Building the world’s first dual blockchain for equities
Ermin Dzinic — CTO Chainium
Chainium is building a scalable, purpose-built functional blockchain. It is designed specifically for equity trading and supporting equity services. Our solution is implemented as a dual-equity blockchain (check out our previous blog introducing our dual blockchain approach).
Scalability, in terms of the number of transactions, is ensured through the slim consensus protocol.
We are using a consensus which is not a computation-based mechanism.
Our purpose-built blockchain is achieved by a functional blockchain design.
Similar to the one used by Stellar. This means that our blockchain supports predefined transaction types, purposely built for equity trading and supporting services. With this design, we’re protecting our blockchain being used for any other purpose than equity services.
Smart contracts are supported but not in endless flexibility.
Our smart contracts only support functionality related to equity. This is another way to protect our network from being used for purposes other than equity services. Chainium smart contract (CSC) provides flexibility through predefined building blocks.
Chainium nodes
Chainium blockchain is a network of distributed servers.
The public blockchain is built as a public network of nodes. This means that anyone can register and become a node in our blockchain network. This blockchain is called “permissionless” because a node doesn’t need the permission of a central authority to join the network. With every new node on our “permissionless” blockchain, our network becomes more robust.
On the private blockchain side, we need to have controlled access to data. Nodes need to have permission to participate in the network. That’s why this blockchain is called “permissioned”. Private nodes are controlled by parties providing equity services, who need to access and process shareholder data. In today’s equity world, these would be banks and brokers, but other equity service providers can use our network and have full access to shareholder data. These nodes have the right to access and view shareholder data and submit new data to the private blockchain. This is how we create a scalable “Byzantine Fault Tolerant” solution.
Chainium consensus mechanism and scalability
The servers synchronize transactions in a process called consensus. The consensus mechanism ensures that the submitted transactions are valid and committed to the ledger. Choosing the right consensus mechanism has a direct influence on blockchain scalability. It is important to understand that we have two forms of scalability:
· “scalability of a number of nodes”
· “scalability of transaction processing performance measured in transactions per second”
Designing the right consensus mechanism is a trade-off because there is a direct dependency between these two scalabilities as shown below.
When designing our consensus mechanisms we were led by a following set of criteria:
· Node identity management — public/permissionless or private/permissioned network of nodes
· Scalability in terms of number of transactions
· Scalability in terms of number of nodes
· Performance
· Power consumption
· Correctness proofs
Both blockchains implement a consensus mechanism which avoids resource-intensive computation-based validation and enables high transaction throughput. We decided not to use the proof-of-work mechanism, for either of our blockchains, because it is slow and negatively impacts transactional scalability. Chainium consensus mechanism reduces the transaction validation difficulties and ensures that we settle any new transaction within a few seconds.
In order to avoid DoS attacks on the network, public blockchain requires a minimum fee to be paid in CHX for the transaction to be accepted. Public nodes which participate in transaction validation, receive this fee, expressed in CHX tokens, as a reward. This has an effect that transactions can be prioritized by offering more CHX fee when submitting them to the network. This CHX fee/reward system is the main incentive for the nodes to join the Chainium public blockchain network.
Our master blockchain is implemented as a “permissioned” network with a limited number of nodes.
The small number of nodes allows us to select a concensus mechanism with a high “scalability of transaction processing”.
Chainium has rebranded to Own. For more information about our brand change please read this medium post.
