YGGDRASH WHITEPAPER [ENG]
Table of Contents
ﾠ2.1.1 Why Should DApps Choose to be in YGGDRASH
ﾠ2.1.2 Why Should DApps Connect with YGGDRASH
ﾠ2.2.3 Consensus Mechanism
ﾠ2.2.4 Governance Voting
ﾠ5.1 YGGDRASH BRANCH CHAIN
ﾠ5.1.1 Public BRANCH CHAIN for Businesses in General
ﾠ5.1.2 Private BRANCH CHAIN for Industries that Require High Security
ﾠ5.1.3 Hybrid BRANCH CHAIN - Maritime Trade
ﾠ5.2 YGGDRASH Inter-DeFi
YGGDRASH1 is ‘the next generation multi-dimensional blockchain platform’ aiming to connect all real world assets and other blockchains. Every service regardless of its orientation can be implemented on YGGDRASH keeping its governance and consensus algorithm.
‘AWS(Amazon Web Service)2’ for Blockchain
This is the easiest way to describe YGGDRASH in a nutshell. AWS makes it easy for service providers to use virtual cloud servers anytime, anywhere. YGGDRASH also provides a flexible and sustainable blockchain environment to meet the service needs of service providers in the blockchain market.
STEM CHAIN & BRANCH CHAIN3
In YGGDRASH, a DApp is an independent blockchain untethered from the platform. Each DApp is a BRANCH CHAIN, and can keep its governance and consensus algorithm, and still be connected to many other DApps within YGGDRASH at the same time through STEM CHAIN.
A DApp in other blockchain platforms aiming to be an interchain platform is merely a smart contract dependent to the governance and the consensus algorithm of the platform.
Problems in the Current Blockchain Market
Blockchains Considering Technological, Institutional, and Business Aspects are Needed
Technologically, implementing blockchains in many industries has been facing frustrations due to the lack of meaningful numbers(TPS) to persuade the management level within companies.
There are industries that can create synergy by introducing blockchain technology, such as payment services. Applying blockchain technology to payment services can reduce the middle step to improve profit structure and benefit service users. Nevertheless, if we look at the current state of the blockchain market, developers spend more time solving the business and institutional problems arising from applying the blockchain than experiencing the technical utility of the blockchain
In June 2019, the Financial Action Task Force (FATF) announced its obligations for virtual asset service providers (VASPs), including cryptocurrency exchanges4. Therefore, cryptocurrency exchanges should have the identity information of the parties that trade assets. In other words, anonymity, which is one of the main features of blockchain, is no longer guaranteed.
According to the EU's General Data Protection Regulation (GDPR) which took effect in May 2018, the use of public blockchains for business is no longer viable under both domestic and international legal regulations governing the protection of personal information. The Internal Revenue Service (IRS) of the United States of America also announced that ‘all cryptocurrency users must disclose their transactions and pay taxes accordingly5.’
As such, regulatory uncertainty about blockchain technology has caused entrepreneurs to hesitate the adoption of blockchain and has given instability to those who already implemented and developed it.
Gartner, a research firm in the IT field, created a ‘Hype Cycle6’ (Figure 1) and divided it into five stages from the emergence of new technology to the universal use of the technology, and visually express expectations for each stage.
Currently, blockchain is entering the third stage of 'Trough of Disillusionment'. Only those firms that have brought consumer satisfaction can enter the stabilization phase. Therefore, blockchain projects inevitably need to implement a service that satisfies consumers, and only such a project can be a leader in the blockchain industry.
Interchain - The Inevitable Choice
Understanding Different Types of Blockchain Technology and Discussing Applications to Businesses
Most blockchains write their information in distributed ledgers in their own way. Accordingly, interaction with other distributed ledgers are almost impossible. For example, the Bitcoin network and the Ethereum network cannot exchange information directly since each blockchain has a different operation/communication method.
In addition, overloading certain services in a network affects the entire services in the network. In the past, the volume of Ethereum-based game, Crypto Kitties, caused the Ethereum network to become paralyzed.
