Tokenization of payment channels (roll-ups): V. Buterin & ENVELOP


In short, V. Buterin proposed a solution that is one of the possible implementations we described earlier (6–9 months ago), which effectively means verification of our architecture on his part. The rest is discussed in more detail below.

General part

The development of an architecture within a DDS (decentralized and / or distributed systems) is a complicated matter, but if it is successful, there is no limit for satisfaction.

Yesterday an extremely important event happened: V. Buterin published an interesting material about the connection between payment channels (roll-ups) and NFT. There she is:

There will be comments on this subject below, but first — let me remind you how ENVELOP (NIFTSY) is connected with this phenomenon and most importantly — why? ..

Brief summary of what happened earlier

The first and main conclusion from yesterday event, when Vitalik’s tweet on the topic was discovered, is that ENVELOP (NIFTSY) is on the right track: Rarible has decided to make their own protocol and index, 1inch has found the strength to do wrap-NFTs, and now Buterin is telling everyone that the future will be exactly with what we have staked on.

Actually, the key (summary) article on the topic was published about 3 weeks ago:, but it was not the first either. The idea of tokenized payment channels and roll-ups (PC / R) has been spinning in my head for a long time and takes a lot of time, because it obviously solves three important problems:

  1. Cuts extremely high commissions in Ethereum and not only;
  2. Provides additional levels of security while distributing liquidity;
  3. Creates all the conditions for the development of decentralization in detail (considering that each channel is also a micro-network node).

This happens in correlation with the reality:

10 years ago when many looked at cryptocurrency with distrust, it had already spawned such phenomena as ICOs, from which, in turn, DeFi was born, and from them — the need to work with liquidity: safe, public and maximum anonymous work at the same time. Therefore, the tokenization of PC / R is the key issue here.

Actually, it should be understood that: “Rollups are a type of level 2 scaling solution that combines or“ rolls up ”sidechain transactions into a single merging unit and sends messages to the blockchain. This makes layer 2 transaction data available in layer 1 at any time needed to check status change .

The blockchain ensures the access to data, but moving off-chain ensures that only the integrity of the data can be verified. ” At the same time, this approach has its drawbacks: “the complexity of computing the ZK proof will require data optimization to obtain maximum throughput; the initial setup of ZK-rollups promotes the use of a centralized scheme [I note — this is a common stumbling block for ZK-like systems, but not for this particular solution]; the security scheme assumes a level of unverifiable trust. “ On the other hand, there are data solutions and they have clearly evolved since 2016 and on fairly powerful grounds (see example:

If we go back to WP ENVELOP (NIFTSY), then we can find literally the following: “Protocol is the basis for protocols of the following order: that is, if any blockchain solution is a L0 / L1 level, then the Protocol can lie in the L1 / L2 plane and higher … And this is what the Project offers in this vein: tokenization of payment channels: in this case, it doesn’t matter whether we are considering some specific implementations (Plasma, Lighting Network) or their aggregations (Plasma + ZK-rollups, bridges of different levels), whether we take a separate blockchain or multi-chain integration, but the main thing is that the exit from the main chain can and should be used, providing liquidity both of the channel itself (between the parties) and the assets wrapped through it (until the channel is closed). In this case, the same mechanics of the cross-chain Protocol apply as in the cases when the Project connects the offline economy with online projects ”.

This is what we will call Approach # 01. Now let’s see what V. Buterin decided to do there? Approach # 02 — accordingly.

Buterin. NFT and channels

The first is security breaks: “all existing major EVM-enabled roll-up platforms have backdoors, centralized sequencing or other beta features, and it is risky to deploy an entire ecosystem on one platform while there is uncertainty about how it will evolve.”

