Pantos Project Update: Seventh TAST Technical White Paper

In the seventh TAST Technical White Paper we develop an incentive structure for blockchain relays that follow a proof on demand approach where block headers are optimistically accepted and only fully validated if identified as illegal by off-chain clients. The preliminary cost analysis shows that such blockchain relays are able to drastically reduce operational costs over relays that validate every single submitted block header.

Key facts of White Paper VII:

• The prototype published in September is a blockchain relay that enables clients (e.g., smart contracts) on one blockchain to verify the inclusion of transactions on some other blockchain in a completely decentralised manner.
• While no trust in a centralised party is required, the prototype depends on the continuous participation of off-chain clients.
• To encourage off-chain clients to participate, we enhance the prototype with an incentive structure.
• With the incentive structure in place, the daily operational costs of the prototype vary between 522.46 and 5224.43 EUR depending on the gas price. This is 6 times cheaper than traditional blockchain relays.
• The prototype can now act as the basis for the development of cross-blockchain token transfers as envisioned by TAST.
• Download the seventh TAST Technical White Paper on TU Wien’s TAST homepage or directly here.
• Download fact sheet PDFs in English, German and French.

Recapping prior work and White Paper VI

The Token Atomic Swap Technology (TAST) research project aims to create a platform for cross-blockchain interoperability. The overarching goal is to investigate possible means of interconnecting various blockchains. In our prior work, we described the underlying concepts of our proposed blockchain relay and implemented these concepts in a first proof-of-concept prototype for Ethereum-based blockchains.

However, the devised prototype still needs to be extended before it can actually be leveraged for applications like cross-blockchain token transfers. In particular, since the prototype relies on third parties to relay block headers from the source chain to the destination chain and to dispute any illegal block headers arriving at the destination chain, an incentive structure needs to be in place to motivate these third parties to participate.

In the seventh TAST Technical White Paper we provide a) a detailed description of the prototype’s incentive structure and b) a preliminary analysis of the operational cost.

The prototype’s incentive structure

The relay scheme that we propose relies on clients continuously submitting block headers of the source chain to the destination chain as well as on clients disputing any submitted illegal block headers. Clients that submit or dispute block headers incur cost since they need to provide a fee for posting the respective transaction to the destination chain. To keep the system alive, an incentive structure has to be in place that compensates submitting and disputing clients for their efforts. Otherwise, clients have no incentive to participate. Thus, we propose an incentive structure that rewards clients for submitting and disputing block headers.

To encourage clients to continuously submit block headers to the destination chain, we propose a fee model where a submitter receives a “verification fee”, i.e., a small financial reward, every time a transaction inclusion verification takes place using one of the block headers that were submitted by the client. The verification fee has to be provided by the client requesting a transaction inclusion verification for a specific block header b. After the verification, the submitter of block header b is rewarded with the provided fee. Essentially, whether a client gets fully compensated for submitting a block header depends on the size of the verification fee, the number of verifications taking place on the specific block as well as the cost for submitting a block header. The minimum verification fee can then be calculated as the submission cost of a block header divided by the number of verifications taking place on the submitted block header:

With an incentive structure in place, clients are encouraged to keep submitting and disputing block headers, thus keeping the system alive and healthy. In the following section, we provide a preliminary analysis of the operational cost of the proposed relay scheme.

Estimating the operational cost

We introduced a proof of concept implementation of the proposed relay scheme for Ethereum-based blockchains. The effort required by transactions in Ethereum is measured in gas. That is, each operation (e.g., accessing storage) in Ethereum costs a certain amount of gas. When posting a transaction, a client can decide how much Ether (ETH) to pay for each unit of gas. The higher the price per unit of gas, the higher the probability of the transaction being included within the next immediate block but the higher the total cost of the transaction. Vice versa, transactions with a lower gas price are less expensive, but run the risk of being bypassed by miners. As such, we can objectively measure the cost of submitting and disputing block headers in the amount of gas required by the transaction. If we want to find out a client’s cost in ETH, we also need to take the gas price into consideration.

As seen in Fig. 1, submitting block headers without full validation cost about 580,000 gas, while the full validation alone costs about 2.9 million gas. Hence, fully validating block headers at submission, as done in traditional blockchain relays, would cost around 3.5 million gas. This gives a clear indication about the benefits of the devised approach as optimistically accepting block headers is about six times cheaper than the traditional approach. However, the cost savings of the optimistic approach become even more evident when considering longer time periods.

Next steps and conclusion

The next step of the TAST research project is to further improve the prototype. The ability to perform on-chain SPVs in order to confirm the inclusion of transactions across blockchains is crucial for enabling blockchain interoperability. In the last TAST white paper, we proposed and implemented a relay scheme capable of on-chain SPV. In the seventh Whitepaper, the prototype was extended by an incentive structure which is crucial for keeping the prototype alive. Further, we conducted a preliminary analysis on the operational costs of the prototype. With the incentive structure in place, the prototype can now act as basis for the development of cross-blockchain token transfers as envisioned by TAST.

For more information, check out the seventh TAST Technical White Paper.

About Pantos

As the first multi-blockchain token system, Pantos aims to bring blockchain projects closer together, improve communication between developers, researchers and users, and set innovative standards for cross-chain token transfers.

The goal is to serve as a lighthouse project in an increasingly fragmented blockchain space. With multiple blockchains serving all kinds of different purposes, Pantos is seeking to allow these projects to talk to one another in a standardized way. This will speed up innovation by creating a link between blockchains which then can scale together.

To get the latest news on the progress of the Pantos project you can follow our official channels:

• GitHub: github.com/pantos-io
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• LinkedIn: linkedin.com/company/Pantos_IO