For this reason, many DApps want to have their own networks. YGGDRASH provides the independence of DApps through the interchain technology, and provides an environment to interact with other DApps on other the blockchain networks.
Why Should DApps Choose to be in YGGDRASH
What We Offer
As previously mentioned, DApps should be developed considering institutional, technological and business aspects. Most blockchain platforms offer one collective development criteria without considering this, but YGGDRASH offers a highly ‘customizable' DApp SDK. Everyone can use the SDK provided by YGGDRASH for their goals.
STEM CHAIN and BRANCH CHAIN
The Team determined that a true blockchain ecosystem will only emerge when there is an increased number of DApps from all kinds of platforms interact freely. Therefore, we applied INTERCHAIN technology to construct YGGDRASH blockchain platform, and STEM CHAIN and BRANCH CHAIN are the core structures of the YGGDRASH INTERCHAIN technology.
Since BRANCH CHAINs in YGGDRASH are independent blockchains that can form their own governance, consensus algorithms, token economy, and more, they are not affected by network overload or failures of other BRANCH CHAINs.
STEM CHAIN contains address of all BRANCH CHAINs and lets the BRANCH CHAINs to connect with one another to exchange cryptocurrencies and data. This structure guarantees each BRANCH CHAIN maximum freedom and minimum traffic risk.
YGGDRASH Interchain enables the interactions between BRANCH CHAIN and BRANCH CHAIN, BRANCH CHAIN and STEM CHAIN, and BRANCH CHAIN and external blockchain platforms through STEM CHAIN. DApps in YGGDRASH can create services with their own blockchain standards, fast processing speed, and INTERCHAIN solution.
Types of BRANCH CHAIN
YGGDRASH BRANCH CHAIN provides three blockchain types. DApp developers can choose the BRANCH CHAIN type best suits to their business.
1. Public BRANCH CHAIN
Anyone can participate as a node in ‘Public BRANCH CHAIN’ which features like a public blockchain or an open blockchain. Participants in the network can engage in both major and minor decision makings. YGGDRASH Public BRANCH CHAIN can communicate and exchange assets and data with all BRANCH CHAINs connected to YGGDRASH ecosystem without limitations. This type is appropriate for the services related to exchanges and social networking services.
2. Private BRANCH CHAIN
The ‘Private BRANCH CHAIN’ is a closed blockchain that is exclusively available to the group or individuals previously formed. It is not connected to the YGGDRASH STEM CHAIN, and only a limited number of people can participate as a node and make decisions and transactions. A Private BRANCH CHAIN is ideal for users that deal with sensitive information such as government organizations or hospitals.
3. Hybrid BRANCH CHAIN
The ‘Hybrid BRANCH CHAIN’ is a compound BRANCH CHAIN that combines the advantages of the Public and Private BRANCH CHAINs into one. In the Hybrid BRANCH CHAIN, other BRANCH CHAINs that have completed the consensus process can create third-party services. This is a good model for users like banks and supply chains who want to exchange data with different assets.
Why Should DApps Connect with YGGDRASH
Undoubtedly, a synergy arises when blockchain projects collaborate; however, there has been no efficient interaction protocols for blockchains to help them communicate up until the point of YGGDRASH INTERCHAIN.
What is Interchain?
Interchain is a technology that allows two or more blockchains to interact. Interchain has two models. First, the Digital Asset Exchange model refers to the exchange of assets, that is, cryptocurrencies, by two or more blockchains. Second, the Data Exchange model makes the block data and processes on the blockchain compatible. YGGDRASH will implement the Digital Asset Exchange model first and then build the Data Exchange model.
The World with No Interchain
We would like to explain the necessity of Interchain by imagining the situation of exchanging Bitcoin and Ethereum. Bitcoin and Ethereum differ in the subject and the way of consensus and do not recognize each other's assets. In other words, there is no trust in the data between platforms and more importantly, the transactions are not recognized by the platforms. Even though Blockchain A and Blockchain B are technically fully interoperable, it is unlikely that agreements between cryptocurrencies will be smoothly achieved if there is no common interest. Companies using blockchains yet do not implement Interchain technology will have to use centralized processes when exchanging information, so it is doubtful whether the companies can get the trust that they have tried to acquire using blockchains.
