Regulatable and compliant transaction logging, settlement and finalization

Taking Blockchain Technology Mainstream

The Concordium Network is a proof-of-stake-based blockchain network that will be designed from the ground up to deliver a trustworthy and solid foundation for business. It will feature a protocol-layer ID/KYC/AML mechanism that ensures that every user on the network is identified, and that every transaction involves provenance tracking.

These features do not prevent the provision of privacy (based on zero-knowledge proofs), but they provide an environment that we believe will be acceptable to regulators, to public institutions, to financial institutions and to “big business,” while solving a number of key issues in blockchain-based transaction logging such as avoiding single points of failure and providing finality in transactions.

 

Key Technical Features

  • Programmable Accounts

    On the Concordium Network, accounts will function as programmable smart contracts. This allows users to set rules as to how transactions and funds are managed. For example, automatically reject funds that originate outside a given jurisdiction, or from unknown senders.

    This ability to reject transaction requests is a unique feature of the Concordium Network. Other planned features include automatic forwarding, making it easy to instantaneously manage VAT, taxes, referral fees, etc.

    Contract calls can be set such that activity on one transaction can be used to alert others, which is useful for reporting and account aggregation.

    The Concordium Network aims to deliver programmable functionality where users can choose from a wide range of predefined logic scripts or can develop their own custom applications. This level of flexibility is unprecedented and entirely new to blockchain networks.

    It will allow business users to create their own structures and to do transaction logging much more efficiently and in line with what they expect from their usual operating procedures.

  • Identity Layer

    With Concordium, new users will be onboarded via a Trusted Identity Issuer that screens and verifies the user’s identity before assigning a user ID, also known as an Identity Object.

    Users will be able to receive Identity Objects from any number of Trusted Identity Issuers, with each object generating only the specific subsets of information requested, such as proof of age, physical location, etc.

    As such, this mechanism can be used to integrate licenses, permits, credit scores, diplomas, certificates or any other profile statistic into a user’s identity and store it all in a single file.

    In addition, anyone can become an “untrusted” identity issuer. This allows companies using Concordium to establish facts about their own users, partners and providers—such as internal ID numbers and authorizations—that do not necessarily need to be verified by a Trusted Identity Issuer.

    Consequently, organizations can structure themselves into complete sub-networks on the system.

  • Transaction Privacy

    In contrast to most blockchains, where anonymous users transact publicly, known users on the Concordium Network will transact in private. This may sound simple and straightforward but it is most certainly not. We will use zero-knowledge proofs to cloak users privacy.

    This is a relatively new type of math created in 1985 by Shafi Goldwasser, Silvio Micali and Charles Rackoff. Using this cryptographic technique every user can see the proof that the transaction was logged and registered correctly in an immutable network block.

  • Upgradeable Smart Contracts

    A smart contract is by default an immutable piece of code that cannot be destroyed once written into the blockchain.

    This is part of what ensures the unbreakability of the concept, but Concordium smart contracts will have an added feature: they can be upgraded at any time to deliver new features for new requirements.

    We aim to make it possible for the user or designer of a contract to include version numbering and to make sure that it will always be the latest version of the contract that is executed.

  • Formally Verified Codebase

    We will aim to formally verify key elements in the codebase of the Concordium Network. Formal verification is a method normally used when creating software for airplanes and medical devices.

    These methods ensure that the codebase actually follows formal specification, so the risk of unexpected code exploits is minimized compared to traditional development techniques.

    Thus cryptographic strength does not have to be taken on trust, but can be proven.

  • Revocation of Privacy

    The Concordium Network is designed for regulatory compliance. This means that an agency with the legal right to do so must be able to review specified transactions. The challenge is to construct a setup which allows for a legal disclosure of private transactions while maintaining user confidence that a breach would not be possible by any other means.

    The solution to this conundrum is the establishment of another Concordium innovation, the Directed Revocation Service. When a Trusted Identity Issuer delivers an Identity Object, this carries a key that designates compatible Trusted Revokers.

    A list of Trusted Revokers is maintained by the Concordium Foundation and is written into the network’s governance layer. The Concordium Foundation has an additional, but different, key.

    A user’s privacy can only be revoked if two or more Trusted Revokers from an appropriate jurisdiction agree to do so on the basis of a court order or other legal requirement delivered to them.

  • Hyper-Transactions

    A common issue with blockchains is that contracts which fail to meet pre-agreed standards are executed anyway. This is because almost all other blockchains have sequential processing of contracts. We aim to introduce parallel execution to enable multiparty contracts.

    This means that users will be able to make the execution of contracts contingent on external data requested by a third party where that party may also function as an escrow. Transactions may be made dependent on a specific precondition existing in another smart contract and automatically verified.

