587 lines
15 KiB
Markdown
587 lines
15 KiB
Markdown
# Use Case 3: Multi-Party State Channels for DeFi
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## The State Channel Limitation
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Traditional state channels revolutionized scaling but hit a fundamental wall:
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### Current State Channel Problems
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1. **Limited to Two Parties**
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- Payment channels work great for Alice ↔ Bob
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- Multi-party channels require complex coordination
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- Each state update needs signatures from ALL parties
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- One offline party blocks everyone else
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2. **Sequential State Updates**
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- State N must be agreed before State N+1
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- Concurrent operations impossible
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- Reduces to blockchain-like consensus problem
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- Defeats the purpose of off-chain scaling
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3. **Complex Dispute Resolution**
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- Must track latest state from ALL parties
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- Challenge periods for each update
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- Capital locked during disputes
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- Griefing attacks are cheap
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## The BFT-CRDT Solution: Parallel State Channels
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Instead of sequential states, use CRDTs for concurrent state updates:
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```
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Traditional Multi-Party Channel:
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State 1 → State 2 → State 3 → State 4
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↓ ↓ ↓ ↓
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[All sign] [All sign] [All sign] [All sign]
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BFT-CRDT Multi-Party Channel:
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State 1 → Alice updates ↘
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→ Bob updates → [CRDT Merge] → Final State
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→ Carol updates ↗
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↓
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[Independent updates]
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```
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### Key Innovation: Conflict-Free Parallel Operations
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- Participants update state independently
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- Updates merge automatically via CRDT rules
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- No coordination needed between parties
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- Byzantine participants can't corrupt state
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## Architecture Deep Dive
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### State Channel Components
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```rust
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pub struct MultiPartyChannel {
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// Channel identity
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pub channel_id: ChannelId,
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pub participants: Vec<Participant>,
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pub params: ChannelParams,
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// CRDT state
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pub balances: BalanceCRDT,
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pub orders: OrderBookCRDT,
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pub positions: PositionCRDT,
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pub operations: OperationLog,
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// Security
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pub dispute_window: Duration,
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pub bonded_stake: Map<ParticipantId, u128>,
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}
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pub struct Participant {
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pub id: ParticipantId,
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pub pubkey: PublicKey,
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pub role: ParticipantRole,
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pub permissions: Permissions,
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}
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pub enum ParticipantRole {
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Trader,
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MarketMaker,
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Liquidator,
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Observer,
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}
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```
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### CRDT State Types
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```rust
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// 1. Balance CRDT - tracks token movements
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pub struct BalanceCRDT {
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// Each participant tracks their operations
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operations: Map<ParticipantId, Vec<BalanceOp>>,
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// Cached balances for quick lookup
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cached_balances: Map<(ParticipantId, TokenId), i128>,
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}
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pub enum BalanceOp {
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Deposit { amount: u128, proof: DepositProof },
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Withdraw { amount: u128, nonce: u64 },
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Transfer { to: ParticipantId, amount: u128, nonce: u64 },
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Lock { amount: u128, until: Timestamp, reason: LockReason },
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}
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// 2. OrderBook CRDT - decentralized exchange
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pub struct OrderBookCRDT {
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orders: Map<OrderId, Order>,
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executions: Map<ExecutionId, Execution>,
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cancellations: Set<OrderId>,
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}
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// 3. Position CRDT - derivatives/lending
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pub struct PositionCRDT {
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positions: Map<PositionId, Position>,
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liquidations: Map<PositionId, Liquidation>,
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funding_payments: Vec<FundingPayment>,
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}
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```
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### Merge Rules
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```rust
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impl Merge for BalanceCRDT {
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fn merge(&mut self, other: &Self) {
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// Merge operations from each participant
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for (participant, ops) in &other.operations {
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self.operations
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.entry(*participant)
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.or_default()
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.extend(ops.clone());
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}
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// Recalculate balances
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self.recalculate_balances();
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}
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fn recalculate_balances(&mut self) {
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let mut balances = Map::new();
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// Apply all operations in causal order
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let all_ops = self.get_causal_order();
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for op in all_ops {
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match op {
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Deposit { participant, amount, token } => {
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*balances.entry((participant, token)).or_default() += amount;
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}
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Transfer { from, to, amount, token } => {
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let from_balance = balances.entry((from, token)).or_default();
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if *from_balance >= amount {
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*from_balance -= amount;
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*balances.entry((to, token)).or_default() += amount;
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}
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// Invalid transfers are ignored
