Foundations and Practice of Distributed Ledger Interoperability


Blockchain and distributed ledger technology (DLT) have evolved significantly from their original visions. Permissioned networks of limited business scope and guarded memberships, built on platforms like Hyperledger Fabric and Corda, coexist with the open Bitcoin and Ethereum networks, thereby fragmenting the blockchain ecosystem into disconnected networks built on very different data models and consensus protocols. Enterprises, consortia, and governments are using DLTs to build business networks that manage trade, supply chain, finance, and regulatory compliance workflows. Currently, Decentralized Finance (DeFi) and Central Bank Digital Currency (CBDC) networks are being built on DLT.

These networks need to operate independently for privacy, performance, and auditability reasons, but their business processes are interdependent, so they cannot afford to be isolated from each other or have their digital assets trapped in siloes. To allow such networks to coexist but interconnect when needed for the purposes of transferring and exchanging assets and data safely, they must be able to interoperate in a way that preserves blockchain tenets of decentralization. In other words, interoperability is the way by which transactions spanning more than one network (and ledger) can be orchestrated safely while keeping the networks independent.

Ensuring such interoperability, regardless of the open or closed nature of networks and of the underlying ledger technology they are built on, is our mission. To this end, we have devised solutions based on open standards, DLT- (or vendor-) neutrality, network self-sovereignty, and eschewing of trusted intermediaries. In our project, incubated from scratch in 2019, we have constructed a science of distributed ledger interoperability, with basic building blocks and cross-ledger protocols engineered on a sound theoretical foundation. We have built software modules and libraries, originally open sourced in the Hyperledger Weaver Lab, now part of the flagship Hyperledger Cacti interoperability framework and toolkit. We are actively maintaining generic interoperability modules as well as DLT-specific adapters and extensions within Cacti, in a transparent community-driven effort. We have published several research papers that have advanced the state of the art in DLT interoperability and presented our point-of-view in various articleslectures, and panel discussions. We are also active members of an IETF Working Group seeking to standardized secure cross-network transfer protocols for digital assets.