But then Vitalik actually repeats the scheme created by ENVELOP (NIFTSY) in MVP basis: “first, NFTs are registered in one Rollup (or basic chain). The NFT can then move between other Rollups (or base chain) by creating a wNFT ”. But the most interesting thing is that Vitalik came to the same conclusion as we did, developing the trinity of the Protocol, Oracle and Index, namely: “… the withdrawal of funds will have a time delay, since it is required and is (approximately) 1 week: this it is necessary to complete the work of Optimistic roll-ups, so that you can check the “receipt receipts”. So far, the only way to make multiple jumps more quickly is with a multilevel wrapper. ” And further: “so that the user can check that wrapped X is legitimate, he will need to independently check the state on collapse B and the receipt on collapse A.” But, if you read WP and other devoted materials (see also: material # 01 and material # 02) to the ENVELOP (NIFTSY) architecture again, you will see that this is exactly the task that the Index + Oracle bundle performs.

What V. Buterin added was the concretization of a possible solution: “in fact, the following happens: when the NFT moves from Rollup to Rollup, the transfer chain leaves behind a chain of“ order receipts ”, and each receipt in this chain is mirrored into Rollup A, for example, and is processed in order at some point in the future, when states in other Rollups are completed [via closure] (this can be optimized in the short term with Kate commitments, and in the long term, the entire chain of receipts can be proven using ZK-SNARKs ) ”.

Again, it was ZK mechanics that formed the basis of the ENVELOP (NIFTSY) architecture. For example: “… the AI-method of analysis-synthesis is already working here, which is impossible without the presence of big data (which is why there is a gradual transition from scoring to classical antifraud and only from it to the AI ​​aspect) and work through ZK-mechanics initially …. We will briefly describe the principles of the scoring system and the anti-fraud system created on its basis, because at the first stage … all the results of the system to maintain security are transferred to the Protocol and external sources exclusively through the ZK-mechanic, as indicated above. “

Interestingly, in the comments to the article, users and Vitalik himself turned again to the problem of sharding and commissions, first of all pointing out such issues as:

  1. Long waiting stage (1 week);
  2. Possibility of commission optimization according to the Arbitrum — Uniswap scheme;
  3. Prevention of the problem with more complex design (architecture).

Of course, we could not bypass the attacks on the cross-chain (multi-blockchain) chains, which were described by me in the Forklog trilogy: one, two, three. That is exactly what the NIFTSY project was born from, now renamed ENVELOP: since we all understand the problems of communication between DDS, it becomes clear that NFTs of different blockchains (and other DDS) must somehow interact with each other, but being at this … unique to each DDS!

In my opinion, This should underlie the creation of a roll-up bridge and wrap / unwrap operations between DDS:

  1. We need an Oracle to prevent most attacks on cross-chain (multi-blockchain) communication nodes;
  2. It is extremely important for us to take into account that wNFT can be an initial wrapper, which can contain, if not an infinite, but in fact an unlimited number of other wrappers;
  3. And most importantly: we cannot trust centralized solutions, which means that the micro-DAO architecture is extremely important, when each element is dependent on others, so each element provides sufficient and necessary data to other participants in the scheme through ZK-mechanics.

Exploring the comments under Vitalik’s post, I found that such a broad approach is not yet accepted by most members of the ETH community, while it is still necessary to take into account the inevitable transition of Ether itself to version 2.0, and hence the PoS consensus.

On the other hand, I agree with one of the commenters that “every L2 maintains an exit tree. This tree is a Merkle tree in which elements can only be added and cannot be removed. This Merkle tree contains entries … The consistency of this tree is guaranteed by the wrapper manager. NFTs are blocked in the smart contract if they are original from this L2, or simply burned if they are wrappers of NFTs from other chains ”. Why? Because just such a mechanism was adopted at ENVELOP (NIFTSY) and today it is developing within the MVP super-DAO.

But questions remain, for example: “How will the community react to V. Buterin’s passages?” — and most importantly: “How will our project develop in this regard?” I am answering the last question briefly: the same way. I am finishing what I started with:the decisions from the leading industry players that fit into our strategy that are its best verifiers of it.

What do you think?..




The first cross-chain protocol to tokenise payment channels and determine an objective asset price by

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