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KyberNetwork: trustless cross-chain trading with chain relays

Chain Relays or a Practical Approach for Cross-chain Trades Lets relay!*

KyberNetwork’s long term vision is to support trading between different cryptocurrencies, e.g between BTC and ETH, ETC and any ETH tokens. In order to do so, we rely on technology and protocols that allow communication between these cryptocurrency networks. We are glad to see many qualified teams including Polkadot and Cosmos — just to name a few — working on the problem. Unfortunately, these projects are still under heavy development and either have yet to announce any release date (e.g. Polkadot) or only work for proof of stake-based blockchains (e.g. Cosmos). Thus, a practical solution for interchain communication between existing blockchains is still yet to be explored. In this post, we discuss a practical solution that has been largely overlooked: chain relays. We conclude by describing how KyberNetwork is planning to use and maintain chain relays for our use cases.

What is a Chain Relay?

A chain relay for a blockchain X, or X-relay for brevity, is a way to implement and maintain light client for blockchain X within an Ethereum smart contract. The contract essentially stores all block headers which are much lighter than the size of the chain state or the entire blockchain, hence the term light client. With the block headers, it is sufficient to verify if a transaction has been included, or even the blockchain state, depending on what are stored in a block header. Thus, X-relay allows any contract in Ethereum to verify transactions, and sometimes even account states of the blockchain X via the implemented light client.

Why Chain Relays Are Powerful?

Having a light client of a cryptocurrency X running on Ethereum enables strong interoperability between Ethereum and the said cryptocurrency. For example, one can create a contract to receive payment in X-coin by fixing a beneficiary address in X that one controls. The contract then verifies any transaction via X...

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