WanChain (WAN) – Distributed Bank Infrastructure, Meet Blockchain

WanChain (WAN) – Distributed Bank Infrastructure, Meet Blockchain

Wanchain aims to build a distributed “bank” infrastructure for cryptocurrency, a framework for the digital market. As a whole, it is a complete digital financial platform with privacy protection for smart contract transactions.

 

Fundamentals

By connecting and exchanging values between different blockchain ledgers, WAN plans to establish connections between blockchain networks. The team wants to utilize cryptographic theories to build a non-proprietary cross-chain protocol with a distributed ledger. This ledger will be able to record both cross-chain and intra-chain interactions. Users can provide services based on digital assets, such as loan origins, asset exchanges, credit payments, and transaction settlements.

 

Features

 

  • Cross-Chain Asset Transfer:
    • Connecting existing digital currency networks (ETH/BTC) and completing the asset exchange.
    • Integrated consortium chains with WAN allows the transfer of assets from original chain to WanChain, vice-versa, and including the trading of various assets on Wanchain.
    • Secured and stable cross-chain transactions.
    • Multi-party computation.
    • Threshold secret-sharing joint anchoring schemes achieve minimal-cost integration through the cross-chain communication protocol.
  • Transaction Privacy Protection:
    • Users have the option to conduct transactions and exchanges of digital assets with privacy protection.
    • Anonymous protection of digital asset holders.
    • Ring signature scheme based on elliptic curve cryptography.
    • One time account generation.
  • Native Token (Wancoin):
    • Consumed as transaction fees for cross- and intra-chain transactions.
    • Used as security deposits for cross-chain verification nodes.
  • Intra-Chain Transactions:
    • Similar as ETH, but with added privacy protection through a ring signature scheme and one-time account creation.
  • Additional Features:
    • Distributed platform of exchange.
    • Deposit and loan business for different digital currencies.
    • Issue and trade existing/new digital financial assets.
    • Conduct transactions of assets using digital currency as a medium.
    • Blockchains developed on WAN share cross-chain integration.

 

Architecture

Wanchain can be roughly described as a distributed ledger that can achieve interconnection between different blockchain networks. This ledger will be able to complete records of cross-chain transactions and maintain cross-chain transaction details. WAN will support transactions between public chain ledgers and private ledgers, and vice versa.

To reach its goal of providing a cross-chain infrastructure, the establishment of connections between blockchains to Wanchain is vital to the project, as it will make the inter-ledger transfer of assets possible, allowing a financial infrastructure based on digital currencies and assets to be built.

 

Cross-chain Communication

The cross-chain communication protocol will define the specifications for data transmission and process inter-connections and data flow between Wanchain and its constituent chains. Consisting of 3 modules, Registration and Data Transmission, and Status Query; the protocol will utilize each to process different functions as listed below.

 

Registration

  1. The original participating chain is to be registered. A unique ID, generated through specific algorithm rules, is assigned to maintain the ID registry of the original chain to avoid fraud caused by false chains.
  2. Assets to be transferred will also be registered. A unique ID is also generated to ensure its singularity.

 

Data Transmission

  1. Users on original chains can make cross-chain transaction requests to Wanchain. This is the starting point of the transfer-in process.
  2. Wanchain’s validator node will verify and return a receipt of acknowledgement confirming the success of the request.
  3. WAN’s validator nodes are also able to send the legal transaction to the original chain. This is the completion of the transfer-out process.

 

Status Query Module

  1. This module will query the confirmation status of the asset transfer-in transaction on the original chain to WAN’s locked account and vice-versa. This will serve as the control mark of the cross-chain transaction progress.

 

Transaction

Proof-of-Stake (PoS) protocol will provide the consensus mechanism for transactions and implements the incentive for cross-chain transactions. Blockchains and assets are required to be registered on Wanchain before integration to verify that they can be uniquely identified. This process will be completed by chain and asset registration protocols.

When an unregistered asset is transferred to WAN, the blockchain creates a new asset, using a template, to deploy a smart contract based on the information. When a registered asset is transferred, Wanchain will issue the equivalent tokens in the existing contracts to ensure that the original chain assets are valid on the WAN blockchain.

A description of the transfer-in and transfer-out process is detailed in the provided whitepaper by Wanchain, and is a good example of the Locked Account mechanism.

  • Transfer-In:
    • Alice and Bob have ETH and WAN, and Alice wants to transfer 10 ETH to Bob.
    • Alice creates a cross-chain transaction request using and initiates a transfer on Ethereum; the recipient being an ETH cross-chain WAN Locked account. This is processed by the Data Transmission module.
    • Wanchain’s validator node receives the request, verifies the transaction on the ETH ledger using the Status Query module, and creates a new smart contract token ETH’ (ether prime) on Wanchain, that correlates to the ETH being cross-transferred. Original assets are locked, and tokens are registered using the Register module.
    • Bob receives 10 ETH’ (ether prime) tokens.
  • Transfer-Out:
    • Bob wants to transfer 10 ETH to Chris.
    • Bob uses Wanchain wallet to initiate a cross-chain transaction with the ETH’ contract token he previously received.
    • WAN validator node locks the 10 ETH’ asset after receiving the transaction request.
    • After the asset tokens are locked, the validator node uses the threshold secret-sharing mechanism to create an ETH transaction with the transferor being the Locked Account that was previously locked by Alice’s asset and the transferee being Chris’ account on Ethereum.
    • After the validator node verifies the confirmed transaction on Ethereum, the 10 ETH’ locked under Bob’s account will be cleared, meaning the equivalent asset is transferred back to the original chain.

