Transaction Management for Multiple Heterogeneous Computing Networks

Key Glossary

Term Definitions Distributed Ledger Technology (DLT) A way to share, replicate, and synchronize transaction records between multiple participants without the need for a central authority. Blockchain A distributed database that stores transaction records in chronological order, using cryptography to ensure security and immutability. Smart Contract A program stored on a blockchain that automatically executes when pre-set conditions are met. Cross-ledger transactions involve transactions that transfer value between two or more different distributed ledger networks. Bridge A system that connects two different distributed ledger networks or traditional financial systems, allowing value to be transferred between them. Bridge Node A node that provides a connection point between two different networks. Bridge Metadata Data that defines the properties of a bridge operation, such as transfer model, pricing model, replenishment model, sequence, direction, and fees. Transfer Model A model that defines how ledgers are connected via a bridge wallet, such as collateralization, settlement, transfer, conversion, and transformation. Pricing Model A model that defines the ratio of the number of destination ledger tokens that a bridge receives for each source token sent, such as linked (1:1), pegged (fixed ratio), algorithmic, or external. Supplemental Models define mechanisms for refilling outbound wallets when excessive imbalanced flows occur and resources need to be relocated, such as None, Manual, Transfers, and Swaps. InfinXchange An interface architecture, including a library of mappings and service interfaces and data structures, for use with DLT and traditional value transfer networks. Financial Ontologies Syntax-agnostic models of value transfer, along with a catalog of transfer messaging terms and related items, and conversion patterns to convert heterogeneous implementations to the syntax-agnostic model. Route Planning Services Modules that determine the best path for transactions across networks, including identifying bridges and calculating associated fees and times. Chain Transfer Handlers Modules that manage cross-ledger transaction execution, including ensuring that sub-transactions are executed in order, handling rollbacks, and recording transaction history. Independent Transaction Ledgers that record all sub-transactions, including a ledger for reversing transactions. Zero-Knowledge Proofs A technology that allows one party to prove to another party that a statement is true without revealing any other information. Collateral A transfer model that involves depositing funds into a bridge and issuing an IOU (digital version) of the equivalent value that can be used in the internal network. Settlement A transfer model that involves redeeming an IOU back to its original form and withdrawing the equivalent value in an external network. Metamorphose A transfer model that allows tokens to be created and destroyed between ledgers without changing the total supply. Dark pools Private trading venues that facilitate large trades, providing liquidity and price advantages.

Short Answer Questions

What are cross-ledger transactions and why are they challenging?

What role does a bridge play in facilitating cross-ledger transactions?

What information does bridge metadata contain?

What is the purpose of InfinXchange?

Explain the concept of financial ontology and its importance in cross-ledger transactions.

How does a routing planning service determine the best path for transactions across networks?

What key functions does a chain transfer handler perform?

What role does an independent transaction ledger play in ensuring transparency and accountability for cross-ledger transactions?

What is the difference between collateral and settlement transfer models?

How do zero-knowledge proofs enhance the security of cross-ledger transactions while preserving privacy?

Short Answer Question Answers

Cross-ledger transactions are transactions that transfer value between two or more different distributed ledger networks. Since each DLT network has its own protocols, rules, and consensus mechanisms, coordinating transactions between these networks is challenging.

Bridges act as intermediaries between different DLT networks, allowing value to be transferred between them. They do this by managing the technical and protocol differences between different networks, enabling cross-ledger communication and transactions.

Bridge metadata contains information that defines the operational properties of the bridge, such as transfer model, pricing model, complement model, sequence, direction, and fees. This data is essential for route planning and transaction execution.

InfinXchange is an interface architecture that aims to simplify the interaction between DLT and traditional value transfer networks by providing a common set of interfaces and data structures. This makes it easier for developers to build applications that operate across different networks.

Financial ontology is a syntax-agnostic model that provides a common language for financial transactions. It plays a vital role in enabling interoperability and simplifying cross-ledger transactions by defining standardized representations of services, functions, and objects that are common across different DLT networks.

The route planning service determines the best path for cross-network transactions by analyzing network topology, bridge functionality, and associated costs such as fees and time. It utilizes algorithms such as breadth-first search to explore possible routes and select the most efficient one.

Chain transfer handlers are responsible for coordinating and executing the sequence of sub-transactions involved in a cross-ledger transaction. It maintains transaction integrity by ensuring that all sub-transactions are executed successfully, or by initiating a rollback mechanism in the event of a failure.

Independent transaction ledgers facilitate transparency and accountability of cross-ledger transactions by providing a tamper-proof record of all sub-transactions, including reversal transactions. This allows transactions to be audited and verified, even if they span multiple networks.

Pledges involve depositing funds into a bridge and issuing an IOU of equal value, while settlements allow IOUs to be redeemed back to their original form and funds to be withdrawn in an external network. Pledges facilitate use within an internal network, while settlements allow users to withdraw funds from the bridge system.

Zero-knowledge proofs allow verification of cross-ledger transactions without revealing sensitive information about the transaction itself. This privacy-enhancing technology improves security while maintaining the confidentiality of transactions.