    If a check-up on an external database reveals that a buyer does not have a valid permit or VAT number, for example, then that contract will not execute. As such, hyper-transactions enable easy-to-agree terms on more flexibly built contracts.

  • Dynamic Proof-of-Stake Protocol

    The Concordium Network’s consensus protocol defines some initial constants, such as block size,  block time, finalization range, baking rewards, etc. However, the Concordium Network also includes an overview layer as part of the consensus protocol.

    This overview layer will monitor topical network data such as distribution of peers, transaction volume, local network latency, etc. and will combine this information with  system-wide data such as overall number of Concordium GTUs transferred, complexity of invoked smart contracts during the last blocks, and so on. Every key blockchain parameter can then be dynamically adjusted based on overview-layer data to keep the network running at optimal levels.

    When there is a lot of activity on the network, block time will get smaller, while peak activity will mean block time gets longer. If there are many baker nodes online, rewards get smaller and if there are fewer baker nodes online, rewards get higher, etc. We have named this approach the “dynamic consensus parameter.”

    By adjusting all parameters dynamically, the network is more responsive and scalable and less prone to any kinds of bottlenecks.

  • Concordium P2P Network

    Concordium’s P2P network is a fully secure peer-to-peer broadcast and message communication channel, encrypted with the latest Transport Layer Security (TLS) standard where the nodes participating in the network use existing, proven internet technology including DNS for node registration and discovery.

    The network will be able to layer several blockchains on top of each other—a feature used in conjunction with the Concordium sharding and finalization protocol—and will be developed to be easily extensible and adaptable to carry whatever future communications are required as the concept develops, for example, the sharing of larger files.

    As such, the Concordium Network aims to become a fast network transport in a fully secure setting.

  • Finalization

    A big problem in current blockchains is rollback. In big projects, like Bitcoin, a rollback for more then a couple of blocks while impropable is theoretically possible. Only a few of the newer blockchains have finalization mechanisms, and Concordium Network may be only project that aims to deliver mathematically provable finalization.

    Finalization is part of the Concordium Network’s consensus protocol where a commitee of network clients run a Byzantine fault-tolerant decision-making agreement to agree on finalization timestamps based on specific best chain rules.

    When a block has been finalized, it is not possible to roll back to a point in time before that finalization timestamp.

    This will effectively make the Concordium blockchain truly immutable and verifiably final. Obviously, being able to deliver rock solid finalization will be of major interest to the financial services industry.

  • OAK Programming Language

    The Concordium Network will have its own smart contract programming language called Oak. It is based on a functional programming language called Elm and enables formal verification of smart contracts as well as pre-execution gas-requirement calculations.

    Oak is a purely functional language, developed with an emphasis on usability, performance, and robustness, and it delivers “no runtime exceptions in practice,” via static type checking compilation. Oak is easy to learn, easy to program, difficult to make mistakes in yet still delivers a lot of mileage, allowing developers to get a lot done with just a few lines of code.

    Elm, which is the precursor of Oak, already has a large user base, all of whom can start working on Concordium smart contracts right off the bat with only minor prerequisites.

    Additionally, Elm’s package library has more than 10,000 packages, most of which are directly usable in Oak to create smart contracts on the Concordium Network.

  • Outstanding Transaction Speed

    Concordium smart contracts will deliver parallel execution, which means bigger blocks can be written in a shorter time. However, our consensus protocol adjusts working parameters based on the health and state of the network as a whole. In less busy periods, block times are longer.

    In more busy periods, block times are shorter. As such, the transaction speed constraint in Concordium will not be the virtual machine/compiler, as in most other blockchain networks, but solely overall network latency.

    Bigger blocks allow for aggregate transactions, for example, micropayments running on side-chains, which can then be aggregated and written onto a single block every so often. Even when running with a heavy transaction load we expect to see significantly faster transaction speeds than with most other networks.

    This is made possible by a smart contract design that relies on pure functions, and which does not modify global states inside any execution path, but only as a result of execution.

  • Certified Smart Contracts

    We aim to make it possible to formally verify and certify any Concordium smart contract. Contract certification means publishing a formal verification proof of the contract and its ability to execute and perform as required.

    Our protocol will ensure cheaper gas prices for certified smart contracts than for uncertified ones, giving developers incentives to do this certification. As such, certified contracts can be proven to deliver what they are set up to do and will cost less to execute.

    The Concordium Foundation aims to offer certification as a service and we intend our contract library and app store to have pre-certified contracts deployable by users.

  • Verified Repository of Smart Contracts and Libraries

    Concordium aims to save users time and effort with access to libraries of already programmed smart contracts and libraries of functions. Developers can submit their smart contracts for library verification and, if their contracts are used on the blockchain, they will be rewarded.

    The users of the library material will pay less in gas costs for their contracts and the creators of the contract gets a kickback of some of that gas saving, thus incentivizing both parties.

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What Makes Concordium Different?