Cross-rollup DEX with smart contracts only on the destination side - Layer 2 - Ethereum Research Cross-rollup DEX with smart contracts only on the destination side - Layer 2 - Ethereum Research Suppose that we have two rollups, A and B, and Alice wishes to exchange some quantity of coins on rollup A for the same coins on rollup B. There are already proposals for how to do this in a decentralized way if A and B both have full smart contract support. This document proposes how to do it in th… ethresear.ch Over the past two years, we have developed a decentralized cross chain transaction protocol called Te Waka. Te Waka is a kind of canoe that early Polynesian settlers used to travel between otherwise islands of the archipelago. This is very similar to the current state of the blockchain space.

Te Waka protocol has been running since April 2021, there’s already a fully developed application called czzswap that allow users to trade native tokens between Ethereum, BSC and Heco. Connect metamask wallet to your browser, and you can start swapping at https://classzz.com/swap. The same protocol would also enable users to engage in cross rollup transactions in an efficient and decentralized manner. Specifically, it will not require any intermediary, nor will it require any slow process to run on L1.

2, Basic protocol Here’s a very high-level description of how Te Waka works. For a detailed documentation, please see https://docs.classzz.com/czz.whitepaper.v4.pdf (Section 3).

First we describe the basic protocol, which allow for the cross chain transfer of CZZ tokens that exist on different blockchains. The Class ZZ network is a PoW main net with zero pre-mined tokens. It also recognizes a list of community addresses, there are addresses with extremely simple public keys such as 000…000101. We can assume extremely high confidence that nobody knows the private keys to these addresses.

For every CZZ token sitting on • 000…000101, one ECZZ token is issued on Ethereum; • 000…000102, one HCZZ token is issued on HECO; • 000…000103, one BCZZ token is issued on BSC • …

A multi-sig cross chain smart contract is also deployed on every main net, where it is responsible for mint / burn of *CZZ tokens. Custodian of these smart contracts must stake main net CZZ tokens, and their staking could be slashed by PoW miners in an event of misconduct.

When Alice wish to convert 1000 of her ECZZ to BCZZ for example, she would • send her 1000 ECZZ to the cross chain contract on Ethereum, where it will be burnt. • Alice then broadcast her Ethereum transaction hash to CZZ main net (in reality, this step is done by dapp developers) • PoW miners will give -1000 CZZ to 000…000101 and 999 CZZ to 000…000103 as mining reward in the following block (40s per block). 1 CZZ will be sent to 000…000000 to be destoyed permanently. • PoS custodians will vote in a BFT committee to mint 999 BCZZ on BSC, based on the fact that 000…000103 has just received 999 CZZ main net tokens. • 999 BCZZ is sent to Alice after its minted on BSC.

3, General protocol Next, we describe the general protocol, which will allow cross chain transaction of any native tokens between two smart contract enabled blockchains. The general protocol exist as a smart contract that calls a • dex contract, and • the basic cross chain contract.

Specifically, if Alice wish to purchase UNI (lives on Ethereum) using her BNB (lives on BSC). All she need to do is deposit her BNB to the general cross chain contract on BSC, wait, and receive UNI on Ethereum. Here’s what goes under the hood, • General contract (BSC) calls a dex, say Pancake swap, to convert BNB to BCZZ. • General contract (BSC) calls basic contract to burn BCZZ. • Class ZZ PoW miners operate on community addresses through mining reward • General contract (Ethereum) mint ECZZ • General contract (Ethereum) calls a dex (e.g. Uniswap) and buy UNI with ECZZ • General contract (Ethereum) send UNI to Alice.

4, Insurance Since the general protocol need to wait for CZZ miners to mine at least 1 block, many users in the community have asked for a tool to hedge against exchange rate fluctuation during that time. Here we briefly describe how the insurance contract works. Insurer: The community is encouraged to deposit ECZZ, HCZZ and BCZZ to an contract pool, those who deposit will receive a fraction of the insurance premium paid by the user.

Insurance contract: Since users are incentivized to deposit, we assume the insurance contract is pre-loaded with some *CZZ tokens on each blockchain. If Alice indicate her intent to use insurance on her BNB -> UNI transaction, here’s what will happen: • Alice send her BNB to the general contract (BSC), indicating she want insurance • General contract (BSC) buy and burn BCZZ • Insurance contract (Ethereum) buy UNI with pre-loaded ECZZ ahead of time, but the UNI tokens are withheld. • PoW miners update community address through mining reward • General contract (Ethereum) mint ECZZ and send ECZZ to insurance contract (Etherem) • Insurance contract release UNI to Alice after receiving ECZZ.

This procedure will minimize exchange risk for the user, reduce market supply of CZZ through staking, and also provide the community participants an income stream.

