Gavin Wood, founder of Ethcore, recently renamed to Parity Technologies Ltd, has published a paper presenting Polkadot, a new network that aims to provide interoperability between private and public blockchains.
The concept is somewhat similar to sidechains, but sidechains “are pretty much limited to token transfers for now,” says Peter Czaban from Ethcore. On the other hand, “Polkadot handles canonicaliztion of the parachains and enables rich communication” – he added. Moreover, according to the paper, each sidechain requires its own security while Polkadot aims to provide “pooled security across chains,” according to a public statement by Gavin Wood.
Wood told CCN that Polkadot transcends currency:
“[I]t’s actually about allowing contracts to more generally pass messages (or transactions) between each other, even if they’re on different chains. Those messages might be: effect the transfer of tokens/assets, but they might do all the other stuff that’s possible with smart contracts, e.g. represent an application for, or confirmation of, a loan agreement, represent the certification of a party, represent the engagement of a particular insurance instrument.
“[S]o this means that you can have wildly different chains (some might be open and public chains like ethereum and bitcoin, others might be fully encrypted internal enterprise chains, others may be partially hidden industry consortium chains) and they can all autonomously be transacting with each other.”
The general idea is to decouple the means by which parties collate and execute transactions (state transition) from the means by which parties agree upon one of a number of possible, valid, histories (the consensus mechanism, such as proof of work or proof of stake). According to the paper [PDF]:
“Polkadot provides the bedrock “relay-chain” upon which a large number of validatable, globally-coherent dynamic data-structures may be hosted. We call these data-structures “parallelised” chains or parachains.”
A consortium or a bank could, therefore, fork ethereum, customize it for its own needs, and through Polkadot interconnect it with Ethereum’s public blockchain or it could have one chain for certain functions and another for different aspects, allowing for greater scalability and perhaps efficiency. In further explaining this vision the paper states:
“We see conservative, high-value chains similar to Bitcoin or Z-cash co-existing alongside lower-value “theme-chains…” and test-nets with zero or near-zero fees. We see fully-encrypted, “dark”, consortium chains operating alongside, and even providing services to, highly functional and open chains such as those like Ethereum. We see experimental new VM-based chains such as a subjective time-charged Wasm chain being used as a means of outsourcing difficult compute problems from a more mature Ethereum-like chain or a more restricted Bitcoin-like chain.”
The project is very much at an inception stage, but Wood publicly stated that Parity Technologies has “already been prototyping the underlying consensus algorithm and laying some of the groundwork for the proof-of-validity stuff.” The initial research was funded by the British Government under the Innovate UK programme with further development to be funded by Melonport AG, a new start-up co-founded by Mona El Isa, former Goldman Sachs trader and hedge fund manager.
El Isa aims to automate paperwork and other aspects of non-trading asset management through the use of smart contract technology by launching Melon, a hedge fund like system for wealth management, which will probably be one of the first interoperable chain with Ethereum’s public network as Polkadot will “include a backwards-compatibility layer with the current Ethereum network, allowing smart contracts on Ethereum to interact directly with any chains,” according to a press release.
Bitcoin can also be interconnected, according to the paper, but it would require a two-way peg, which is a “non-trivial undertaking,” a hardfork, which in Bitcoin is “difficult to arrange to say the least” or a “virtual parachain” to stand between the two networks, but that would require “a substantial effort with an uncertain timeline and quite possibly requiring the cooperation of the stakeholders within that network.”
The focus, therefore, is like to be mainly on interconnecting Ethereum’s public blockchain with other private blockchains as well as, perhaps, eventually, with other public networks.
Images from Shutterstock.
Last modified: May 21, 2020 10:12 AM UTC