Centrifuge Chain — the Gateway for Real-World Assets to the Blockchain Multiverse
A company, such as Paper Records, uses the Centrifuge P2P Network to sign and send an invoice to Spotify. Spotify verifies receipt of the document and its correctness with its signature and sends an updated, signed version of the document back to Paper Records. Ethereum is used for the node identities, allowing Paper Records to look up Spotify and for Spotify to verify Paper Records. Paper Records is then able to anchor the document hash with both signatures onto Ethereum. Using these elements Paper Records can now mint an NFT on Ethereum that represents the unpaid invoice — and use this NFT as collateral to access financing. Third parties, from traditional lenders to DeFi lending pools, can verify the value of the NFT against the on-chain anchors and identities, as well as get access granted to the off-chain document whose authenticity can be verified against the on-chain anchor as well.
Though we are built on and love Ethereum, we have investigated and started building our own chain in order to achieve efficiencies and new possibilities over our architecture as it exists today.
Though there are many positive qualities to building on Ethereum, these same attributes also form the motivation for us to build our own chain as a solution.
Ethereum is designed to serve many different purposes and types of use cases. It is built to be a core blockchain that prioritizes security. This has the benefit of enabling many different types of applications to be built on Ethereum. However, this multi-purpose design means that many types of operations are slow and costly. This creates long wait times for our transactions, which can be especially long and expensive depending on the current gas price. In the case of Centrifuge — our anchor transactions on Ethereum end up costing around 0.1EUR and the cost to mint an NFT costs roughly 1.7EUR (and that is at low gas prices!).
The Uncertain Road to Eth2.0
Another important quality of Ethereum is its high security guarantees. Due to the perceived high value of the Ethereum Network, it is attractive to mine ether, giving Ethereum a high hash rate. The higher the hash rate, the higher the cost of an attack on a Proof-of-Work chain. However, this approach to block production is inefficient and results in a deadweight loss; creating unnecessarily high security costs. Though Ethereum plans to release Ethereum 2.0, which is intended to lower transaction costs and increase throughput while maintaining high security guarantees — this transition will be a long process with an uncertain timeline.
Large Ecosystem & Community Driven Governance
Ethereum has a large and valuable ecosystem of developers, Dapps, hackathons, and global communities. However, governance for such a diverse group can be complicated. Features such as privacy, though important, are not a high priority to the larger community. As a result, Ethereum support for zk-SNARKs is limited and inefficient. Privacy is an important feature for Centrifuge users — and is therefore a priority for Centrifuge. Though support may be added to Ethereum in the future, it is not something that we can rely on.
Published at Fri, 22 Nov 2019 13:34:53 +0000