Applications to Ethereum Layer 2 A key problem to Ethereum’s layer 2 rollup’s is the inability to cross communicate with one another without either • Going through layer 1 • Rely on a somewhat centralized intermediary We believe the Te Waka protocol can provide a cross rollup solution to Ethereum layer 2 networks with some additional modifications. This would completely eliminate the throughput problem that layer 1 is currently facing. Specifically, we require each rollup to have • Ability to issue ERC-20 tokens • Ability to host a dex • Even if VM’s of ZK-rollup is not Turing complete, but it’s command set is rich enough to host dex’s)

This will allow us to deploy Te Waka general contract to each roll-up, and users can directly purchase native tokens of any rollup from anywhere. We can deploy Te Waka on Plasma and Op-rollups quite quickly, while ZK-rollups may require some additional work.

Second order bridge problem Te Waka protocol does not require users to deposit native tokens to a bridge contract and trade with bridge tokens. This will vastly improve user experience, as users no longer have to juggle between mapped tokens of different networks. More fundamentally, Te Waka protocol solves the second order bridge problem, which is at the crux of why decentralization of cross rollup is so difficult. Here’s a brief description of the problem. Suppose you have a token ABC lives on Ethereum L1. OP1 and OP2 are two different L2 rollups, such that ABC1 lives on OP1 and ABC2 lives on OP2, and both are connected to ABC via a bridge contract on L1. If Alice wish to convert her ABC1 on OP1 to ABC2 on OP2, a naïve approach is to deploy a bridge contract on OP1, where if Alice deposit her ABC1 she will get ABC2 on OP2. The reason why this approach won’t work is that ABC2 tokens are backed on ABC tokens deposited in a bridge contract living on L1. Therefore, a deposit of ABC1 to a OP1/OP2 bridge, technically is not the same as a deposit of ABC to a L1/OP2 bridge. Alice would be getting something like ABC12, as opposed to ABC2. This is what we call the second order bridge problem.

In reality, equivalence is often drawn by a centralized intermediary, but it would be nice if Alice could receive ABC2 directly without having to resort to a potentially centralized third party. If Alice wish to strictly abide by decentralized route, she must first destroy her ABC1 and claim ABC on L1, and then re-deposit that to the L1/OP2 bridge to get ABC2.

This problem is completely resolved through the Te Waka protocol, as it offers direct exchange between native tokens of each rollup.

Why PoW? The Class ZZ community is devoted to the pursue of decentralization. We can roughly put all blockchain protocols to date into three catagories. • Proof of work • Decentralized Proof of Stake (e.g. Eth 2.0) • Quasi-decentralized Proof of Stake (e.g. DPoS blockchains where block producing nodes never change) Since our community is dedicated to focus on developing cross chain capabilities, we neither have the time or resources to innovate something like Eth 2.0 at the consensus level. On the other hand, we also don’t want to exist as a quasi-decentralized blockchain, like those DPoS networks where block producing nodes never seem to change. Therefore, we are currently left with little choice but to use proof of work. We are open to modifying our consensus in the direction of proof of stake, but not at the expense of decentralization.

Cryptocurrency is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.

Unlike the exchange of physical money in the reality of our world, cryptocurrency transfers exist purely as digital entries to an online database describing specific transactions. In the transfer of cryptocurrency, the transactions are recorded in a public ledger. Cryptocurrencies are generally not issued by any central authority; they are decentralized networks based on blockchain technology. This decentralized structure allows them to exist outside the control of governments and central authorities. They enable secure online payments without the use of third-party intermediaries, they are a virtual currency that uses cryptography for security and because of this, it is difficult to counterfeit because of this security feature.

Cryptocurrencies operate on a blockchain that records all transactions updated and held by currency holders. Mining is a process through which units o cryptocurrencies are created, it is a distributed consensus system that is used to confirm pending transactions by including them in the blockchain. It enforces a chronological order in the blockchain, protects the neutrality of the network, and allows different computers to agree on the state of the system. To be confirmed, transactions must be packed in a block that fits very strict cryptographic rules that will be verified by the network. They can be stored and spent using cryptographic wallets.

A cryptocurrency transaction is a transfer of value between crypto wallets that gets included in the blockchain. The crypto wallets are known for a private key or seed which are peculiar to them, which is used to sign transactions, providing mathematical proof that they have come from the owner of the wallet. This seed also prevents the transaction from being altered by anybody once it has been issued. Cryptocurrency isn’t holding something tangible, but the ownership of a key that allows you to move a record or a unit of measure from one person to another. It is an electronic payment system based on cryptographic proof allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms. implemented to protect buyers.

EVOLUTION OF TRANSACTION & THE TRADITIONAL BANKING SYSTEM

Transactions have evolved all through the history of man, several means and methods of transactions have been adopted at different times and stages of history till this very day; From the Barter system which dates back to the Neolithic age, it is the exchange of material goods or services for other goods or services. It evolved with the rise of agricultural/livestock farming. Then, Coins made their first appearance from 680 to 560 BC, in contemporary Turkey. The use of coins became the new means of a transaction as barter posed difficulties for transactions sometimes, with certain transactions that included perishable goods. This resulted in the emergence of coins which were made of precious metals with a circular shape and were adopted as being the most practical means of transaction.

