Exploring Cross Chain Asset Technologies: CATA, CDEX, and CDAT
Wanchain’s VP of engineering Weijia Zhang works with the EEA on cross-chain standards
A blockchain is a distributed, decentralized, and immutable ledger that may be used for recording virtual currencies, tokens, transactions, events, and other data of value. With the success of Bitcoin, various blockchains such as Ethereum, EOS, Ripple, Litecoin, Wanchain and the like have been developed and are growing at a rapid pace. There are also other private and consortium blockchains such as Hyperledger, Steller, Corda, Quorum, and Lanchain that only allow nodes with permitted identities to join the blockchain network. With the advancement of public and private blockchains, the importance of interoperability increases and there is more demand for developing crosschain applications to connect homogenous and heterogeneous blockchains.
Heterogenous & Homogenous Cross Chain
Cross chain technology allows for the secure transfer of information and assets between different blockchains. Broadly speaking, cross chain technology can be divided into two types, heterogenous and homogenous. Homogenous cross chain refers to the transfer of assets or information between two blockchains with similar design architecture, while heterogenous cross chain refers to the transfers between chains with different architecture. Wanchain’s approach to cross chain technology is heterogenous, which means it allows for cross chain transfers between different blockchains without any ‘opting in’ by the chain operators.
Cross Chain Assets and Cross Chain Data Sharing
Cross chain technology can be further subdivided into cross chain asset technologies and cross chain data sharing. Cross chain asset technologies are discussed in the section below in greater detail.
Cross chain data sharing means that data can be seamlessly and securely shared between two different chains. This can potentially allow for complex scenarios such a smart contract on one chain listening through a cross chain mechanism for events on another chain, and then triggering new events or transactions on its native chain or on another chain (again through an intermediary cross chain mechanism) when the specified event occurs.
Generalized cross chain sharing of data is a significant challenge and has yet to be realized in a decentralized and trustless way. Much progress has been made on the development of systems for cross chain assets and Wanchain is a leader in this area.
Wanchain and the Ethereum Enterprise Alliance
As an official member of the EEA, Wanchain (together with Clearmatics and Consensys) is in the process of working to establish standards for cross chain asset technology. This process is led by Weijia Zhang, Ph.D., who is also the official representative of the EEA in China. As a part of this process, Wanchain has presented the EEA with several detailed use cases which outline suggested approaches for dealing with the issue of cross chain asset transfer, trading, and transformation.
Cross-chain Asset Technologies: 3 Use Cases — CATA, CDEX, and CDAT
Wanchain’s research team under Dr. Zhang has done extensive research into various use cases for different types of cross chain asset technologies. Below the team presents use cases for three cross chain asset applications: Cross-chain Asset Trading Application (CATA), Cross-chain Decentralized Exchange (CDEX), and Cross-chain Decentralized Asset Transform (CDAT) (Figure 1). The similarities and differences among these cross chain applications are also compared.
Cross-chain Asset Trading Application (CATA)
CATA is a system that allows a user to sell fungible or non-fungible crypto assets to another user with accounts on any supported blockchain. For example, Alice has a cryptokitty asset in Ethereum blockchain and wants to sell the asset to another user (Figure 2). Alice has accounts on other blockchains such as Bitcoin, EOS, Wanchain, etc., and is open to accepting offers from other blockchains. The CATA system has multi-chain support so that it can communicate with the original chain (Blockchain A) and an external chain (blockchain B) with operations such as querying block and event information, sending transactions, etc. The CATA system also has access to an oracle to access crypto exchange rate information.
To place a sell order, Alice connects to CATA using a wallet and specifies the asset to sell, target price, the acceptable type of currency, and the account address to receive payment for each blockchain. CATA then checks if the specified crypto currency is among the supported blockchains. If yes, the CATA system will retrieve the exchange rate between the original and external blockchain and calculate the target sale prices of Alice’s asset denominated in various sepcified assets on other blockchains. CATA then publishes Alice’s sell order to an order book so that any user with a CATA wallet can access it.
CATA user Bob sees Alice’s Sell Order and decides to purchase the cryptokitty asset from Alice. Bob does not have an Ethereum account but does have a Bitcoin account and his balance is sufficient to purchase the cryptokitty. Using the CATA wallet’s cross chain operation feature, Bob creates an account on the Ethereum blockchain. Then using CATA’s query feature, Bob remotely queries the exchange rate of bitcoin and ether and figures out the real time sale price of the cryptokitty asset in bitcoin. Bob then submits a cross chain transaction to perform an atomic transaction across the Bitcoin and Ethereum blockchains. Once the transaction is completed, Bob’s cryptocurrency is transferred into Alice’s Bitcoin account and Alice’s cryptokitty ownership is transferred to Bob Ethereum account (Figure 3).
Cross-chain Decentralized Exchange (CDEX)
CDEX is a system that allows cryptocurrencies to be exchanged across different blockchains (Figure 4). After selling the cryptokitty to Bob, Alice now has some ether. Later Alice decides to convert the ethereum to bitcoin. Alice again uses her CATA wallet to send an exchange order. She specifies the target currency, the desired exchange rate, and the address to receive the bitcoin. Bob has some bitcoin and would like to exchange it for ether. Bob sees Alice’s sell order and accepts the sell price. The ether specified in Alice’s sell order is then transferred to Bob’s address, and the corresponding amount of Bob’s bitcoin is then transferred to Alice’s address (Figure 5). If there is any failure, the exchange operation is cancelled. There are several situations to consider: for example, Alice or Bob might exchange the asset in part or in whole; they can also specify the expiration date for the exchange order.
Cross-Chain Decentralized Asset Transform (CDAT)
The CDAT system allows a crypto asset on one blockchain to be transformed to another format of asset on the same or different blockchain while maintaining its original value (Figure 6). This is currently the approach used by Wanchain for the cross chain transfer of asset value. The transformed asset can be used in the new chain to take advantage of the new asset format, and the performance and scalability of the new chain. For example, EthGame has a decentralized application that allows any ERC20 token to be used. Alice wants to play the games in EthGame, but he only has Bitcoins. EthGame then builds a smart contract and cross chain service to allow Alice to lock certain amount of BTC on the Bitcoin blockchain, and the same amount of an ERC20 mapping token (such as wbtc_erc20) that represents bitcoin is generated and assigned to Alice’s address on Ethereum. Alice can then use his wbtc_erc20 token to play in EthGame to trade to other erc20 tokens or ether. Alice can also redeem wbtc_erc20 back to bitcoin at any time (Figure 7).
CATA, CDEX, CDAT are three different decentralized cross chain applications with some similarities and differences as shown in Figure 8. All three dapps rely on cross chain and decentralization. CATA and CDEX involve value exchange and do not involve cryptocurrency format changes. The main difference between CATA and CDEX is that CDEX only supports value exchange while CATA can support both value and asset ownership transfer. CDAT does not involve owner change but supports the transformation of asset from one chain’s format to another. Assets transformed through CDAT maintain their value and do not need to access external exchange rates.
Wanchain is the infrastructure connecting the decentralized financial world. Wanchain’s live cross-blockchain solution is EVM-based, includes optional private transactions, and provides a decentralized, permissionless, and secure approach for interoperability. Wanchain has employees globally with teams in Beijing (China), Austin (USA), Kuala Lumpur (Malaysia), and Madrid (Spain).