STIJ5014 - Assignment 1

Title: Blockchain Interoperability and Distributed Ledger Systems in Distributed Computing

Objective

This assignment explores blockchain interoperability, focusing on challenges, solutions, and how different distributed ledger technologies (DLTs) fit within distributed computing paradigms.

Section 1: Overview of Blockchain Interoperability

Goal

Understand the complexities of enabling different blockchain networks to communicate and interact.

Instructions

1. Blockchain Interoperability Definition

   • Define blockchain interoperability and its importance.
   • Discuss interoperability across different layers:
     • Data Layer: Sharing data across blockchains (e.g., transferring asset ownership).
     • Consensus Layer: Ensuring different blockchains agree on transaction finality.
     • Application Layer: Enabling dApps to interact with multiple blockchains.

2. Challenges of Interoperability

   • Technical: Differences in consensus mechanisms (PoW vs. PoS) and transaction formats.
   • Security: Risks like double-spending, replay attacks, and transaction malleability.
   • Scalability: Issues in handling high throughput across chains.

3. Approaches to Blockchain Interoperability

   • Atomic Swaps: Exchange assets between blockchains without intermediaries.
   • Cross-Chain Bridges: Lock assets on one chain and mint them on another.
   • Cross-Chain Communication Protocols:
     • IBC (Inter-Blockchain Communication)
     • Polkadot's Relay Chain
     • Cosmos Hub

Deliverables

• A 2-3 page essay discussing:
  • Importance of interoperability.
  • Challenges and solutions.
  • Two real-world projects (e.g., Cosmos, Thorchain).

Section 2: Distributed Ledger Technologies (DLTs) and Distributed Computing

Goal

Compare blockchain with other DLTs and their role in distributed computing.

Instructions

1. Difference Between Blockchain and Other DLTs

   • Blockchain: Stores data in linked blocks, sequential transactions.
   • Other DLTs:
     • DAGs (Directed Acyclic Graphs) (e.g., IOTA, Hedera Hashgraph) – allow for parallel transaction processing.
     • Hashgraph – achieves consensus without mining or staking.

2. Types of DLTs

   • Blockchain: Discuss PoW, PoS architectures.
   • DAG-based systems: More efficient, scalable.
   • Hashgraph: Efficient consensus through node communication.

3. Advantages of DLTs Over Centralized Databases

   • Fault Tolerance: System integrity is maintained despite node failures.
   • Transparency & Immutability: Transactions are tamper-proof.
   • Security: Decentralization reduces the risk of single-point failures.

4. Real-World Use Cases

   • Supply Chain (IBM Food Trust with Hyperledger Fabric).
   • Healthcare (IOTA for patient records).
   • IoT Networks (Hedera Hashgraph).

Deliverables

• A 3-4 page paper comparing blockchain and non-blockchain DLTs, their features, advantages, and real-world applications.

Section 3: Cross-Chain Communication Protocols

Goal

Compare Polkadot and Cosmos, two leading solutions for blockchain interoperability.

Instructions

1. Polkadot

   • Architecture: Explain the Relay Chain and Parachains.
   • Shared Security: Uses Nominated Proof of Stake (NPoS).
   • Governance: Token holders vote on network upgrades.

2. Cosmos

   • Hub-and-Spoke Model: The Cosmos Hub connects multiple blockchains.
   • IBC Protocol: Transfers data and assets across chains.
   • Tendermint Consensus: High-performance, secure consensus.

3. Comparison: Polkadot vs. Cosmos

   • Differences in governance, security, and scalability.
   • Use cases and ecosystems:
     • Polkadot: Focus on customizable parachains.
     • Cosmos: Emphasizes sovereignty and interoperability.

Deliverables

• A 3-4 page analysis comparing Polkadot and Cosmos architecturally and functionally.

Section 4: Distributed Ledger Consensus and Fault Tolerance

Goal

Examine consensus mechanisms ensuring fault tolerance in decentralized networks.

Instructions

1. Byzantine Fault Tolerance (BFT)

   • Ensures networks function despite malicious nodes.
   • PBFT (Practical BFT): Reduces communication overhead.

2. Consensus Mechanisms

   • PoW (Proof of Work): Secure but energy-intensive.
   • PoS (Proof of Stake): More scalable and efficient.
   • Tendermint (Cosmos): BFT-based, achieving high throughput.

3. Fault Tolerance in Distributed Systems

   • Ensures data consistency and network reliability.
   • Examples: Bitcoin, Ethereum, Cosmos.

Deliverables

• A 3-4 page paper discussing PoW, PoS, PBFT, Tendermint, and fault tolerance in blockchain networks.

Section 5: Practical Exercise

Goal

Develop and deploy a cross-chain application that interacts with two different blockchains or DLTs.

Instructions

1. Choose Two Blockchains (e.g., Ethereum + Polkadot, Ethereum + Cosmos).

2. Implement a Cross-Chain Mechanism:

   • Atomic Swaps or Cross-Chain Bridges.
   • Use IBC protocol or Polkadot’s relay mechanism.

3. Tools:

   • Ethereum: Remix IDE / Truffle.
   • Cosmos: Cosmos SDK / IBC libraries.
   • Polkadot: Substrate.

4. Code Functionality

   • Build a simple cross-chain token swap.
   • Ensure secure token transfers across chains.

Deliverables

• GitHub repository with:
  • Smart contract code.
  • Cross-chain interaction implementation.
• 2-3 page report explaining:
  • Architecture and choice of blockchains.
  • Challenges encountered.
  • How interoperability was achieved.

Grading Criteria

1. Research Depth: Advanced understanding of interoperability, DLT, and consensus.
2. Technical Execution: Applying theoretical knowledge to practical implementations.
3. Clarity & Structure: Logical organization, proper citations, and diagrams.
4. Creativity & Innovation: Thinking critically about future blockchain solutions.

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