among others. Sensing
elements can be incorporated
into fabrics at any level depending on
the structural fabric
element being modified or sensitized.
SFSs are part of

Chapter 2
TECHNOLOGIES USED

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The ETH Relay, also known as Ethereum Relay, is a technology designed to facilitate
interoperability between different Ethereum-based blockchains. It aims to provide a cost-efficient
solution for transferring assets and data between these blockchains. Some of the key technologies
commonly used in building interoperability solutions for Ethereum-based blockchains include:

Smart Contracts: Ethereum's smart contract functionality forms the backbone of many
interoperability solutions. Smart contracts can be deployed on multiple Ethereum-based blockchains
to facilitate cross-chain interactions and asset transfers.

Relay Networks: Relay networks act as bridges between different blockchains, allowing assets and
data to be transferred securely and efficiently. These networks typically consist of a set of nodes that
facilitate the relay of transactions and messages between blockchains.

Atomic Swaps: Atomic swaps enable thrustless trading of assets across different blockchains. This
technology allows users to exchange one cryptocurrency for another without the need for a
centralized intermediary.

Cross-Chain Messaging Protocols: These protocols enable communication between different

blockchains, allowing them to exchange information and trigger actions based on events occurring
on other chains.

Sidechains: Sidechains are separate blockchains that are interoperable with the main Ethereum
network. Assets can be moved between the main chain and sidechains through mechanisms such as
pegged assets or two-way bridges.

Interoperability Standards: Standardization efforts play a crucial role in interoperability by

defining common protocols and formats for cross-chain communication. Examples include the
Interpledge Protocol (ILP) and the Cosmos Inter-Blockchain Communication (IBC) protocol.

Chapter 3

PROPOSED SYSTEM: ETH RELAY

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A relay scheme that keeps operating costs low while remaining fully decentralized and secure.
The relay scheme consists of a relay contract (i.e., a smart contract) running on the destination
blockchain and off-chain clients.

RELAY’S have two popular systems: -

 Validation-on-demand

 Incentive Structure

Validation-on-demand
In any relay scheme—off-chain clients are responsible for continuously relaying block headers
of the source blockchain to the relay contract on the destination blockchain.

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Right after the arrival of a new BLOCK (Header), it is checked that the retrieved header has not
been submitted to the relay contract before and that the parent block referenced by the header is
known to ensure that only a continuous chain of block headers is replicated within the relay
contract. If both checks are successful, the header is stored in a HashMap with the header’s hash
as key.

The key to reducing operating cost in ETH Relay lies in a validation-on-demand pattern. That
means, newly submitted block headers do not immediately undergo the expensive full header
validation procedure of the source blockchain. Rather, they are optimistically accepted by the
relay contract.

Of course, this may lead to invalid block headers entering the relay contract. Therefore, each
newly received header is “locked” for a certain amount of time.

To filter out the invalid block headers that may have entered the relay contract, locked headers
can be disputed by the off-chain clients. That is, the clients monitor the relay contract and the
source blockchain. Whenever they detect a block header that is submitted to the relay contract
and that does not constitute a valid block header of the source blockchain, they send a dispute
request to the relay contract. In case of a dispute, the full header validation according to the rules
of the source blockchain is carried out by the relay contract. If the validation fails, the invalid
block header is removed from the contract.

Once the lock period has passed, block headers are considered valid.

Incentive Structure

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 Without an incentive structure that compensates off-chain clients for submitting and disputing
block headers, clients may have no interest in participating in the proposed relay scheme. The
incentive structure we propose rewards off-chain clients for submitting and disputing block
headers and discourages submission of invalid block headers.

To hold clients that submit invalid block headers accountable, clients are required to deposit a
stake for every submitted header. The stake is locked in the duration of the lock period of newly
submitted block headers. While the stake is locked, it cannot be withdrawn and cannot be used
for submitting further block headers.

After a submitted header has passed the lock period without a dispute, the client that submitted
the header gets back control of the corresponding stake.

However, in case the block header is disputed successfully within the lock period, i.e., the
validation of the block header fails, the client that triggered the dispute earns the locked stake of
the submitter as well as any stake that was locked in any descendant of the illegal block header.
Not only does this incentivize disputes, but it also discourages submission of invalid block
headers as clients risk losing the deposited stake.

CHAPTER 4

CONCLUSION

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For Ethereum-based blockchains, existing relay schemes are either very costly, rely on authorized
parties, or may not be technologically feasible. As a solution to this problem, we introduced ETH
Relay, a novel relay scheme especially suited for Ethereum-based blockchains. ETH Relay uses a
validation-on-demand pattern combined with a sophisticated incentive structure to motivate honest
participation.

ETH Relay is able to reliably verify the inclusion of transactions across blockchains while reducing
the operating cost in comparison to traditional blockchain relays by up to 92%.

Overall, the ETH Relay presents a promising approach to addressing scalability and cost challenges
within the Ethereum ecosystem, offering a path towards greater adoption and usability of
decentralized applications (dApps) and smart contracts. Continued innovation and refinement in
relay technology are essential to realizing the full potential of Ethereum and blockchain technology
as a whole.

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