Transledger to launch the first P2P decentralized exchange & digital Canadian Dollar

Published by eosnetworkxx 30 Sep 2019

Transledger to launch the first P2P decentralized exchange and digital Canadian Dollar (dCAD)

Nowadays, Facebook, Google, Amazon, and Apple effectively control our digital lives but the blockchain which is at the core of the new internet is going to change this. It is so distributed that no single entity influences its course this is why it is more censorship-resistant, more secure and less corruptible. The designated future seems bright but today’s blockchain landscape infrastructure is a major roadblock to a unified web. This is where Transledger makes a difference. It connects all the major blockchains like Bitcoin, Ethereum, EOS, Stellar, Ripple, and others to assure seamless user experience and bridge traditional fiat currencies with cryptocurrencies. It makes blockchains interoperable independently of the technology or the cryptoAsset they use. It assures freedom of transactions and makes of blockchain the web with no barriers.

What is Transledger

“Transledger is the first peer to peer exchange able to trade tokens representing 80% of the total market cap. Something no decentralized exchange (DEX) can do today” said Didier Martin, the founder of Transledger.

It is the first technology to solve major problems the blockchain faced so far, the same that were the cause of limited adoption. It solves the interoperability problem, the lack of liquidity for the distributed exchanges, fiat getaway, and users onboarding. It adopts the Move token to work as the neurotransmitter between different neural centers (ledgers) and thanks to the fiat getaway which works like the receptors receiving inputs from the external world, the blockchain finally becomes the next generation internet, Web 3.0.

“In a nutshell, the Transledger solution unlocks coins by allowing them to be moved back and forth from their original blockchains to other ones while always keeping their value independently of their location or the technological substrate,” wrote Didier in his white paper.

Beyond the lack of standardization

Deloitte cited a lack of standardization as one of the biggest obstacles to blockchain adoption. It found that there were over 6,500 active blockchain projects on GitHub written in different languages, with different technology, consensus mechanisms, privacy measures etc. It is highly inefficient to deploy an app on all the chains and it is impossible to ask all the developers to adopt one language or one consensus, but making the apps communicate despite the diversity is what Transledger does.

Previously, there was no possibility to move bitcoin to EOS or XRP to Ethereum. A decentralized exchange based on the Ethereum network could offer trading of the Ethereum based tokens but no bitcoin-based tokens. This is because cryptocurrencies are restricted to a single technology where they are hosted. This is very limiting with regard to the market cap. Limited possibility to exchange cryptocurrencies with high-value cryptoAssets representing 80% of the total market capitalization is one of the factors that influence the 51% attack so common in the crypto world.

Transledger reintroduces competitiveness among the different technology propositions and reduces transaction costs. By rendering the exchange of tokens easier it allows for major liquidity. It is also a scaling mechanism for slow networks like Bitcoin or Ethereum. With Transledger, cryptocurrencies can be moved freely from one blockchain to another just like fiat currencies like USD or EURO can be moved from one bank to another and across borders.

Inter Blockchain communication

Inter Blockchain Communication (IBC) as we know it so far was best developed on the EOSIO software. Chain interoperability finds multiple applications not only in finance but also in identity verification, oracles, transfer of assets like virtual reality game objects and many others. A DEX is the best-known application of IBC. A DEX based on interchain communication is totally decentralized and is probably the most resistant to deliberate manipulation or censorship. For this to be true, there is a need for a security model in which block producers cannot censor transactions. The IBC implementation adopted by Transledger is via a multisig notary scheme. “The entire system stands on a peer to peer network which is not a blockchain but a specialized peer to peer network specialized for inter blockchain operations,” said Martin. The cross-chain operations are facilitated by a group of trusted entities. A multi-signature of all of the entities ensures that there’s no trust in a single notary.

How it works

Transledger uses proxy tokens as the mechanism of exchange. A proxy token on the EOS network has the same value on the Ethereum network. It always retains the value of the original coin for example bitcoin. It can be redeemed back to their original network in total or in fraction. To move a coin from its original network to a destination blockchain like EOS it needs to pass by a Transledger network of processors and validators first. In practice, a BTC sent to an EOS address passes by the Transledger event handler and is finally processed by just one processor elected to process the transaction. The processor transfers the proxy coin from the reserve to the address on the EOS network and receives a reward for the work performed.

Bitcoins are stored into a reserve where each address contains a limited amount equal to a transaction. The fragmented nature of the poll of funds limits the risk exposure of the reserve. The reserve is used to redeem bitcoins to i-bitcoin owners.

The major difference between blockchain and Transledger is that in Transledger, a transaction must be performed only once. This means that while in a blockchain each node performs the same operation, in a Transledger network only one node performs the operation.

To make the whole process secure, Transledger is composed of 5 major elements:

  • The Interblockchain network

  • Network monitor

  • The auditors

  • The transaction processors

  • The blockchains

Transledger agents use an encrypted messaging system, network monitors, peer discovery layer. The auditors are responsible for checking transaction balances in the source and the destination blockchain. Who can be an auditor? “Whoever wants to be an auditor. Some users and external ones like professional auditors” said Martin. Those meeting certain criteria can receive messages from the Transledger network and audit all broadcasted transactions. The results of the audits are then recorded in a database. Auditors can connect to the Transledger Augmented Node service or use their own connections to the blockchains. The auditors aren’t rewarded and it could seem like the interest in participating will be low. “We try to keep the cost as low as possible. If the auditors are also users their interest to audit is clear, they want the system to be honest. The code for auditors is open source and freely available. Auditors are not bloc producers its transaction listeners, like explorers.”

