Kadena’s Interoperability Story Part II:

The World Economic Forum insists interoperability is a top concern for decision-makers interested in building blockchain solutions. Organizations do not want to find themselves on a blockchain platform that may limit their options for external collaboration in the future. They want to build scalable solutions that can grow with both the enterprise and the extended ecosystem if needed. Others may be preoccupied with making their existing systems interoperable with blockchain platforms, typically to submit or use data from a blockchain solution within their existing enterprise applications. Currently, with the fundamental problems of Bitcoin and Ethereum, interoperability can be a destructive force eroding the incentive for participants to use blockchain as a platform. Blockchain development company and founders of Corda, R3, introduced 5 key components of blockchain interoperability in this Forbes article: integration, initiation, interchain, intrachain, and interchange. Examining how Kadena has implemented each component into its platform, we will see why entities looking to interop can trust the platform to build future-proof-scalable applications.

Integrate

Businesses will not replace their existing applications with new blockchain ones overnight; they need to integrate with their existing systems. Kadena exists to become the ultimate settlement platform — It was built from the ground up with finance, security, regulation, and new paradigms in mind. It took all of that to build the next-gen system that can settle the entire United States stock market without breaking a sweat. Kadena is here to drive the next round of business and social transformation. Kadena’s founders have proven experience building software systems for leading financial and government organizations such as JPMorgan Chase Bank and the U.S. Securities and Exchange Commission. Kadena has shipped a platform that can work with various industries including but not limited to the banking industry, insurance industry, and healthcare industry; regardless of their current infrastructure. One healthcare firm already demonstrating use cases through Kadena is Rymedi, which thus far has been focused on deploying hepatitis C vaccines in Mongolia. It uses blockchain technology to govern its patient management system, and Kadena will become its gateway into the U.S. Kadena has also worked with Humana to create a “golden record” of provider contact data.

USCF is known as an early pioneer of ETPs, bringing previously difficult to access asset classes to all investors. The firm broke new ground with the launch of the first oil ETP, the United States Oil Fund, LP (USO), in 2006. Over the next decade, USCF designed and issued fifteen more ETPs and ETFs, across commodity and equity asset classes. Kadena is proud to collaborate with USCF in the investment space. USCF has a history of diligent, creative leadership and they are financial services market leaders who share Kadena’s vision of delivering everyday uses of blockchain.

The first crypto gas station implemented by Kadena makes it possible for new entities to participate in the network for free, no need to acquire gas beforehand! Onboarding new participants on the Kuro fast finality chain is seamless as well. With multiple chains and multiple legacy systems to integrate, it has been challenging to find a way for everything to interact. With Pact’s readability and Chainweb’s scaling, that challenge can be easily met to take digital assets to the next level.

Initiate

Pact can initiate a payment/settlement smart contract using a wide variety of existing payment rails (off-chain via oracles) and other blockchains, ensuring safe delivery is achieved with certainty that the payments have happened. Currently, on Ethereum, the moment you have two smart contracts trying to interact, you have a parity multi-sig problem. For example, if a dApp interacts with a price feed contract and the price feed contract fails, we might lose all of our value. The EVM only has single public key sig accounts and contract accounts. Gnosis enables multi-signature capabilities for decentralized finance, which allows them to secure, create, trade, and hold digital assets on Ethereum. Making a Gnosis multi-sig account can be expensive. Built-in multi-sig on Pact means that you don’t have to resort to more complicated smart contract solutions like Gnosis for Ethereum to get the security benefits of multi-sig. Multi-signature is absolutely where the future is, and Kadena is proud to lead the way. In Pact, single-sig and multi-sig are synonymous and thus are both natively supported out of the box. Since Pact has formal verification and is Turing-incomplete, interoperability is more predictable. Solidity can’t formally verify and, therefore, should not be used for settling billions of dollars worth of value.