The process is essentially the same for currencies with a private chain.

The locked account mechanism of Wanchain eliminates the need for a trusted third party to conduct reliable cross-chain transactions. Wanchain is able to perform account management by itself without outside participation or credit endorsement. Wanchain also doesn’t need to rely on two-way anchoring or additional script extensions to identify and verify the Simple Payment Verification (SPV) proof.

All transaction data is transmitted into the node network of the original chain after reconstruction and integration on the Wanchain validator node. The format of the validator node is in line with the transaction type requirements. This process enables the operation and computation of cross-chain transactions to be completed on the WAN blockchain, without modifying original chains. Both private and public chains, even based on other platforms, can be integrated with WAN at a low integration threshold.

 

Verification Nodes

The Proof-of-Stake (PoS) protocol was also adopted as it is theoretically less vulnerable to the threat of collusion attack from participants. PoS will increase the opportunity cost of verification node collisions and lower the possibilities of an attack happening. Wanchain is designed as such; when the overall value of WAN is sufficiently high, collusion between verification nodes means giving up margin held by them that are staked to the tokens on Wanchain, greatly increasing the inefficiency of collusion. The nodes will not attempt to destroy the entire network for cross-chain assets and risk their existing interests and long-term income within the blockchain.

WAN’s verification nodes are divided and functions as such:

  • Vouchers (Cross-chain transaction proof nodes):
    • Vouchers are used to provide proof of transactions between original and locked accounts.
    • Voucher nodes receive transaction fees from corresponding shares as a security deposit
    • Holding accounts are subjected to the same penalty above if proven false.
  • Store-men (Locked account management nodes):
    • Once a notice is received, a store man is responsible for computing the signature shares according to its own part of the key and merging the signature’s parts into a complete signature for the locked account.
    • A store man node receives a corresponding key share according to the stake it holds and calculates the corresponding signature share to be added into the transaction.
    • Store men also obtain the transaction fee involved in the verification transaction according to the key share proportion. If the key share information is offline or lost, the transaction fee cannot be claimed.
    • If nodes sign the error transaction, the credentials of the store man node will also be taken away.
  • Validators (General verification nodes):
    • Validators informs the store-men of operational actions related to the locked account and complete the record of operations on the Wanchain whenever a transaction proof reaches a consensus.
    • A validator node can complete the recording of transactions on Wanchain to gain a percentage of the transaction fees.
  • General Nodes:
    • Only nodes holding high enough stake in the Wanchain network are qualified to become a verification node. Those that fail to meet the requirements are known as general nodes.
    • These nodes cannot participate in the verification process of cross-chain transactions, but can entrust the stakes they hold to the trusted verification nodes. The entrusted verification nodes distribute the transaction fee they receive to the general nodes in proportion to their entrusted stakes. If the entrusted verification fails, general nodes will bear a corresponding loss.

The included incentives are meant to motivate vouchers to provide correction transaction proofs, the validators to complete recordings of WAN ledger faithfully, and store-men to stay online and safely keep their own key shares.

The more cross-chain transactions are processed by Wanchain, the higher the value carried by WAN. The higher value will prove to be higher risk for verification nodes to collude and heighten the network’s security.

 

Locked Account

Locked Accounts are used to lock the assets of the original chain that were transferred into the WAN network. The accounts are generated based on secure multi-party computation and threshold key sharing.

Secured multi-party computation is the theoretical basis of distributed cryptography and involves a group of participants working together to compute a function. Validator (store-men) nodes are tasked with the maintenance and management of the keys to Locked accounts to guarantee security and verification. This feature will lower the risk of losing keys and has strong stability and adaptability in an ad-hoc network environment, which has no fixed topology.

The threshold key sharing scheme is designed to provide secured key management. A key is divided into N (some number) pieces and distributed to N participants. Each holds one piece of the key share, but a minimum collection of key shares is needed to reconstruct the key, requiring the participation of at least the minimum number of holders needed.

An operation on a Locked account will require a minimum number of key holders. They compute the signature shares separately through the key shares they hold and then reconstruct the full signature using signature shares.

Current existing cross-chain platforms use methods such as Hashed TimeLock contracts, Trusted Third-Party Escrow account, and Multi Signature accounts, to lock original assets. But compared to these systems, WAN’s Locked account mechanism offers several advantages:

 

  • Decentralized Without Third-Party participation:
    • Locked accounts are generated in a process that requires no participation or endorsement of a trusted third party. Only information interaction and computation by validator nodes through secure channels are needed. This process has higher flexibility and lower costs than the trusted third-party escrow account scheme.
  • Secured and Stable:
    • The distributed nature shared key mechanism and shared participation enables security. Even when some key holder nodes are offline or lose their key share, the signature of the Locked account can still be generated provided with the participation of at least N validators. This ensures the whole system operates with stability and security.
  • Easy Integration and Efficient Data Storage:
    • Operations on the Locked Account are done by the original transaction of the original chain. No new transaction type or verification mechanism is required. Theoretically, any chain can be integrated with Wanchain at negligible cost.
    • Compared to multi-sig mechanisms that rely on the logic of smart contracts to achieve multi-party management, Locked account generation achieves the same type of management through principles of cryptography. The final transaction has only one signature, not several, proving itself to be a more efficient concept for data storage.