The service currently supports Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Ripple, Stellar and EOS. By storing all validated and not validated transactions in the archive blockchain and by registering the balance of each blockchain network reserve, Transledger ensures transparency and accountability of the network.

The transaction itself requires 5 processors that sign a transaction. One transaction processor performs the transfer of funds on the destination blockchain network. The first implementation is used to move cryptocurrencies and cryptoAssets across blockchain networks and later by adding the exchange across blockchains. Hence, transaction processors perform transactions solely on destination networks.

Martin said that the reasons why he didn’t opt for a network of processors specialized in processing only transactions coming from specific blockchains were “more expensive development costs, more sources of failures, harder to monitor, slower to develop”.

In the white paper, he wrote: “The transfer process starts with a transfer of funds from a user account to a source network reserve. This first step removes the funds from circulation in the source blockchain network but doesn’t destroy them. The reserves are needed for any redemption of funds across blockchain networks. Reserves allow redemption of funds as a whole or as a fraction. A counterparty is always available since each reserve is acting as a central bank on each blockchain network. Reserves are used to create and remove circulating funds.”

Transledger reserve is full, not fractional as we know it from the current banking system. Didier said that it’s “too risky to do fractional and speculate it. We may lose the trust from users and since the whole system is very transparent (what banks are not) it will be very obvious we use the funds for speculation.” When asked who are the reserve owners, he answered: “At first us until we have a full decentralized system with other signers. So it will be controlled by all the active servers but owned by all the users. Votes will be used for decisions concerning the reserves. This is why it has to be the full reserve.”

Didier talked also about some changes he had to do to the eosio.token contract to suit his needs. “We had to redo the basic contract because the actual one is not adapted to real peer to peer exchanges. The basic contract doesn't support the "approve" function or the "allowance" function. The former to allow a third party to perform an operation for another owner up to a certain amount. And the latter to return the amount allowed to the third party. The EOS basic contract, as it is, actually forces DEXes to perform an operation off chain and in custody (at least temporarily).” He described briefly the functionality of the exchange:

“In our peer to peer exchange, the order book is off chain and all transactions are on chain. Thus, users post their orders on the order book. The orders are then broadcasted to each client, matching engines and connectors to the blockchain (we call this blockchain the trading platform). Then, when there is a match, this connector just activates an action to one on chain contract which in turn will do the transfers to each trader's accounts”

The security

Cryptocurrency exchanges are a frequent target for hackers. The security is a big concern and a reserve of tokens will become a big bounty. What will happen with all proxy tokens if the reserve will be hacked?

“This is why we have to do everything to prevent the hack with different means:

a) a lot of security measures: file gap, Shamir secrets, multiple servers involved in signing the transactions, verification of transactions with the original signed transfer request document, etc, etc.

b) by not having everything in hot storage but part of it in cold storage” answers the CEO. “We also have a super secured reserve that we are testing at the moment with manual transfer to air-gapped transaction servers.”

Didier Martin worked for many government agencies where he was tasked with protecting highly secured information.

dCAD - the first legal digitized Canadian Dollar

Transledger is first to put the Canadian Dollar on chain. They are currently registered with the FINTRAC (Canadian Financial Authority) and licensed with the AMF. The license and the registration give them the legal right to digitize CAD.

The relation between the original fiat CAD is always in a 1:1 relation with the proxy token dCAD. Only on the destination network and for relations with external tokens that the relation is not 1:1. People transfer a 1 CAD to our bank account (using e-transfer, wire transfer or direct bank account transfer) this triggers the creation of a dCAD (a digitized version of the CAD). We consider the source network as being the bank network and the destination network as the trading platform network (for example if the dCAD is created on the very same platform as the exchange is located but later on it can be created on different platforms - no problems with the possibility to move it anywhere). The dCAD can now be traded with another token like any other token. Now for the equivalent of the withdrawal process, users can redeem their dCAD into CAD which involves that they transfer the dCAD to its reserve and this triggers the operation to transfer a CAD from the CAD reserve (a bank account) to their own bank account. See, the same mechanism is used for fiat as well as for virtual currencies or tokens” said Martin.

FOREX trading platform

But Transledger plans are far greater because they will digitize several fiat currencies so that everything people can now do with centralized exchanges can be done peer to peer. They plan to create an exchange with fiat-crypto pairs and crypto-crypto pairs. “This implies that people will decide on the exchange rate, not the banks,” said the founder.

FOREX exchange will allow trading digitized fiat currencies with local bridges to convert fiat-digitized version and vice versa. After that, there will come also an international money transfer service using all these mechanisms. The main advantage will be transparency, lower costs, and transaction speed.

“Here is a FOREX scenario: Bob is a maple syrup importer in England, Alice is selling maple syrup in Canada. Thus, Alice needs to be paid in CAD and Bob needs to pay in GBP. So, Bob used the GBNP bridge located in England (the bank account is in England) Bob does a fast transfer operation to buy some CAD to be able then to buy Alice maple syrup. To do so, on the FOREX exchange market, Bob exchanges GBP (he owns) with CAD (another user has). Now Bob has CAD, so on top of the FOREX market we add a transfer service which allows Bob to send his dCAD (now located in our Canadian bank account) to Alice bank account in Canada with a local interbank settlement.”

The launch

Transledger launches its beta on testnet first with other services:

a) a dashboard assembling all of them,

b) a token issuance and token management system,

c) a prototype wallet where the user uses the email address to send funds instead of a hash key,

d) an exchange,

e) the dCAD, the first legal digitized Canadian dollar.

Transledger users will need to undergo the process of identification. Worbli users won’t need to pass the KYC again while new users will need to pass the standard KYC process when it will become available. Transledger will do a crowdfunding and create the Move token.

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