Traditional Interchain Methods
Various projects have tried to implement the interchain solutions.
Cosmos Network exchanges different cryptocurrencies by creating a third-party network that extends the concept of 'Atomic Swap'. However, only the same type of hash functions can be swapped, and transaction latency is long.
In the case of BTC Relay, Bitcoin's Simplified Payment Verification(SPV) node is implemented in Ethereum. BTC Relay’s verification process requires intervention of intermediaries, and they receive a brokerage commission in exchange; however, the commission is too high and the verification process is also very difficult.
YGGDRASH INTERCHAIN has a validator to verify the results of external transactions from external platforms, to close the asset transactions. At this time, not only it is free from the need for the identical hash function type, it is possible to close the transaction without using a third blockchain. These are the necessary elements to implement an ideal interchain because assets can be freely exchanged, and this can even be extended as a means of delivering data. The figure below shows the transaction process between YEED and ETH.
As shown in <Figure 2>, Alice wants to exchange her YEED with ETH. To do this, Alice creates a smart contract, puts her YEED as a deposit, and Bob checks Alice's smart contract. After the validator completes the validation, both tokens are exchanged.
RATATOSKR, the New Name for YGGDRASH INTERCHAIN
In this version of White Paper, we would like to introduce the new name for YGGDRASH INTERCHAIN, RATATOSKR.
RATATOSKR (Ancient Nordic) is a squirrel that lives on the stems of the world tree, Yggdrasil. This squirrel is a messenger of the Yggdrasil passing messages between worlds. This is in accord with the nature of YGGDRASH INTERCHAIN, which helps communication between various blockchains. YGGDRASH RATATOSKR will connect various lonely-island-like blockchain projects and will let them share assets and data, creating new value and innovation.
In Norse mythology, the Norns are goddess of the destiny of gods and men, and they live near the well close to the root of Yggdrasil. The consensus protocol of YGGDRASH is also named ‘NORNS’, and this protocol is derived from the combination of practical Byzantine Fault Tolerance(PBFT) and Delegated Proof of Stake (DPoS). As the YGGDRASH network grows, DPoS part of the NORNS will be replaced with the Delegated Proof of Authority7 (DPoA) which selects the validators based on the ‘reputation’ of network participants.
The consensus of YGGDRASH ecosystem is made by the masternode. The consensus process is applied based on the PBFT. Voting power of the masternode is determined by the amount of staked YEED of the masternode. Masternode is responsible for securing the YGGDRASH network, forging new blocks, verifying transactions in each round (blocks per round = Number of ODIN + 1), ensuring that YGGDRASH node is always running, and resolving consensus issues through an honest and democratic means.
Delegated Proof of Stake will be used to validate transactions on the STEM CHAIN, the main public blockchain of YGGDRASH since it brings many advantages to the network.
Firstly, DPoS regards positive in terms of speed and reliability. These can be attractive features for DApps which participate in the network in the early stage. According to the <Architectures and Frameworks for Developing and Applying Blockchain Technology, 2019>8, DPoS is evaluated as follows: it is deemed to be a very reliable and efficient consensus algorithm. This is because the mechanism of DPoS features a relatively small number of nodes and therefore the processing of the transaction is quicker9. Secondly, it provides real-time security as YGGDRASH users do not need to worry about the dishonest delegates as malicious delegates could be voted out easily. Thirdly, DPoS consumes significantly less energy and power than Proof of Work (PoW), as DPoS do not require as much utilization of computational resources that are involved in PoW. Lastly, DPoS offers a better distribution of rewards as the voters would theoretically vote for delegates who reward them the best.
Competitive incentive structures are effective when malicious representatives emerge. If a representative acts with malicious intent, the voters who vote for that representative are directly affected. The right to vote is the power of staking, and malicious representatives will adversely affect the ecosystem and lower the value of cryptocurrencies. As such, voters will choose the most trusted and reliable representatives to increase the value of cryptocurrencies.
