Business Technology

Datachain Teams Up With NTT DATA For Blockchain Interoperability

Datachain, Inc. (Datachain) has started technical cooperation with NTT DATA Corporation (NTT DATA) to achieve interoperability between multiple different blockchains.

As part of the collaboration, the company conducted the world’s first demonstration experiment on the automation of value transfer between Hyperledger Fabric and different blockchains using Inter-Blockchain Communication (IBC), which is
classified as “Relay method”.

The demonstration successfully validated the technical feasibility of Datachain’s Cross Framework and IBC module as a method to achieve interoperability without relying on third party intermediaries.

Datachain will continue to deepen its collaboration with NTT DATA, especially in the area of interoperability, to achieve social implementation of blockchain.

Recently, the commercialization of blockchains has accelerated in a variety of fields.
There are many examples of its application worldwide, and commercialization projects are also increasing in Japan.

As commercialization of blockchain progresses and services are implemented on different blockchains, there is a soaring demand for interoperability.

In addition, there is a growing movement around crypto assets and digital currencies throughtout the world, including Japan, and interoperability technology has become even more important to connect the blockchains which handle these assets with the
blockchains for various payment services.

There are two methods of interoperability which do not rely on third parties to mediate transactions: “HTLC method” and “Relay method”.

Based on the demonstrations conducted by NTT DATA, they concluded that it would be extremely difficult for HTLC (*1) to solve the following three issues (trilemma) simultaneously as a settlement function for service operators:

(1) On different blockchain platforms,
(2) Service users control private keys by themselves, and
(3) Execute transactions automatically.

Datachain’s Cross Framework and IBC module (* 2) adopt “Relay method” which performs mutual verification on each blockchain, and there is a possibility of solving trilemma for service operation in HTLC method as shown in the above figure.

Against this backdrop, Datachain and NTT DATA jointly conducted a demonstration experiment to verify the technical feasibility of the Cross Framework and IBC modules in value transfer between multiple different blockchains.

*1 HTLC method: HTLC stands for “Hashed Time-Locked Contract”. One of the typical ways to achieve interoperability.
*2 Cross Framework and IBC module: Solutions developed by Datachain to achieve interoperability. See “Technical Achievements” for details.

Before the demonstration, both companies prepared the “trade platform” built on Hyperledger Fabric and the “payment platform” built on Cosmos (Tendermint) (*3), then conducted DvP settlement for “transfers of trade documents on the trade platform” and “transfer of funds on the payment platform” as shown in the figure below.

The following figure shows a comparison between “HTLC method” and “Cross Framework and IBC module implementing Relay method” in the transactions performed by importers and exporters (service users).

HTLC method requires both service users (importers and exporters) to confirm and sign the other party’s transaction solely by themselves. They must perform complicated processing during transactions.

Although they can request the service operator to automatically confirm and sign the transactions, it is a significant burden for the service operator due to the large restrictions on private key management.

Datachain’s Cross Framework IBC module, on the other hand, implements “Relay method,” which allows service users to automatically execute transactions (no action required for the service users during transaction) without having to pass a private
key to the administrator. It is also possible to implement complex smart contracts that involve arbitrary data linkages, which are difficult to support by HTLC method.

These features enable automatic execution of Atomic Swap (*4) between transaction platform and settlement platform, which solves the trilemma, by utilizing Cross Framework and IBC module.

*3 Build on Cosmos (Tendermint): Use Tendermint as the consensus engine and build applications with Cosmos-SDK.
*4 AtomicSwap: A mechanism to enable the transfer of assets between different blockchains without the intervention of a third party (e.g. exchange).

Potential Applications and Business Value
Based on the results of the demonstration experiment, Datachain confirmed the
possibility of efficient, practical, and convenient settlement using digital currency, and the company is currently considering applications in the following fields.

  1. Value transfer of trade-related securities and funds on TradeWaltz®, the trade information collaboration platform operated by TradeWaltz Inc.
  2. DvP settlement on the securities platform which NTT DATA and Securitize Japan, Inc. have started joint research
  3. Simultaneous transfer of rights and funds related to P2P electricity and nonfossil certificates in electricity trading
  4. Automatic payment of insurance claims by linking the blockchain which manages diagnostic data and the blockchain which manages insurance contracts (linking arbitrary data as well as digital assets).

Other use cases will also be considered with various companies.

Technical Achievements
The technical achievements of the demonstration are as follows.

  1. The world’s first interoperability between Hyperledger Fabric and other blockchains via IBC

Using the internally-developed IBC module which supports Hyperledger Fabric, Datachain achieved the world’s first interoperability between Hyperledger Fabric and Cosmos (Tendermint) blockchains.

For more information about IBC module (Fabric-IBC) supporting Hyperledger Fabric, click here.

  1. Atomic Swap between multiple blockchains using Cross Framework

Using Cross Framework developed by Datachain, Cross-chain smart contract (smart contracts across different blockchains) can now be implemented to enable AtomicSwap between multiple blockchains. This enables DvP settlement of trade and settlement platforms.

For more information about Cross Framework, click here.

Future Initiatives
Datachain will continue to enhance its technical collaboration with NTT DATA focusing on blockchain interoperability. The company will conduct verification for practical use, such as verification of abnormal systems and improvement of
performance, to realize commercialization in FY2022 at the earliest.

The IBC module used in the demonstration will be compatible with Corda and Enterprise Ethereum (Hyperledger Besu/Quorum etc.) in the future, to meet the needs of more companies.

By providing “Interchain-bridge (*5)” solution which supports the connection of existing systems and blockchain foundations, Datachain will create a world in which various blockchains and existing systems can work together.

*5 Interchain-bridge: A solution which Datachain is currently developing to connect existing systems and blockchain foundations using IBC.

Message from Hisashi Matsunaga,
Executive Vice President and Director, NTT DATA Corporation:

As part of open innovation initiative, NTT DATA is challenging to create new service models with various venture companies. We are pleased to have the opportunity to collaborate with Datachain, who has a deep and extensive knowledge of interoperability.

Ensuring interoperability is critical to making the blockchain a new social infrastructure for the digital age. We would like to maximize the knowledge gained from this demonstration experiment to realize social infrastructure using blockchain.

About Datachain
Company Name : Datachain, Inc.
Representative: Tetsushi Hisata, Founder and CEO
Data Established: March 2018
Business: Planning and Development of Blockchain Technology
Head Office : 4-1-4 Roppongi, Minato-ku, Tokyo

* Company, product, and service names are trademarks or registered trademarks of their respective owners.