# XClaim notes

> XCLAIM constructs a publicly verifiable audit log of user actions on both
> blockchains and employs collateralization and punishments to
> enforce the correct behavior of participants. Thereby, XCLAIM
> follows a proof-or-punishment approach, i.e., participants must
> proactively prove adherence to system rules.

## Useful terminology

- Trustless, Interoperable, Cryptocurrency-Backed Assets
- Cross-blockchain trading protocols
- Cross-chain exchanges
- Interoperability
- To remove the need for trusted intermediaries leverage
- verifiable smart contracts
- chain relays
- Backing blockchain B of cryptocurrency b and an issuing blockchain I with underlying CBA i(b) [In our case Bitcoin is the backing blockchain and RSK is the issuing blockchain]
- Primary techniques:
- (i) constructing secure audit logs on both the backing blockchain B and the issuing blockchain I to trace all actions in the system;
- (ii) transaction inclusion proofs via chain relays to prove correct behaviour on the backing blockchain B to the iSC;
- (iii) collateralization to incentivize correct behaviour through proof-or-punishment.

## Definitions
### Cryptocurrency-backed assets (CBAs)
Assets deployed on top of a blockchain I that are backed
by a cryptocurrency on blockchain B. We denote assets in I as i, and cryptocurrency on B as b. We use i(b) to further denote when an asset on I is backed by b. We extend the definition of assets by Androulaki et al. [31] and describe a CBA through the following fields:
- issuing blockchain, the blockchain I on which the CBA i(b) is issued.
- backing blockchain, the blockchain B that backs i(b) using cryptocurrency b.
- asset value, the units of the backing cryptocurrency b used to generate the asset i(b).
- asset redeemability, whether or not i(b) can be redeemed on B for b.
- asset owner, the current owner of i(b) on I.
- asset fungibility, whether or not units of i(b) are interchangeable.

We define a CBA as symmetric if the total amount of backing units b is equivalent to the total amount of issued units i(b), i.e., |b| = |i(b)|, and as asymmetric if the CBA exhibits an alternate backing rate, i.e., |b| <> |i(b)|. In XCLAIM, we restrict CBAs to be symmetric cryptocurrency-backed assets.

Moreover, CBAs can be divided and merged back together as necessary. We defer the analysis of alternate CBAs, such as asymmetric and non-fungible CBAs, to future work.

### XClaim actors
- CBA Requester. Locks b on B to request i(b) on I.
- CBA Sender. Owns i(b) and transfers ownership to another user on I.
- CBA Receiver. Receives and is assigned ownership over i(b) on I.
- CBA Redeemer. Destroys i(b) on I to request the corresponding amount of b on B.
- CBA Backing Vault (vault). A (non-trusted) intermediary liable for fulfilling redeem requests of i(b) for b on B.
- Issuing Smart Contract (iSC). A public smart contract responsible for managing the correct issuing and exchange of i(b) on I. The iSC ensures correct behaviour of the vault.

To perform these roles in XCLAIM, actors are identified on a blockchain using their public/private key pairs. As a result, the requester , redeemer and vault must maintain key pairs for both blockchains B and I. The sender and receiver only need to maintain key pairs for the issuing blockchain I. iSC exists as a publicly verifiable smart contract on I.

### Desirable security properties with regards to CBAs
- Auditability. Any user with read access to blockchains B and I can audit the operation of XCLAIM and detect protocol failures.
- Consistency. No CBA units i(b) can be issued without the equivalent amount of backing currency b being locked, i.e., that |b| = |i(b)|.
- Redeemability. Any user can redeem CBAs i(b) for backing currency b on B, or be reimbursed with equivalent economic value on I.
- Liveness. Any user in XCLAIM can issue, transfer and swap CBAs without requiring a third party, i.e., liveness relies only on the secure operation of B and I.
- Atomic Swaps. Users can atomically swap XCLAIM CBAs against other assets on I or the native currency i.

### Desirable functional properties
- Scale-out. The total amount of CBAs available for circulation increases with the total amount of backing currency locked up in blockchain B. Any user can contribute to this amount by assuming the role of the vault.
- Compatibility. XCLAIM does not rely on a single cryptocurrency implementation with a set of specific features. Instead, it allows to issue assets i(b) on any blockchain I that supports smart contracts, backed by any blockchain B that supports only basic fund transfers between parties.
This enables XCLAIM to maintain backward compatibility
with existing blockchains that do not provide smart contract support, such as Bitcoin.

### Protocols
- Issue
- Transfer
- Swap
- Redeem

### Chain Relays: Cross-Chain State Verification
- Provides Transaction inclusion verification and Consensus verification

### Attacks
- Chain Relay Poisoning
- Replay Attacks on Inclusion Proofs
- Counterfeiting
- Permanent Blockchain Splits
- Denial-of-Service Attacks
- Sybil Attacks
- Extortion

## Further research
- cross-chain payment channels