How the aelf Ecosystem Achieves Blockchain Interoperability

Jan 4, 2019 · 5 min read

Blockchain technology has advanced in leaps and bounds over the ten years since Bitcoin was introduced, particularly more recently, as the technology has gained interest and recognition beyond the initial use case of cryptocurrency. Blockchain offers a wide range of applications including trade finance settlements, supply chain management, digital identity, and contract law.

However, blockchain systems don’t currently offer the functionality of a versatile operating system. Bitcoin and other cryptocurrencies that have forked from it are single-use applications. Distributed application platforms such as Ethereum have attempted to replicate the features of an operating system but with some serious limitations.

These limitations include speed, security, and a lack of capability to customize according to various specific business needs. For this reason, many businesses are reluctant to leverage the benefits of decentralized public blockchains, opting instead for permissioned distributed ledgers. This is not to say that blockchain technology is something to terrify them, but they are treating it with caution.

Blockchain Landscape Similar to Pre-OS Computing?

Consider that up until the time Microsoft developed Windows, everyday businesses didn’t use computers for tasks like word processing. Once operating systems became available and increasingly user-friendly, commercial adoption of computers and therefore applications started to increase. Developers started creating more apps that served specific purposes, adapted for different business needs.

Blockchain is facing a similar issue as pre-OS computers. With no operating system that can adapt for use by many different types of businesses, the technology has so far failed to achieve widespread commercial adoption. Business needs vary too widely to make a single blockchain fit for all purposes.

For example, trade finance doesn’t need instant settlements if legal and data privacy requirements can’t be maintained. Retailers need to meet peaks in demand during shopping holidays like Black Friday. Existing blockchain infrastructure cannot meet these conflicting demands without compromising one for the other.

Why aelf is Different

Aelf seeks to overcome these problems with a customizable blockchain ecosystem that is fully interoperable and therefore suitable for commercial use — a Linux for blockchain. We provide the core system, solving issues including governance for system updates, transaction speed, scalability, and interoperability.

Developers can then use the aelf kernel to create customizable sidechains for specific business or commercial needs. Aelf will also allow each sidechain to interact with each other as well as other blockchains such as Bitcoin or Ethereum, thereby allowing assets, users and information to be shared between different applications.

How aelf Achieves Interoperability

To achieve interoperability, aelf uses two innovative features. Sidechains bring scalability through separation of resources and smart contract functionality. Alongside this, the delegated proof-of-stake (DPoS) protocol provides an adaptable governance system with fast transaction confirmations.


Aelf doesn’t operate on a one-size-fits-all blockchain concept. Instead, the system runs on a main chain backbone, with branched sidechains connected to the main chain by an indexing system. The indexing system recognizes two types of sidechains:

• External chains of high importance, such as Bitcoin or Ethereum

• Internal sidechains

The main chain doesn’t hold any smart contracts. Smart contracts are developed on internal sidechains, with each sidechain serving a specific type of smart contract functionality and/or business need.

For instance, one sidechain may act as a digital asset exchange, whereas another might handle asset storage as a digital wallet. If the digital asset exchange sidechain becomes too heavy, it can be branched off into sub-chains which handle different types of digital assets.

Sidechains can only interact with one another via the main chain. In this way, if one sidechain is experiencing any peaks or bottlenecks, the rest of the system is unaffected.

Read more about Sidechains vs. Sharding.


Indexing multiple sidechains on the main chain is more complicated than typical transaction confirmation on a blockchain like Bitcoin. In addition, aelf is designed to provide enterprise cloud services in a more complex structure.

Therefore, proof of work or proof of stake aren’t suitable, so the main aelf blockchain uses the DPoS protocol. DPoS offers the dual advantages of being both faster and more predictable than PoW or PoS, while still ensuring high levels of security are adhered to.

In DPoS, ELF token holders elect mining nodes. The mining nodes enforce all rules of aelf and decide how to distribute mining rewards. Sidechains are free to adopt their own consensus protocol but are encouraged to merge mining with the aelf main chain.

Aelf token holders delegate 2N+1 mining nodes, where N starts with 8 and increases by 1 each year. Unlike the traditional setup, each node will consist of a cluster of computers split into two clusters, one for processing transactions and one for database storage.

Read more about why aelf chose DPoS.

Putting It Together

Sidechains are charged a transaction fee in ELF tokens, which is determined relative to the contribution of the sidechain to the overall aelf ecosystem. Therefore, the biggest contributors pay the least fees.

As sidechains transact, mining nodes on the main chain read information coming in from the sidechains, forming a Merkle Tree. Each block on the main chain then records the Merkle Tree roots in the block header. If a sidechain needs to communicate with another sidechain, they can do so via the main chain by including the main chain block header.

Sidechains can vote within their own branch to index other sub-chains. Sub-chains can request to be indexed by more than one sidechain if they wish. Sidechains can also charge fees of any sub-chains branching off from them.

With a fully interoperable blockchain ecosystem, aelf offers a variety of potential business use cases that are unrestrained by many of the challenges facing users of other blockchain infrastructure. These include financial services, digital identity, smart city, and Internet of Things (IoT) applications. Existing dApps built on Ethereum, EOS or other platforms can interact with aelf applications, and companies wishing to participate in the aelf ecosystem have the opportunity to start small and scale as much as they wish.

You can read more about the technical aspects of aelf in our whitepaper.

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Written by


Head of Content Creation & Community Engagement for aelf. Crypto investor, trader, maker and baker - all things crypto



ælf, the next breakthrough in Blockchain.

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