Interchain

Chainweb allows interchain applications and smart contracts to be deployed/executed across protocols — Enabling solutions built on Terra such as Mirror Protocol to easily connect to a solution on another platform such as Kadenamint on Cosmos or Kusama on Polkadot, etc. Thinking long-term, opening the possibility for interchain operability is a must. ZelCore and Torus wallet integrations facilitate the use of KDA across a latitude of applications. In Kadena’s public blockchain, smart contract simple payment verification allows for automated cross-currency exchanges with multi-step pacts. Suppose that Alice wants to exchange her Kadena coin with Bob’s Bitcoin. She initiates a pact by escrowing her Kadena coin, and Bob responds with a Merkle proof of the corresponding transfer to her Bitcoin address. The pact then validates the proof of the transaction history and releases the escrowed funds to Bob’s Kadena account. To allow these exchanges, Pact requires direct support for the Merkle proofs of the other popular currencies, such as Bitcoin and Ether. For cross-currency exchanges, one must verify the authenticity of the Merkle proof by “linking” the proof’s root to the roots of the longest branch of an external cryptocurrency.

Since smart contracts cannot access the internet, an oracle must be trusted to provide the Merkle roots. Oracles allow smart contracts to interact with data and systems from outside their native blockchain (off-chain). Kadena has facilitated interchain communication by integrating API3 and Chainlink oracles, enabling smart contracts to interact with traditional non-blockchain systems that currently power global economies and other blockchains. With API3, it is possible to have dApps on Kadena that trigger dApps on different blockchains via an API. Decentralized price feeds from oracles will benefit market makers and traders on KADDEX as they were key in developing solutions against front running (MEV) and providing hedges against impermanent loss. Oracles also allow for a marketplace of data that might be too expensive to compute on-chain, which only benefits the quality of the smart contracts on Kadena’s platform and could be beneficial for something like calculating options pricing.

Intrachain

With just twenty chains (which already provide much more throughput than any other PoW blockchain on the market), miners can easily keep track of all chains and mine all chains concurrently. This means Chainweb allows applications to benefit from the intrachain value of the same underlying protocol — Kadena has the advantage of native oracles, which came from the need to transfer value intrachain but, once implemented, produced other benefits:

• Protocols such as KADDEX will easily interop with the upcoming DAO and NFT platforms set to launch on the platform to achieve a combined value.
• Developers have the freedom of using one or all chains to deploy apps on.
• Since the KDA token is just an instance of fungible (Kadena’s version of ERC-20), you don’t need a wrapped version like Ethereum had to do with Wrapped ETH, which facilitates intrachain transactions.

Chainweb’s twenty chains are just an account prefix. The important thing is that one can easily transfer value between all accounts within Chainweb, no matter what chain they are on. It’s the job of smart contracts and dApps to be abstract over chains. Ideally, and eventually, users won’t even have to be aware of chains.

Interchange

What happens if you want to interchange one platform for another? KADDEX and soon other dApps on Kadena can achieve that holy grail of interoperability by being completely agnostic to the underlying platform. With the power of high throughput blockchain and bridges, KADDEX will offer a dex-aggregator (like https://1inch.exchange/#/ aggregate “multiple ETH based Defis”) that will seamlessly aggregate multiple-protocol based platforms (Defi, DAO’s, NFT markets). The key to being “multi-protocol” is to actually be scalable while still being actually decentralized. KADDEX running on multiple chains, and then even on Cosmos or Polkadot, is the future. Chainweb will roll out to as many chains as demand dictates. Plus, we can then talk about KADDEX running on Cosmos/Kadenamint and Polkadot/Core Pact under the same multi-venue AMM system as the Kadena venues. Chainweb will be integrated with Ethereum, Celo, Polkadot, and Cosmos chains like Terra. On Ethereum, protocols like Maker will also collateralize wrapped KDA tokens. Since Celo is a platform focused on mobile Defi, bridging to KADDEX opens up the doors to more value. To this extent, Kadena’s partnership with Flux has been key since day one since ZelCore will make these interchanges seamless.

Kadena has one of the strongest interoperability stories in the industry. Projects that want to achieve interoperability are still struggling to be truly scalable and decentralized. Kadena addressed a major issue of current PoS interoperability systems by scaling Proof of Work and addressed the status quo with fundamental interoperability characteristics. Pact’s formal verification and Turing-incompleteness allow for safer and more predictable interoperability. Kadena’s public blockchain ecosystem brings blockchain application development and interoperability into a stronger, more effective paradigm.