This article is part of a series where we introduce Rayls. If you want to start from the beginning you can go to the first article.
What are Rayls Subnets
Rayls Subnets are high-performance and compliant permissioned EVM blockchain networks that connect to the Rayls Public Chain. We also like to refer to Rayls Subnets as VEN (Value Exchange Network). Throughout this article, we may use the two terms interchangeably.
The main advantage of a Rayls Subnet is that they allow participants to exchange tokens in complete privacy with other participants of the same Subnet, other Subnets and in the the future even the Rayls Public Chain.
Each Rayls Subnet is formed of the following components (from the picture above):
1. Privacy Ledgers: Modified Ethereum client to enable high performance and enterprise-grade database connections
2. Privacy-enabled Bridges: Custom-made bridges that use ZK (Zero-Knowledge) and Homomorphic technologies to enable private transactions
3. Commit Chain: A central EVM blockchain used as messaging layer (for example Hyperledger Besu or even a dedicated Rayls Privacy Ledger)
Financial Use Cases
The appeal of blockchain technology for financial institutions lies in its potential for increasing efficiency and innovation. However, at the same time financial institutions have a strict regulatory framework that they have to operate under, which makes using public blockchains challenging.
Because of these regulatory requirements, private permissioned blockchains (as opposed to public permissionless blockchains) have been created and touted as the solution to financial institutions blockchain usage. Despite many proof-of-concepts and tests, permissioned blockchains are not used in production in any meaningful way.
Rayls Subnets allow financial institutions to transact privately and stay compliant with laws and regulations while at the same time being connected to the wider public blockchain ecosystem.
Anatomy of a Rayls Subnet
Rayls Subnets can be created by any financial institution or Financial Market Infrastructure provider such as Central Banks, payment processors and major financial institutions. Every Subnet has an operator, responsible for the initial setup of the Subnetand the definition of its governance rules. The operator can be a single entity or a consortium of entities. Creating a Subnet means in practice getting a Commit Chain online, running one or more nodes and maintaining it.
Once the Subnet is formed, participants that want to join the Subnet need to install Privacy Ledgers in order to communicate with the Subnet. Privacy Ledgers are highly performant EVM clients intended to be installed on-premises in the financial institution or in a cloud provider account owned by the institution.
Privacy Ledgers are feeless, meaning no token transaction costs within the network, allowing financial institutions to have as many accounts and perform as many transactions as they wish. Their Privacy Ledger are for their own use. Each Privacy Ledger is connected to a Private Bridge which in turn connects to the Commit Chain. Through this mechanism, financial institutions can send & receive tokens from one Privacy Ledger to another through the Commit Chain.
Transactions between participants of a Subnet require that the token being transacted be previously ‘registered’ with the Subnet. This has to be done by the token issuer, once registered the commit chain starts to keep track of the token in every Privacy Ledger, ensuring that the system stays safe and trusted.
Note that while transactions inside a Privacy Ledger are free, bridge transactions between Privacy Ledgers are paid. The payment is done in Rayls native token, but payment is also accepted in FIAT or other cryptocurrencies.
Transactions Between Subnets
Since Subnets are connected to the Rayls Public Chain, it is possible to send & receive private transactions from/to connected Subnet and its participants.
Transactions between VENs require that the token being transacted be previously registered with the Rayls Public Chain, similar to transactions within a VEN.
How are Rayls Subnets different from any other Subnet out there?
Rayls Subnets are different because they have unique features, such as:
- Rayls Subnets allow participants to transact privately within the Subnet
- Rayls Subnets can be decentralized and run by a consortium of node operators/validators and still maintain privacy
- VENs allow participants to transact privately with other Rayls Subnets through the Rayls Public Chain
- Rayls Subnets are infinitely scalable
- Rayls Subnets offers a series of sophisticated governance tools to operators
- Rayls Subnets support the role of an auditor/regulator that can peek on transactions
- Rayls Subnets can interoperate with public blockchains through the Rayls Public Chain
Rayls Subnets are built for financial institutions and use the latest cryptography to offer privacy, scalability and interoperability with decentralization.
These features and characteristics make Rayls Subnets are the perfect solution to address several institutional blockchain use cases, for example:
- CBDC (Wholesale & Retail)
- Tokenization
- FMI Settlements
- Intra-institution transactions
- Cross-border FX
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If you are a financial institution interested in exploring the use of Subnets please contact us
Check out the other articles in this Series