There are two components in YGGDRASH governance: ODIN, a masternode, and VALKYRIE, a YEED holder.
VALKYRIE can vote for multiple ODIN candidates on YGGDRASH. The candidates that receive the most votes become ODIN. It is ODIN’s responsibility to act with the best interests of YGGDRASH in mind. ODIN and VALKYRIE can make suggestions that can maintain YGGDRASH healthy and decentralized. A vote will be done by ODINs and the weight of the vote VALKYRIE cast in the election is directly proportional to the amount of YEED that is staked. In order to get a high weight of the vote, ODINs have to build trust while being responsible within the YGGDRASH platform.
YEED is the key currency of the YGGDRASH ecosystem. YEED is the means of trading within the YGGDRASH platform and it is used to develop and maintain the YGGDRASH network. Also, users are able to exchange assets with BRANCH CHAINs connected to YGGDRASH.
Transaction fees will occur when transactions are processed within the YGGDRASH ecosystem. Those fees will be partially shared with the masternode, and YEED used as transaction fees will be burnt.
Incentive and Penalty
In order to maintain a stable network, to promote activities, and to secure the blockchain, STEM CHAIN incentivizes VALKYRIE and ODIN. Rewards and reputation scores will increase through every appropriate behavior, network referral, and participation in YGGDRASH. In the case of malicious behaviors by ODIN, the one that act inappropriately can be punished and voted out.
ODINs will stake YEED to show their commitment to the YGGDRASH network. The secured ODINs’ YEED can only be taken out from the staked when they have completely performed their duty diligently. Misbehavior by the ODINs will cause part of their staked YEED to be burnt or rewarded to the other YGGDRASH network participants.
VALKYRIE’s staking is done when they cast their votes for ODIN. Before a new ODIN is elected, all ODINs go through the process of creating a block. However, until ODIN completes to generate the block, VALKYRIE cannot withdraw YEED which has been staked for ODIN.
Once this process has completed, VALKYRIE will receive rewards. The rewards’ ratio might vary depending on the ODIN that VALKYRIE votes for. The ratio is inversely proportional to the percentage of the total YEED used for staking in YGGDRASH.
To reiterate, as a number of YEED staked increases, the rewards from staking increases. However, the lower the staking ratio, the higher the incentives that the participants will receive.
Mint and Distribution
Total amount of minted YEED is 10,000,000,000. The Team will use them for the following purposes:
Incubating DApps and YGGDRASH ecosystem (21%)
D-STATION is a DApp & blockchain incubator service founded by YGGDRASH. D-STATION helps the entire development process of DApps and aims to support the services in various fields so that they can safely settle in the market.
YGGDRASH will provide open-source blockchain development toolkits for easy access to the YGGDRASH network through YGGDRASH DEVELOPERS. Developers, enterprises, and other DApps can use the SDK (Software Development Kit) prepared by YGGDRASH. Also, they can receive support on the development side as well.
Followings are the key elements that YGGDRASH DEVELOPERS provides:
- The YGGDRASH Core is a Java library that implements the core logic for the YGGDRASH protocol to work. This includes consensus algorithms, security, blocks, transactions, and peer-to-peer communications.
- We have the official YGGDRASH nodes implemented to work with the YGGDRASH Core. Using the spring framework that has a robust ecosystem, each node can shape organically according to its role.
- The YGGDRASH Wallet is an all-in-one solution that can manage addresses, accesses and transfers assets within YGGDRASH, and place a vote based on reputation. It will also be combined with a browser that shows the resources a BRANCH CHAIN has.
- This is the CLI(Command Line Interface) for the YGGDRASH core API. It will help with the management and the bootstrap of a BRANCH CHAIN. It aims to be the most convenient tool for developers who want to easily utilize YGGDRASH.
- YGGDRASH Explorer is a tool that visualizes and navigates all information and activities from the past and present within YGGDRASH.
STEM CHAIN, the main chain of YGGDRASH, is provided as an open source for anyone who wants to build a BRANCH CHAIN. YGGDRASH MainNet is a product with many years of know-how and experiences. This can drastically reduce developmental costs and resources for those who want to build an blockchain.
