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EthCC 2019, Paris

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XClaim - @alexeiZamyatin

Interoperability between Bitcoin and Ethereum - Trustless

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Dominik Harz, EDCON, 2019, Sydney

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Motivation

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A History of Theft and Loss

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XClaim - @nud3l

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A History of Theft and Loss

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XClaim - @nud3l

Decentralized Exchanges?

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Decentralized Exchanges

“Decentralized” Exchanges (DEX)

Mostly limited to ERC20 tokens on Ethereum

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Not „cross-chain“!

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XClaim - @nud3l

Trading volume

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Cross-Chain Communication Today

Atomic Cross-Chain Swaps* (2012)

  • Ensure A 🡪 B and A 🡨 B occur atomically
  • Hashed Time-Lock Contracts (HTLCs)

Challenges

  • All parties must be online
  • No standardized interface for locks
  • Need out-of-band channel (censoring!)
  • Race conditions, mempool sniffing, …
  • Require monitoring of all involved chains

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Wrapped Bitcoin

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Challenges

  • Trusted third-party receiving Bitcoin
  • KYC and AML required
  • Relies on trust in legal system and is not decentralized

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XCLAIM in a nutshell

First introduced at Scaling Bitcoin October 2018

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Issue���

Trade/swap

Connect DEX, Plasma, payment channels, stablecoins cross-chain, and more�

Redeem

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Why XCLAIM?

Trustless cross-chain token issue and redeem

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  • Decentralised: no trusted third parties
  • Value redeemability: secured by collateral in Ethereum smart contracts
  • Compatibility: minimal requirements for backing chain

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Conditional Locks in Bitcoin

Goal:

Unlock funds on Bitcoin only when tokens are burned

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Challenge:

We cannot verify the state of Ethereum on Bitcoin

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Can we use hashlocks?

Publicly verifiable contracts cannot generate random secret�

  • We need an intermediary

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XClaim - @nud3l

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System Model

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XClaim - @nud3l

Requester: locks Bitcoin to issue Bitcoin-backed tokens on Ethereum

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Redeemer: burns Bitcoin-backed tokens to receive Bitcoin

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Sender/Receiver: Send/receive Bitcoin-backed tokens

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Vault: ensures correct redeeming on backing chain.

Collateralized and permissionless

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Smart Contract: responsible for issuing, trading and redeeming. Enforces correctness of Vaults.

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Intermediaries

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Smart Contract

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XClaim - @nud3l

Base functionality:

  • Issue
  • Transfer / Swap
  • Redeem

Chain Relay:

  • Verify PoW
  • Verify TX inclusion proof

Collateralization:

  • Lock
  • Conditional release / Liquidate

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Protocols

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XClaim - @nud3l

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Issue

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XClaim - @nud3l

Vault

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Issue: Precondition

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XClaim - @nud3l

🡪 Over-collateralization to mitigate exchange rate fluctuations

Vault

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Issue

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XClaim - @nud3l

Vault

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Issue

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XClaim - @nud3l

Vault

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Issue

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XClaim - @nud3l

Vault

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Issue

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XClaim - @nud3l

Vault

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Swap & Transfer…

Simple ERC20 transfer / atomic swap!

Alice 🡪 Bob

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XClaim - @nud3l

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Redeem

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XClaim - @nud3l

Vault

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Redeem

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XClaim - @nud3l

Vault

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Redeem

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XClaim - @nud3l

Vault

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Redeem

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XClaim - @nud3l

Vault

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Redeem

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XClaim - @nud3l

Vault

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Redeem

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XClaim - @nud3l

Vault

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Redeem

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XClaim - @nud3l

If the vault cannot provide proof of correct behavior:

  • Collateral slashed
  • Bob reimbursed

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Vault

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System Properties

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XClaim - @nud3l

  1. Auditability: all actions on both chains logged
  2. Consistency: backed-assets only issued if proof provided
  3. Redeemability: receive Bitcoin or be reimbursed in Ether
  4. Liveness: no third party: Any user can be a vault!!
  5. Atomic Swaps: swap Bitcoin vs Ether via smart contract
  6. Scale-out: more collateral, more assets can be issued
  7. Compatibility: minimal requirements for backing chain

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Implementation

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XClaim - @nud3l

https://github.com/crossclaim

  • XCLAIM smart contract: Solidity v0.5.x (~ 820 LOC)

  • BTCRelay: Serpent�Solidity implementation is WIP�https://github.com/ethereum/btcrelay

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  • Tested on Ropsten

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Performance and Costs

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XClaim - @nud3l

Exchange rate: USD 220 / ETH (Gas cost: 5 gwei); USD 4.497 / BTC

“Recommended” security parameters: 14 sec x 12 ETH Tx confs; 10 min x 6 BTC Tx confs.

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Comparison to HTLC Atomic Swaps

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XClaim - @nud3l

BTC-ETH swaps with XCLAIM are 95.7% faster and 64.5% cheaper for 1000 independent swaps.

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Joint Work With

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XClaim - @nud3l

Alexei

Zamyatin

Joshua

Lind

Panayiotis

Panayiotu

Arthur

Gervais

William

Knottenbelt

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EthCC 2019, Paris

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XClaim - @alexeiZamyatin

eprint.iacr.org/2018/643

github.com/crossclaim

Questions?

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Dominik Harz

@nud3l

d.harz@imperial.ac.uk

Website: xclaim.io