DeFi Product: Interoperability Enabling Blockchain System (IEBS)

Defi Product Proposal
Name
Institution Affiliation
Instructor
Course
Date
Defi Product Proposal
Elevator Pitch
The current proposal recommends a Defi product called Interoperability Enabling Blockchain System (IEBS) that will enable unrelated blockchains to securely relate with one another such that data or value will flow between different blockchains. For instance, between Bitcoin and Ethereum without any intermediary. The proposed product seeks to break down barriers between different blockchain ecosystems and enable middleman-free communication between these networks, that the DeFi technologies strive to achieve (Zetzsche et al., 2020). It can be considered a network of networks, allowing even different blockchain architectures to interact. This will be done through specialized blockchains that have their features and tokens.
IEBS will be based on a blockchain designated as Dispatch Chain and several pre-created analogous chains called Analochains. Furthermore, it will consist of a connecting layer referred to as Conduit that will allow the transfer of data and value across blockchains such as Ethereum, Bitcoin, Cardano, Avalanche, Hyperledger Fabric, Hyperledger Sawtooth, Chainalysis KYT, and IMB Blockchain, among other blockchains. Thus, IEBS will not be based on the existing blockchain like DeFi, such as Decentraland (Blockchain Council, 2022). Rather will utilize a specifically designed blockchain to facilitate communication between existing blockchains.
Part One
Today, most blockchains are struggling with interoperability and scalability issues, and most users of DeFi products would want a platform where such problems have been eliminated (Holotescu, 2018). IEBS aims to solve this problem by providing a platform with improved speed of transactions and where users can transact across various blockchains without any problem. It attempts to achieve a fully decentralized web under user control and provides an interoperable protocol to scale up the network using shards or segments. The product will connect private chains, public networks, and oracles, creating a new form of the web where independent blockchains can securely exchange data and enable transactions (Holotescu, 2018). As indicated above, the IEBS will use two sets of blockchains, Dispatch Chain and Analochains. The Dispatch chain will be responsible for reaching a consensus and delivering transactions between Analochains. Analochains will be application-specific blockchains within the IEBS network. Each Analochain will be a complete blockchain in its own right, with its logic and functionality. Interoperability Enabling Blockchain System Coin (IEBSC) will be the native token currency of the IEBS, and it will be its smallest unit. IEBSCs will facilitate payments, network governance, staking, reward incentives, transaction fees, and other engagement processes. Tokens might be locked as part of connecting new chains to the IEBS network or will play other roles in the ecosystem. Unlike most other cryptocurrencies, the supply of IEBSC will not be limited. Rather it will aim to incentivize the network to adjust dynamically to users’ staking participation rates.
Like other blockchain ecosystems, IEBS will not allow a handful of large firms to control how users interact with the technology or with one another (Holotescu, 2018). Additionally, there will be no central authority with the power to control users’ data security and privacy for personal gain and incentives. Websites people use today require them to agree to certain terms and conditions each time they use an application or software. Often, they do not even read such terms because they do not have the free will to reject or accept them. If they want to use any web tool or application, they must abide by the terms crafted by the manufacturers of such technological tools (Holotescu, 2018). Using these applications creates enormous valuable data stores that provide detailed information about their personal lives. This means they make their data free, maintaining a limit of trust that the companies that control it will not manipulate it. Nevertheless, this is far from the truth because the companies and authorities possessing such data can take advantage of it for personal use. For instance, most companies use data analytic tools to establish valuable insights to streamline their operations. They do so without the consent of data owners (customers). With the proposed DeFi product, users can control their data and use it whenever and however they want (Holotescu, 2018). Blockchain technology will play a crucial role in improving data security. A decentralized web breaks corporate stranglehold and emphasizes users’ sovereignty.
Part Two
The customers of IEBS will be companies and individuals performing various transactions through cryptocurrencies and using blockchains such as Bitcoin, Ethereum Hyperledger Sawtooth, and Chainalysis KYT, among others. Today, many companies use crypto-currencies in various transactions using these blockchains and will target customers for the proposed product (Rejeb et al., 2021). The benefits these users will enjoy using the platform include improved scalability, cross-chain functionality and interoperability, meaning that they will be able to perform several transactions within a short period and will be able to transact across different blockchains without major hindrances as observed in independent blockchains. Several scalability issues have plagued other blockchains, resulting in high transaction fees and reduced transaction speeds due to congested networks. IEBS network intends to solve this scalability problem by introducing a multiple-chain model that renders transactions fast, trustless and decentralized. Customers will be attracted to IEBS due to its architecture which makes it different from other blockchains (Rejeb et al., 2021). Thus, improved scalability will be achieved via the two chains mentioned earlier to increase the number of transactions per second. The proposed product will have a protocol with two types of chains. The main chain, called the Dispatch Chain, will be where all transactions will be finalized. Analochains will be doing the heavy lifting by connecting to the Dispatch chain to optimize transactions.
Applying this approach will allow IEBS to support thousands of transactions per second (Holotescu, 2018). Users will also enjoy the ease of development. The substrate is a crucial building block in the blockchain sector. By connecting to the system via Analochains, users of the connected chai...