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Exactpro - Challenge 1 - Hackathon Submission

Exactpro
October 07, 2022

Exactpro - Challenge 1 - Hackathon Submission

DLT is rapidly claiming its place in the global fintech landscape, penetrating the most critical industry use cases. The multitude of DLT frameworks available brings not only the promise of more financial freedom, but also the challenge of harmonising them from the technical, as well as the regulatory standpoint, to truly guarantee transaction security and transparency. If not taken into account, these aspects could result in DLT jeopardising the payments ecosystems both nationally and internationally. Setting up a single inter-DLT framework seems like a viable solution to address the risks and allow more users to access the technology.

Exactpro

October 07, 2022
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  1. 1 BUILD SOFTWARE TO TEST SOFTWARE
    BUILD SOFTWARE TO TEST SOFTWARE
    exactpro.com
    Cross-chain
    Ecosystem
    Exactpro – Challenge 1 – Interoperability

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  2. 2 BUILD SOFTWARE TO TEST SOFTWARE
    SWIFT Hackathon 2022 - Business Challenge Articulation
    1. The Challenge
    What is the core challenge you believe your solution will solve? Where is the problem seen? Why is this challenge important? What is the problem magnitude? Why does it need to be solved
    now?
    3. Reusability/Scalability
    ty
    How can the techniques implemented in your solution be extended to other use cases / industry challenges? How scalable is your solution in terms of computational
    complexity? What challenges may arise in order to achieve this on a wider scale?
    2. Business Opportunity
    What is the business opportunity derived from solving this solution? (both for yourself and Swift)
    DLT is rapidly claiming its place in the global fintech landscape, penetrating the most critical industry use cases. The multitude of DLT frameworks
    available brings not only the promise of more financial freedom, but also the challenge of harmonising them from the technical, as well as the regulatory
    standpoint, to truly guarantee transaction security and transparency. If not taken into account, these aspects could result in DLT jeopardising the payments
    ecosystems both nationally and internationally. Setting up a single inter-DLT framework seems like a viable solution to address the risks and allow more
    users to access the technology.
    Our proposed cross-chain swap platform represents a new DLT-based payments ecosystem with the “inter-token” (interoperable token) at its heart.
    Inter-token is tradable across all blockchains that are part of the ecosystem and can be traded freely within the ecosystem in a single transaction. In
    contrast to the current widespread implementations of cross-chain payments, having a trusted ecosystem eliminates the need for using Hashed Timelock
    Contracts (HTLC) and having to mitigate the associated drawbacks.
    A unified platform would help increase transaction speed, streamline national and cross-border payments, and reduce end-user costs of maintaining
    separate accounts on separate blockchain implementations, among other benefits.
    The main challenge in the implementation is the necessity to set up the “inter-currency”, i.e. network-specific “inter-tokens” that circulate on par with the
    native tokens on each blockchain-partner of the ecosystem. “Inter-token” liquidity balancing would also have to be set up. The system can be scaled to as
    many blockchain partners as is needed and – performance-wise – is only limited by the original networks. An ecosystem of 3 networks is demonstrated in
    our architecture, but the “universal payment system” approach can be applied further to 1) more networks and 2) more use cases, such as building an
    interoperable supply-chain platform.
    Organisation: Exactpro
    Challenge 1 - Interoperability

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  3. 3 BUILD SOFTWARE TO TEST SOFTWARE
    The Cross-chain Ecosystem – High-level Setup
    The Cross-chain Ecosystem:
    - Has “inter-token” (interoperable token) as its own
    form of currency that can be bought/sold with
    blockchain-native tokens and freely circulates
    between and within original blockchains.
    - May be extended by deployment of NFTs or other
    native inter-tokens, pegged to digital or traditional
    currencies.
    - Expands the possibilities for users of different
    blockchains with the ability to make cross-chain
    transactions via “inter-token”. Harmonises a variety
    of blockchain implementations and mitigates the
    technical disparities between them by setting up
    equal rules for token operations.
    - Simplifies the current token exchange: Hashed
    TimeLock Contracts (HTLCs) are no longer needed
    for cross-chain transfers.
    – inter-token equally present on each blockchain
    Organisation: Exactpro
    Challenge 1 - Interoperability

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  4. 4 BUILD SOFTWARE TO TEST SOFTWARE
    Cross-chain swap: existing approach
    (example of a problematic scenario)
    HTLC сross-chain bridge example
    ● Wealth Chain
    ● Participant Agnes
    ● Participant Bjorn
    ● Helium Chain
    Off-chain
    Creates secret password
    Creates the password’s
    hash
    1
    Sends
    2 2
    1) Swap info
    2) Password’s hash
    3) Time constraints
    3 3
    Agrees to swap information
    Agnes Bjorn
    → Unlocks HTLC using the password
    → receives Helium tokens
    Creates HTLC with agreed upon
    amount of Wealth tokens
    Negative Scenario
    Wealth Chain
    Agnes
    TX1
    Bjorn
    TX1
    Checks the validity of HTLC (amount,
    hash, time)
    5
    4
    Time has run out!
    → HTLC is unlocked
    10
    Creates HTLC with agreed upon
    amount of Helium tokens
    Helium Chain
    Bjorn
    TX2
    Agnes
    TX2
    TX3
    Checks the validity of HTLC (amount,
    hash, time)
    7
    6
    8
    ! secret password revealed !
    9
    Bjorn is unable to get his part of the deal
    12
    Receives
    Wealth tokens back
    11
    Organisation: Exactpro
    Challenge 1 - Interoperability