Coins were replaced by Paper money and banknotes because it was uncomfortable to carry coins in large quantities. Banknotes were first used in China in the 7th century, it was paper and didn’t weigh anything close to the coins which seemed easier to carry and ensured easier transactions. Every banknote was issued by a country’s authorities and from the 1970s they had to be backed by a certain amount of gold. Paper money and banknotes were supplemented by Bills of exchange and cheques, a document that guaranteed that the debtor would pay the creditor, or another person authorized to receive the money in the commercial document. Transactions went digital with the use of Cards, banks started to offer cards as a payment solution in 1958, as cards could be used to buy, withdraw, sell and transfer money. The first card was known as Visa. More advanced technologies were adopted in transactions with the advent of digital payments. Goods and services began to be sold through this new communication channel with the arrival of the Internet and the World Wide Web system in 1990. This new means of transaction offered the possibility of buying groceries from the comfort of your home via a computer and with the introduction of new technologies, it became possible to pay by mobile phone or digital watch. Now payments can be made through any establishment that accepts contactless payments, anywhere in the world. This is all done digitally, so your payments are more secure and convenient.

Digital transactions have been improved with the introduction of Cryptocurrencies. Wei Dai proposed the idea of creating a decentralized type of currency in 1998, which would be based on cryptography as a means of control. This resulted in the concept of Cryptocurrency. There were initial attempts to create a currency, which includes David Chaum’s DigiCash and eCash, but in 2009 Satoshi Nakamoto created the first cryptocurrency, called bitcoin. This gave rise to so many cryptocurrencies. Ever since 2009, cryptocurrencies and applications of blockchain technology are still emerging in financial terms, and more uses are expected in the future. Transactions including bonds, stocks, and other financial assets could eventually be traded using the technology. The conception of cryptocurrencies provided a new system for the control of money and transactions.

Initially, transactions will go through the system provided by the banking institution and these transactions use the centralized management system that is provided by the banking institution, the security of this transaction is monitored and validated by the bank. The central bank reserves the monopoly right to issue coins and banknotes for its area of circulation (a country or group of countries); it regulates the production of currency by banks through monetary policy. In this transaction, the value of the currency is decided using the exchange rate value. An exchange rate is a price at which two currencies can be exchanged against each other. This is used for trade between the two currency zones.

With the change introduced by cryptocurrencies, the transaction now goes through a blockchain path. The blockchain ledger system is monitored and validated by the users involved and the ledger validation system uses a computer system. Cryptocurrencies make it easier to transfer funds between two parties in a transaction; these transfers are facilitated using public and private keys for security purposes. These fund transfers are done with minimal processing fees, allowing users to avoid the steep fees charged by most banks and financial institutions for wire transfers. There are no physical bitcoins; only balances kept on a public ledger in the cloud. All Bitcoin transactions are verified by a massive amount of computing power. Every day, approximately $12 billion are transferred across the Bitcoin, Ethereum, and Litecoin blockchains, with millions of people using cryptocurrency for payments daily.

TRANSACTIONS & CLASSZZ CROSS-CHAIN SOLUTIONS

Cross-chain is an approach that facilitates blockchain interoperability building better scalability and inter-chain communications between different chains to exchange information and value. Also, it enhances blockchain intercommunication and enables asset swaps and transfers, which are essential to DeFi. The nature of transactions has further developed as the possibility of cross-chain transactions has been improved.

ClassZZ network which is powered by Te Waka protocol has made a remarkable effort which has booked them a permanent slot in the market share. ClassZZ network has proven to be a viable solution to the interoperability of blockchains, as a decentralized Cross-chain protocol for native tokens, it enables the boundless transfer of assets data and NFTs and facilitates seamless Crosschain transactions. The ClassZZ network is the first-ever public chain that supports smart contracts.

ClassZZ has made a major step into the future of Cross-chain and an improvement on the interoperability of blockchains, ClassZZ had provided a more Decentralized, Trustless, and Universal protocol, it is Trustless; as it enables native token to native token, no user deposits are needed, no mapped tokens involved. It is Universal; as just one protocol connects all smart contracts enabled blockchains, unlike Bridge protocols that connect only two blockchains at a time. It is Decentralized; as every part of the protocol is verified on a permissionless public chain, knowing that a network can be said to be permissionless if anyone can join and leave at any time.

ClassZZ has already supported cross-chain transactions of assets on ETH, HECO, BSC, OKChain, Gatechain, Polkadot, Solana, and other public chains. With our provision of seamless cross-chain transactions, decentralized exchanges (DEX) can now offer their users to trade tokens on other blockchains. ClassZZ network has also reduced the waiting time for withdrawals, as there is no more long withdrawal time when moving assets, it now takes only minutes for users to move assets in a quicker time as against the norm. It provides security facilitates the transfer of assets between blockchains as it is less vulnerable to attacks.

ClassZZ network have eradicated the challenges of interoperability, scalability, and inter-chain communications of blockchains and provided more secure and seamless Cross-chain transactions for users. Enhancing the interconnection of blockchain networks to enable the seamless transfer of assets, data, and even NFTs.