YGGDRASH BRANCH CHAIN
YGGDRASH BRANCH CHAIN can choose various types of blockchain (public, private, and hybrid blockchain) in accordance with their business characteristics. There are methods and examples of the most effective application of YGGDRASH BRANCH CHAIN.
Public BRANCH CHAIN for Businesses in General
The First Gateway to Useful Blockchain Services, Decentralized Identification (DID)
Decentralized Identity(DID) is a new technology that allows individuals to have full control over their private information by moving away from the originally centralized system of self identification.
Traditionally, companies and government organizations keep and manage their data in centralized environments. However, these are prone to losing information of numerous people when their centralized data control system was hacked. Some companies went so far as to utilize private information without consent. In stark contrast, DID provides individuals with full control over their data and the information will be guarded safely by being encrypted in blockchain. For instance, DID only allows access to personal data through the user's key and personal information will be delivered directly to companies who have requested it to the user.
DID can be used in the public and private BRANCH CHAINs in YGGDRASH as well as in blockchains like Bitcoin and Ethereum. It also can widely be used in many industries such as in public, financial, and general sectors.
Private BRANCH CHAIN for Industries that Require High Security
Starting from the early 2000s, malwares targeting specific countries or societal organizations arose. From 2010, malwares that caused more damage than simple service errors, directly attacked key institutions like nuclear power plants, airports, finance sectors, electricity plants, and hospitals. YGGDRASH Private BRANCH CHAIN would have prevented these kinds of attacks. Through the distributed data in each node, and its connection through the blockchain network, the data is continuously checked and compared so that fabrication of data through viruses become extremely difficult. Utilizing this mechanism will allow social network services to be managed more securely.
Furthermore, because this technology does not consist of a centralized control system but rather utilizes data through a globally distributed nodes, it is easier to prevent catastrophes in case of a DDos attack. Unless the nodes are all stopped simultaneously, the social infrastructure will remain intact.
Hybrid BRANCH CHAIN - Maritime Trade
As mentioned in 2.1.1 Why Should DApps Choose to be in YGGDRASH, the YGGDRASH Hybrid BRANCH CHAIN is a mixture of strengths from the Public BRANCH CHAIN and Private BRANCH CHAIN. It is best suited in scenarios in which data is being constantly shared, while at the same time sensitive data is protected against unwanted disclosure.
A prime example of this would be maritime trade. Data regarding the trade must be shared transparently, while at the same time sensitive data be stored separately and safely. Until now, information regarding the cargo (legal clearance, total weight, etc) was checked by comparing the paper documents to electronic data. This required a lot of time and manpower. Also, some of the sensitive data could not be tracked through one network system. However, by implementing the Hybrid BRANCH CHAIN, required data about the customs, depending on its nature, can be saved separately or shared through a single system for fast processing.
For example, information that must be shared with all parties such as customs, banks, freighters, and trading companies will be saved in the Public BRANCH CHAIN. Sensitive data like verification, approvals, and bank reconciliations can be managed through the Hybrid BRANCH CHAIN by giving varying levels of authorization to each manager.
On top of that, RATATOSKR, YGGDRASH INTERCHAIN solution, can be utilized to share necessary assets and data. Hence, Hybrid BRANCH CHAIN is appropriate in industries where complex interests are intertwined.
DeFi: the Present and the Future
Presently, Decentralized Finance (DeFi) is mainly used to loan on cryptocurrencies or other collateral. Traditionally, identification has to go through the complex process required by central banking firms, but DeFi has allowed all financial services to be available online.
Let us imagine the future that DeFi will bring: the bank's deposits would be converted into interest services through the cryptocurrency staking; and loans and remittances would use cryptocurrencies mainly. A stock company’s IPO will be led by asset tokenization, and stocks and derivatives will be led by cryptocurrency exchanges.
Gartner has announced that ‘Intelligent’, ‘Digital’ and ‘Mesh’ are included in <Gartner's Top 10 Strategic Technology Trends for 2018>10. Among them, YGGDRASH focuses on the Digital and Mesh, which are the core functions of the blockchain.