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  5. 5 BUILD SOFTWARE TO TEST SOFTWARE
    Our Proposed Cross-chain Solution
    Solution description:
    1. – “Inter-token” (interoperable token). Characteristics:
    ledger-native asset, non-fungible, non-evolvable, on-ledger asset.
    2. Inter-token issuer (ecosystem operator) is present in each network
    and able to issue/burn a universal interoperable token which has
    equal value in each network.
    3. Any participant in the network can buy/sell inter-token in exchange
    for a network-specific asset (cryptocurrency).
    4. Inter-token has equal contract rules across all networks.
    5. Inter-token issuance and management is implemented via a
    custom Cordapp (Corda network), a smart contract with defined
    logic (Ethereum network) and chaincode (Hyperledger Fabric).
    6. The bridges are implemented as original network applications
    (Cordapp, Fabric Application, Ethereum dapp) and maintained by
    the ecosystem operator.
    Business justification: The main idea is that the token is unique and equal
    (from the cost and rules perspective) in all networks. It is tradable and can
    be transferred within one ledger and from ledger to ledger.
    The solution doesn’t guarantee full atomicity, as the token exchange
    between networks happens in 2 stages – burn and then issue. However, it
    ensures “eventual consistency”, meaning that if something goes wrong
    during a given burn or issuance for another party, the token issuer takes
    responsibility to return (issue) the required amount of inter-tokens back to
    the transfer process initiator. This is possible due to the fact that the token
    rules are defined by the ecosystem operator.
    Issuer/Bridge
    ecosystem
    Node +
    Cordapp DApp
    Application
    Cordapp
    Chaincode
    PartyA PartyB
    PartyC
    Organisation: Exactpro
    Challenge 1 - Interoperability

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  6. 6 BUILD SOFTWARE TO TEST SOFTWARE
    Use Case 1: Inter-token purchase: Corda
    Corda
    Atomic Tx (TX1)
    1
    Issuer Node PartyA Node
    Purchase flow:
    PartyA sends TX1 to Issuer in order to
    buy N inter-tokens for M assets.
    Transaction (TX1) is atomic, meaning
    that purchase happens instantly:
    PartyA transfers M assets to the
    Issuer, while the Issuer issues N
    inter-tokens with the ownership
    assigned to PartyA.
    ✽ The inter-token sell process is essentially the same.
    N inter-tokens
    M assets
    M assets
    Organisation: Exactpro
    Challenge 1 - Interoperability

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  7. 7 BUILD SOFTWARE TO TEST SOFTWARE
    Use Case 2: Cross-chain Inter-token Swap:
    Ethereum to Corda
    The Issuer/Bridge service plays a key role in the
    process:
    1. It ensures process integrity (checks the
    tokens existence on the ledger that the
    transfer request is sent from)
    2. It has permissions to issue/burn the
    token on behalf of the participants.
    3. In case something goes wrong during
    the swap process, the issuer guarantees
    returning burnt tokens to the swap
    transaction initiator (PartyB) by issuing N
    inter-tokens.
    Party B has the option to cancel a transaction
    while it is in the ‘pending’ state.
    PartyA owns N inter-tokens and
    can use them.
    PartyB initiates transaction
    to transfer N inter-tokens
    to PartyA on the Corda
    Network.
    Positive Scenario
    Ethereum Network
    PartyB
    TX1
    Issuer/Bridge
    TX1
    Issuer/Bridge executes the smart
    contract to burn N inter-tokens
    on behalf of PartyB, notifies the
    Corda Network counterparty
    about transaction.
    2
    1
    Gets transaction details and
    notification that the tokens are
    burnt on the Ethereum network.
    Corda Network
    Issuer/Bridge
    3
    5
    Issues N inter-tokens with the
    ownership assigned to PartyA.
    PartyA
    4
    Organisation: Exactpro
    Challenge 1 - Interoperability

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  8. 8 BUILD SOFTWARE TO TEST SOFTWARE
    Summary and the Ownership Use Case
    The proposed cross-chain ecosystem allows for “coin-to-coin”, “tokenized asset to single currency”, “tokenized
    asset purchase with multi-linking”, as well as other types of transactions. The above-mentioned use cases work
    as long as the participants are acting as part of the ecosystem. Their assets have to be “inter-tokens” issued on
    the proposed cross-chain network. Tokens/NFTs issued as “inter-tokens” can circulate within and across ledgers:
    they can be sold/bought for other inter-tokens and/or withdrawn as blockchain-native assets. Naturally, the
    ecosystem also makes possible a “token-to-token” swap for original blockchain currencies and assets, but we
    expect these to be rare use cases.
    Inter-token contracts in different networks are crafted to level out ownership and transaction finality guarantees
    across all networks-partners of the ecosystem.
    Addressing Challenge 2 - Ownership
    The proposed cross-chain ecosystem is well-equipped to address the issue of ownership traceability due to it
    being a unified network that can store transaction information, the assets final and intermediary statuses, as well
    as the information on their transition between ledgers. This information can be stored on an internal ledger. Using
    the aggregated data, the network would be able to produce the transaction history for all transactions that took
    place within the ecosystem.
    Organisation: Exactpro
    Challenge 1 - Interoperability

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  9. 9 BUILD SOFTWARE TO TEST SOFTWARE
    Thank You!

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