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Consistent interchain settlement layer

The unique consistency of cross-chain operations enabled by the Inchain architecture is a key property to unlock many of Coinweb's advantages. Without this consistency, any interoperability platform will become more and more unstable as more chains are added. The reason for this is that settlements between chains are anchored to L1 transactions that might be reversed. This is true even for blockchains with 'finality'. History has shown that there is always a chance for a reorganization of blocks, finality or not. As long as the probability of this is above 0, adding many chains will eventually ensure that such a system will be unstable. In practice, this means that tokens can be created out of nothing, can be stuck in undefined states, or disappear.

Clearly, such flaws are unacceptable for the robust decentralised infrastructure needed for global-scale decentralisation. Such an infrastructure must not only be robust, but also adaptive so that it can adopt new innovations as they become available. To ignore the inherent instabilities in L1 would be a fatal mistake, instead, the main focus of the architecture design must be to account for such issues and mitigate them at a fundamental level. Contrary to what one might think intuitively, guaranteed stability over such infrastructure is only achievable through a dynamic, nonrigid model, that can absorb localized instabilities, preventing further propagation. With consistency guaranteed at the protocol level, the risk of loss for protocol participants is minimised, translating to direct competitive advantages over actors operating without such guarantees and thus increased risk.

State propagation graph

For guaranteed consistency to be possible, reorganisations in L1 must be allowed to propagate between shards. This ensures eventual consistency, but without additional measures, it would lead to increased shorter-term instabilities. The solution to this is to consider a well-known property of blockchains, that the probability of a block being affected by a reorganisation decreases with the number of subsequently confirmed blocks. In fact, the probability of a block being affected by a reorg can be set at an arbitrarily low number by the number of confirmations required. If one considers a set of blockchains connected in a graph topology, one could reduce the probability of propagating instabilities to a number much smaller than the probability of a single L1 reorg even with a relatively low required number for confirmations between two neighbor chains.

Instant cross-chain settlement at minimum risk cost.

This robust design allows the interconnection of an unlimited number of blockchains, where even unstable and experimental blockchains can be added to such a network, just with a higher number of required confirmations between its neighbors.

The protocol level settlement layer also provides an optimal platform for interoperability at the application level, where participants leverage the optimal risk mitigation of the protocol. Popular DeFi protocols and other dApps can now be extended and become composable across a large number of blockchains increasing access to liquidity and extended functionality. Interoperability projects can retrofit the Coinweb settlement layer for reduced risk and increased profit.

Instant, Guaranteed Settlement:

Apps needing rapid cross-chain data access use info traders, assuming reorg risks for fees. Learn more: here