Interoperability among

Blockchains
Authors:Maneesh Darisi,Janhavi
Savla,Mahesh Shirole,Sunil Bhirud
 Agenda

Introduction

Literature Survey

Implementation

Results
2
 What is Blockchain?
“A blockchain is a tuple (G, B) where G is a genesis state and B = [β1, β2, β3...] is an
ordered list of blocks. A blockchain is valid if every β ∈ B is valid, and so G+β0 +β1 +... =
σf is a valid state. A block β is a package containing a list of transactions T, a reference to
a parent block and auxiliary verification data. A block is valid in the context of a state σ if:
• The block’s transaction list is valid in the context of σ
• Some other conditions, generally determined by the consensus algorithm (eg. proof
of work), are met.”

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 Need for Interoperability
With the flooding of a large variety of isolated blockchain
solutions into the technological world, one major challenge is to enable
efficient interoperable interchain and intrachain exchanges. The dearth
of inter-operating among these eclectic tokens is hindering the
profits that can be earned by potential investors.
Interoperability if achieved between the major public blockchains, users
would be able to transact on other blockchains seamlessly. This allows
for diverse functionalities, including in payments, smart contracts, and
data storage.
A truly interoperable blockchain network will be the core of the new
digital economy.
 What is Blockchain Interoperability?
● Blockchain interoperability can be defined as a two-tuple (S, D) where S
is the source blockchain and D is the destination chain with which it
wants to interoperate.
● For a cross chain transfer with the transaction ti ∈ TS , TD to occur, we
need to ensure that the states of both the blockchains interoperating
change as
– CS (σ (S) + t i) = σ i+1 (S) in the context of σ of source chain using
consensus algorithm C S
– CD (σ (D) + t i) = σ i+1 (D) in the context of σ of source chain using
consensus algorithm C D

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Token
A token T is defined by a five tuple < S, N, T, I, P > where S is the token
symbol, N is the token name, T is the token type, I is the initial supply of the
token and P is precision of the token supply.
Properties
– Both S and N must be unique in a blockchain.
– Token type can be either fungible (F) or non-fungible (NF).
– Precision of the token is a positive number. For example a number
ranging
between [0-18].

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Granularity of Interoperability
• Granularity of interoperability is defined as the level at which
blockchains can interoperate.
So we can have two types of Interoperability
• Blockchain Interoperability(Base currencies)
• Token Interoperability(Exchange of tokens)
• Xclaim facilitates the interoperability among the two chains through
their base currencies ETH and BTC.
• WBTC facilitates the interoperability among the chains with support
of WBTC tokens.
Issues with Blockchain 3.0
1. Scalability

2. Interoperability

3. Consensus algorithm

4.Governance

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Token classification
• Non-fungible tokens are uniquely identifiable during interaction and
circulation, and these tokens are non-interchangeable, unique in
nature and non-divisible. These tokens are used to represent
potpourri assets, research projects and business processes.
• Fungible tokens are tokens which have currency like
properties and are interchangeable, uniform across platforms and are
divisible into units.
 Blockchain
Interoperabilty

Homogenous Heterogenous

Intrachain Interchain Interchain

Token Token
Token

Security Currency Utility Security Currency Utility

 Agenda

Introduction

Literature Survey

Implementation

Results
11
Literature Survey
Name of the paper Summary
POLKADOT Polkadot is a scalable heterogeneous multi-chain blockchain solution.Easy-to-use platform with
non-complex & minimal functionality.

WRAPPED TOKENS Wrapped tokens proposes a solution to make assets interchangeable and representable on the
Ethereum chain

The act of tokenizing assets can increase speed of transactions.WBTC is a heterogeneous token
interoperable exchange mechanism.

COSMOS Cosmos architecture consists of several independent blockchains called “Zones” attached to a
central blockchain called “Hub”.Highlights of this project is the fact that it uses
Tendermint and Dpos to provide high scalability.

STRONG FEDERATION While not fully decentralized, the system is distributed and publicly verifiable, leaving users with
the ultimate spending authority over their assets. Liquidity and No single point of failure are some
other features.
Hash Time lock contracts
• To deploy an HTLC, the transmitter of the token will first create a secret
s , LockPeriod L and then calculates the hash H of this secret:
H = sha 256( s )
• H1 = Encrypt ( PuR(H))
• The exchange occurs if the receiver has the secret s , H1 and decrypts it
using his private key (PrR)
• f( H1 ,S ) = Equal ( decrypt ( PrR (H1) ,sha256 (s) ) AND ( LocktimePeriod
< block.timestamp ) )
• f( H1,S) = {1 , Exchange occurs
• 0,Exchange does not occur and respective assets are
refunded
Atomic Swaps
 Enabling Next generation
blockchain systems for better
Proposed solution interoperability and
performance.
Actors of the solution
• Token Trader
• Token traders are user accounts who trade and buy tokens from user
accounts.

• Token Owner
• Token Owners are user accounts which deploy token contracts
with an initial supply. These are the account holders which can mint
the new supply of tokens.
Scenario
Consider several ICOs that have been launched since 2010. Tokenization has
become a key source of funding for research projects. With these many tokens into
the crypto world we have an urgent need to interoperate among them. Consider
two ICOs IA and IB who are the token contract owners who have deployed a token
contract with an initial supply of N tokens each to get funds for their project. Each
of the ICOs has sold Ns to token traders who are investors that invest in potential
projects to gain profits. The aspiration of these investors is to maximize their profit.
So these token traders keep exchanging tokens among themselves based on
the growth of the ICOs.

Optimization Problem:The problem that is hindering these token traders to maximise

their profit is the inability of these token traders to exchange between the two
heterogeneous tokens.
Proposed Solutions
Consider A and B as potential Token Traders who want
exchange tokens among themselves to maximise their profit.

So the exchange of these eclectic tokens can be enabled using:

1) Central Contract exchange

2) Atomic Swap exchange

Proposed Solution:Using Central Exchange
Central Contract Interface
Central Contract Data Structure
Proposed Solution:Using Atomic Swaps
Atomic Swap Interface
The above contracts were implemented using solidity
programming language.
The contracts were intially deployed on remix and subsquently
deployed on rinkeby using metamask. We have observed that atomic
swap is more efficient than central contract exchange.
Although both the contracts require equal number of transactions
internally,
atomic swap is 25% cost efficient than central contract exchange.
Morever atomic
swap contracts are more scalable than central contract contracts.
Atomic Swap Data Structure
Results
The above contracts were implemented using solidity
programming language.
The contracts were initially deployed on remix and subsequently
deployed on rinkeby using metamask. We have observed that atomic
swap is more efficient than central contract exchange.
Although both the contracts require equal number of transactions
internally,
atomic swap is 25% cost efficient than central contract exchange.
Moreover atomic swap contracts are more scalable than central
contract contracts.
Comparing Utility Token Standards
 Solution Key Highlights Technical components Benefits

A Well Defined solution to ▪ Created equivalent • Overview of

address the evolving needs blockchain contracts to interoperability
of Token Interoperability facilitate intrachain token • Identifies critical aspects
▪ Have Cost Optimized transfers. of interoperability
Blockchain Intrachain ▪ Mathematical overview of • Reduces Intrachain
Mechanisms interoperability . Interoperability problem
▪ Interoperability ▪ Using of htlc,atomic among tokens.
classifications swaps . • Prevention of Attacks.
Thank You

Questions…