Trustless, Interoperable Cryptocurrency-Backed Assets

Paper
Research Paper
(IEEE S&P 2019)
GitHub
PoC Code
(GPL-3.0)

The Problem of Trustless Cross-Chain Trades

Building trustless cross-blockchain trading protocols is challenging. Centralized exchanges thus remain the preferred route to executing transfers across blockchains. However, these services require trust and therefore undermine the very nature of the blockchains on which they operate. To overcome this, several decentralized exchanges have recently emerged which offer support for commit-reveal atomic cross-chain swaps (ACCS).

Commit-reveal ACCS, most notably based on HTLCs, enable the trustless exchange of cryptocurrencies across blockchains. To this date, this is the only mechanism to have been deployed in production. However, commit-reveal ACCS face numerous challenges:

  • Long waiting times: Each commit-reveal ACCS requires multiple transactions to occur on all involved blockchains (commitments and revealing of secrets).
  • High costs: Publishing multiple transaction per swap results in high fees to maintain such a system.
  • Strict online requirements: Both parties must be online during the ACCS. Otherwise, the trade fails or, in the worst case, loss of funds is possible.
  • Out-of-band channels: Secure operation requires users to exchange additional data off-chain (revocation commitments).
  • Race conditions: Commit-reveal ACCS use time-locks to ensure security. Synchronizing time across blockchains, however, is challenging and opens up risks to race conditions.
  • Inefficiency: Finally, commit-reveal ACCS are one-time. That is, all of the above challenges are faced with each and every trade.

Commit-reveal ACCS have been around since 2012. The practical challenges explain their limited use in practice.

XCLAIM - Trustless Cross-Chain Communication

XCLAIM is a framework for achieving trustless and efficient cross-chain exchanges using cryptocurrency-backed assets (CbAs). XCLAIM allows to create assets which are 1:1 backed by existing cryptocurrencies, without requiring trust in a central operator. While this approach is applicable to a wide range of cryptocurrencies, we currently focus on implementing Bitcoin-backed tokens on Ethereum, i.e. XCLAIM(BTC,ETH).

XCLAIM introduces three protocols to achieve decentralized, transparent, consistent, atomic, and censorship resistant cross-blockchain swaps:

  • Issue: Create Bitcoin-backed tokens on Ethereum.
  • Swap: Swap Bitcoin-backed tokens on Ethereum against Ether or any ERC-20 token.
  • Redeem: Burn Bitcoin-backed tokens on Ethereum and receive the 1:1 amount of Bitcoin in return,

The current XCLAIM prototype is compliant with the ERC20 standard. An overview of the protocol is presented below:

Issue
Trade
Redeem
Design Principles

XCLAIM guarantees that Bitcoin-backed tokens can be redeemed for the corresponding amount of Bitcoin, or the equivalent economic value in Ethereum. Thereby, XCLAIM overcomes the limitations of centralized approaches through three primary techniques:

  • Secure audit logs: Logs are constructed to record actions of all users both on Bitcoin and Ethereum.
  • Transaction inclusion proofs: Chain relays are used to prove correct behavior on Bitcoin to the smart contract on Ethereum.
  • Proof-or-Punishment: Instead of relying on timely fraud proofs (reactive), XCLAIM requires correct behavior to be proven proactively.
  • Over-collateralization: Non-trusted intermediaries are bound by collateral, with mechanisms in place to mitigate exchange rate fluctuations.
XCLAIM vs HTLC Atomic Swaps

To test performance and costs, we implemented both XCLAIM and HTLC ACCS between Bitcoin and Ethereum. Our experiments show:
XCLAIM is cheaper and faster than HTLC Atomic Swaps.

Issue
Trade

Storage and execution costs are in USD as per exchange rates of 30 Nov. 2018: BTC/USD 3717.38 and ETH/USD 105.71. Performance is measured in minutes and includes recommended security parameters: 6 conf. a 10 min for Bitcoin; 12 conf. a 14 sec for Ethereum.

Featured In

Scaling Bitcoin 2018

Scaling Bitcoin, Tokyo
6-7 Oct. 2018


Ethereum Community Conference 2019

EthCC 2019, Paris
5-7 Mar. 2019
(Video)


Community Ethereum Development Conerence 2019

EDCON, Sydney
8-14 Apr. 2019


IEEE S&P 2019

IEEE S&P, San Francisco
20-22 May. 2019
(Video)


Check out our slide deck.

Research and Development Team

Alexei
Alexei Zamyatin
Primary author and lead of the XCLAIM project. PhD researcher in the Imperial College London Centre for Cryptocurrency Research and Engineering. His research focuses on blockchain security and interoperability.
GitHub
Google Scholar
Dominik
Dominik Harz
PhD researcher at Imperial College London Centre for Cryptocurrency Research and Engineering. His research focuses on smart contract security and verification, and negotiation for autonomous agents.
GitHub
Google Scholar
Joshua
Joshua Lind
PhD researcher in the Large-Scale Data and Systems Group at Imperial College London. His research focuses on improving the security and privacy of distributed systems.
GitHub
Google Scholar
Research Advisors

Arthur Gervais and William Knottenbelt

XCLAIM is a research project at the Imperial College London Centre for Cryptocurrency Research and Engineering, in collaboration with SBA Research. This research was co-funded by Blockchain.com, Outlier Ventures, Bridge 1 858561 SESC, Bridge 1 864738 PR4DLT (all FFG), the Christian Doppler Laboratory for Security and Quality Improvement in the Production System Lifecycle (CDL-SQI), and the competence center SBA-K1 funded by COMET.

DISCLAIMER: This sole purpose of this website is to provide information on the challenges of blockchain interoperability and the solution approach described in the XCLAIM research paper.

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Many thanks to Dionysis Zindros for providing the background visualizations. Github link