 

Locked accounts are crucial to the WAN platform, and it is reassuring that the mechanism is heavily protected and secured with a sufficient amount of failsafes.

 

Privacy

Wanchain will utilize the application of original elliptic curve cryptography to ensure the security of the original signature solution, with the addition of threshold secret-sharing, locked account management solution based on multi-party computing and privacy protection for smart contract token transactions based on ring signatures and one-time accounts.

Identities of transaction initiators are hidden in a collection of accounts, ring signature, and are not traceable. Ring-signature essentially mixes the transaction sender identity in a pool of users in order to mask identity and traffic. The ring signature concept is designed as such that the key image and ring signature cannot be matched with the signer who is among the public keyset. Anyone can verify whether the signature is valid or not, but no one will be able to identify the signer.

One-time use accounts are also available, so a corresponding relationship with the original account on Wanchain cannot be established. If a user is to be anonymous in a transaction, they are required to generate an associated account to create a one-time main account together with their original one. The owner of a sub-account cannot be changed without the associated scan key and the private key cannot be obtained without the main private key.

Using a combination of both features, WAN can offers confidential transactions with security. WAN’s privacy protected transaction progression is described using an example provided in the Wanchain whitepaper.

 

Example

  • Alice wants to send tokens to Carl.
  • Alice has a one-time account with the private key [sk1].
  • To send a transaction:
  • Alice generates a one-time account for Carl with his main account (onetime-acc2).
  • A signature for transaction data is generated with [sk1] and the data payload representing the transfer from Alice’s sub-account to Carl’s new account is created.
  • The public key set, key image, and ring signature (in that order) are generated.
  • The final transaction data message is broadcasted to the blockchain.
  • Validator nodes receive the transaction and verifies the ring signature.
  • If valid, the validator node invokes the smart contract with payload as a parameter.
  • The smart contract is then to verify the signature in payload and execute the transfer.
  • Once the transaction is committed on the blockchain, Carl is able to verify his ownership of the created sub-account (onetime-acc2) with his scan-key and claim the private key for the sub-account with his main private key. He is then able to receive the funds within.

 

Application

Wanchain aims to provide a distributed multi-currency platform that integrates multiple different blockchain ledgers into a unified form. Businesses or users can install the WAN wallet to gain access to multi-currency payments and settlements without the need to manage several different blockchain accounts and wallets. The adaptability and ease of integration means the platform provides multiple advantages and features, including multi-currency auction trading and one-to-one curb transactions via smart contracts. The Wanchain system is also equipped to provide financial features such as loan contracts, investment and financing; all achieved through the use of smart contracts.

A variety of services could also be provided using the WAN platform, such as multi-currency credit cards, assets backed securities, peer-to-peer lending, and crowdfunding.

But Wanchain is more than just a cross-chain financial platform; it is a blockchain itself, equipped with native coins, supported smart contracts, and privacy protection. Based on Ethereum, Wanchain’s ledger can run applications independently, with account models and smart contracts that are able to implement various original Ethereum functions. Cross-chain integration and smart contract token privacy protection are added to create Wanchain as proposed. Developers may develop applications on Wanchain in compliance with its developmental standards.

 

Analysis

Wanchain aims to introduce a financial institution that will enable consumers in the space a function vital to the growth of the market long-term, coin exchange. One of the most crippling aspects of the cryptocurrency market is how tightly wound it is to the whims of Bitcoin’s price

If avenues are exposed to be able to swap different tokens from one to the other in a simple, secure, and privacy controlled fashion, it could take us all one step closer to a more universal asset valuation that doesn’t rely on Bitcoin to be “flat” or “falling” for the alt-coin market to get room to move.

Overall, Atomic Swaps and WAN alike are aiming at this, and as far as we can tell WAN is somewhat of an upgrade to the Atomic Swap experience. In terms of potential infrastructure, however, Atomic Swaps may be the main stage player in this type of business structure, given the amount of unilateral support it has from various projects such as Komodo and Litecoin.

 

Team

The team at Wanchain is 22 people strong, with experience in various fields including business management, information security, network communications, and digital marketing.

Jack Lu, the Founder co-founded Factom in 2014. Dustin Byington, the founder of Bitcoin College and co-founder of Tendermint, is also on the team. Michael Y. and Cathy Niu on the team were also involved in the development of Factom. Michael, without an identifying photograph, is a core developer of Master Coin, Omni, and Factom.

Most team members listed have had significant work history and experience with blockchain technology. A handful of these members are developers specializing in cryptographic algorithms and security.

 

Sources

 

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