Blockchain Interoperability

MoonX
MoonX
Nov 3 · 3 min read

Blockchain emerged as a disruptive technology that allowed creation of value in the form of blockchain assets that delivers trustability, transparency, traceability of digital objects in the chain. The application and usability of this technology took a pivotal role by identification and execution of interoperability among different blockchains.

Interoperability refers to the ability of different systems to communicate with each other in a distributed environment to exchange or retrieve information or data. A recent study conducted by Hi-leman and Rauchs suggests that “Interoperability will be essential for the massive adoption of blockchain and distributed ledgers.” Therefore, whether a public or private type of blockchain, interoperability across blockchain systems will become a core requirement.

Interoperability seems to be a strategical concept, where different systems cross-communicate to achieve a common goal. Here the desired goal is to connect separate networks of ledger systems and facilitate cross-chain communication in order to inter-act and transfer data. To understand the interoperability goal, it is first necessary to identify the scenarios for interoperability: an active mode — where systems must be able to engage in the interaction to send and receive data; and a passive mode where systems able to receive data. Therefore, the desired interoperability generally falls into two categories, identified as:

1. Cross-chain ‘transfer \ exchange’ — a cross-chain transfer process aims to transfer various types of assets or value from one blockchain system to another. That means the systems must be in active mode and have a common understanding of the semantics so that the transfer occurs meaningfully.

2. Cross-chain ‘validation \ verification’ — a cross-communication process aims to pro-vide the ability to verify assets, value or information between the blockchain systems. In order to facilitate cross-communication, many techniques such as sidechain, relay, notary schemes and hash-locking are under development. A variety of approaches have been proposed to achieve interoperability, but nearly all of them lead to the violation of the principles of decentralization.

Approaches for Interoperability Interoperability approaches aim to address interoperability barriers however, we must consider how these barriers are removed because some approaches may lead the system to change its security model. Considering the decentralized nature of the architecture, where multiple nodes participate in the process to reach finality, nodes must retain the same result. For that, nodes must have or be given the information in order to process the transaction. If the nodes are set to fetch data from other blockchain systems, the dynamic nature of values would interfere with the consensus. Therefore, the exchange process must be carefully designed in accordance with the system goal. This leads to the interoperability focuses on two types of approaches:centralized and decentralized.

1. In a centralized approach, the cross-communication operation is triggered by a single entity and operates directly between the sender and the receiver blockchain. This results in the cross-communication process in a closed environment. The inner com-munication is facilitated through some trusted/ credible nodes acting as notaries to verify whether a specific event has happened on one chain and taken agreed action on another chain.

2. A decentralized approach assumes that the cross-communication occurs automatically at a protocol level through smart contracts in a distributed environment. For example, when Bob invokes a transfer transaction on his chain, it will automatically be credited in Alice’s chain.

Current interoperability mechanisms in the market include:

· Pegged Side-chain — Applicable in blockchain systems that hold an asset, token or cryptocurrency. In this, the parent chain is connected by a new blockchain called a side-chain. The side-chain as the custodian of assets from the parent chain, and this same asset is locked in the main chain to prevent double spending. However, the advantage of this sidechain is that it can perform instant transactions at a higher speed and volume.

· Relay is a mechanism where a ‘Chain A’ actively listens to and keeps a record of part of the information such as block header from another ‘Chain B’. This will be useful for a light client to verify block headers belonging to ‘Chain B’ by using a standard verification process

· Hash-locking is another technique for the exchange of digital assets without a trusted third party. The mechanism utilizes a hash time [24] locked system which puts a time lock on the transaction so that both the obligations are fully met, otherwise the transaction cannot occur — atomic transaction

· Notary schemesis where transactions highly depend on a third-party notary. When both parties of a transaction across different chains mistrust each other and their information is asymmetric, the simplest method is to seek an intermediary trusted by both sides.

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