Digital is blending the virtual and real worlds to create an immersive digitally. In the report, Gartner predicts that, in 2022, industries can reduce the cost for maintenance, service, supplies by approximately a trillion dollars. In blockchain industry, ‘asset tokenization’, ‘stable coin’ can be the example of the Digital.
Along with the Digital, YGGDRASH focuses on Mesh. Gartner describes Mesh as a concept that can solve complex connectivity. YGGDRASH reinterpreted these concepts and defined YGGDRASH Inter-DeFi as 'connecting digital financial assets and data from different blockchain platforms and connecting them on-chain.’ YGGDRASH will provide a blockchain Mesh environment where different services can integrate without changing their core logic.
Below is an example of YGGDRASH Inter-DeFi staking service.
In the <Figure 11>, Alice deposits her cryptocurrency in order to look for a service provider who suggest her the best investment conditions. She intends to put 70 percent of her assets at low risk and 30 percent of them at high. The terms and deposits are recorded and transferred to a smart contract.
Request for the deposit service
Total Cryptocurrency Deposit : 100 XX Coin
Stake 1) 70% of the deposit for the low risk/capital guaranteed
Stake 2) 30% of the deposit for the high risk/capital not guaranteed
RATATOSKR (YGGDRASH INTERCHAIN) delivers the data to all connected deposit service providers. Alice then chooses A who offers the highest interest based on BTC and C based on ETH. Alice is able to carry out her investment plan with receiving the highest interest rate through the YGGDRASH Inter-DeFi. Furthermore, she can get offers with a good interest rate from more operators in the future.
Inter-DeFi will expand into various industries such as logistics, contents, telecommunications, medical care, education and so on. Also, YGGDRASH Inter-DeFi ecosystem will be vitalized when more users and operators participate.
A YGGDRASH DApp can have its own blockchain. Each DApp remains as a BRANCH CHAIN (Decentralized Autonomous Organization, a blockchain), and it has its own governance. Also, a DApp can choose and change between the forms of BRANCH CHAIN such as Public, Private, and Hybrid depending on the business purpose or technical/regulation conditions. In addition, a DApp can become a blockchain by utilizing YGGDRASH SDK with various features like wallet, commander, explorer, and more.
Also, YGGDRASH provides independence for DApps on the platform through YGGDRASH INTERCHAIN solution, RATATOSKR. In addition, it helps to eliminate hurdles to lead blockchain ecosystem by allowing DApps to interact with other DApps in external blockchain networks.
Lastly, YGGDRASH will provide great benefits to ODIN and VALKYRIE to appreciate their commitments to create the ideal YGGDRASH network.
YGGDRASH dreams of an ideal world: a transparent world where everything is interconnected and lies and corruption become obsolete. In that world, YGGDRASH and everyone who shares a common vision will finally be able to accept differences and enjoy the true freedom.
‘YGGDRASH’ is a compound word of ‘Yggdrasil’ and ‘Hash’. Yggdrasil is the mythical world tree from the Norse mythology connecting the worlds of God, man, the underworld, and more.
Amazon Web Services (AWS) is a subsidiary of Amazon.com that provides on-demand cloud computing platforms to individuals, companies and governments, on a paid subscription basis.
STEM CHAIN is the main chain of YGGDRASH which contains the addresses of all BRANCH CHAINs and links them all. A BRANCH CHAIN is a DApp and a blockchain at the same time.
DPoA is a reputation-based consensus algorithm, where the nodes of the YGGDRASH network is decided by the reputation scores.
Shi, Nansi. Architectures and Frameworks for Developing and Applying Blockchain Technology. IGI Global, 2019.
Zheng, Z., Xie, S., Dai, H., Chen, X., and Wang, H. (2017). ―An Overview of Blockchain Technology:Architecture, Consensus, and Future Trends‖ In: IEEE 6th International Congress on Big Data 2017. P.557-657.
Gartner's Top 10 Strategic Technology Trends for 2018, 2017 Gartner