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}
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// ... handle other operations
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}
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}
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self.cached_balances = balances;
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}
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}
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```
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## Use Case Examples
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### 1. Decentralized Order Book Exchange
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Multiple market makers can update orders simultaneously:
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```rust
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// Market Maker A
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channel.place_order(Order {
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id: "order_a_1",
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maker: "maker_a",
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side: Buy,
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price: 2500,
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amount: 10,
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});
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// Market Maker B (simultaneously)
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channel.place_order(Order {
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id: "order_b_1",
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maker: "maker_b",
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side: Sell,
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price: 2505,
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amount: 15,
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});
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// Trader C (simultaneously)
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channel.execute_market_order(MarketOrder {
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id: "market_c_1",
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taker: "trader_c",
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side: Buy,
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amount: 5,
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max_price: 2510,
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});
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// All operations merge correctly:
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// - Both orders are placed
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// - Market order executes against best price
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// - No coordination needed
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```
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### 2. Multi-Party Lending Pool
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```rust
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pub struct LendingPoolCRDT {
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// Deposits can happen in parallel
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deposits: Map<(User, Asset), Amount>,
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// Borrows check against total liquidity
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borrows: Map<BorrowId, Borrow>,
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// Interest accrual is time-based
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interest_checkpoints: Vec<InterestCheckpoint>,
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// Liquidations are deterministic
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liquidations: Map<BorrowId, Liquidation>,
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}
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// Parallel operations example:
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// Alice deposits USDC
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pool.deposit("alice", "USDC", 10000);
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// Bob borrows ETH (simultaneously)
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pool.borrow("bob", "ETH", 5, collateral: ("USDC", 10000));
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// Carol deposits ETH (simultaneously)
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pool.deposit("carol", "ETH", 10);
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// Dave liquidates Bob (simultaneously)
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pool.liquidate("dave", "bob", borrow_id: "borrow_1");
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// CRDT ensures consistent state:
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// - All deposits are recorded
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// - Borrow succeeds if liquidity available
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// - Liquidation succeeds if position unhealthy
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// - No race conditions or conflicts
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```
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### 3. Derivatives Trading (Perpetual Futures)
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```rust
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pub struct PerpetualsCRDT {
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positions: Map<(Trader, Market), Position>,
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orders: OrderBookCRDT,
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funding_rate: FundingRateCRDT,
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liquidations: Set<PositionId>,
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}
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// Complex parallel scenario:
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// 1. Alice opens long position
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perps.open_position("alice", "ETH-PERP", size: 100, leverage: 10);
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// 2. Bob opens short (simultaneously)
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perps.open_position("bob", "ETH-PERP", size: -50, leverage: 5);
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// 3. Market maker updates orders (simultaneously)
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perps.update_orders("maker", new_orders);
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// 4. Liquidator bot checks positions (simultaneously)
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perps.liquidate_unhealthy_positions("liquidator");
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// 5. Funding rate updates (simultaneously)
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perps.update_funding_rate(timestamp);
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// All operations compose correctly via CRDT
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```
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### 4. Automated Market Maker (AMM) with Dynamic Fees
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```rust
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pub struct AmmCRDT {
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// Liquidity can be added/removed in parallel
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liquidity: Map<Provider, LiquidityPosition>,
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// Swaps execute against current state
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swaps: Vec<Swap>,
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// Fee tier votes aggregate
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fee_votes: Map<Provider, FeeTier>,
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// Cached pool state
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pool_state: PoolState,
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}
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impl AmmCRDT {
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fn execute_swap(&mut self, swap: Swap) -> Result<SwapReceipt> {
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let state = self.calculate_pool_state();
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// Calculate output using constant product
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let output = calculate_output(
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swap.input_amount,
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state.reserve_in,
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state.reserve_out,
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state.current_fee
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);
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// Record swap
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self.swaps.push(Swap {
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id: swap.id,
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trader: swap.trader,
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input: swap.input_amount,
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output,
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fee_paid: calculate_fee(swap.input_amount, state.current_fee),
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timestamp: swap.timestamp,
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});
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Ok(SwapReceipt { output, fee: state.current_fee })
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}
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}
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```
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## Settlement Mechanisms
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### Optimistic Settlement
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```solidity
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contract MultiPartyChannelSettlement {
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struct ChannelState {
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bytes32 stateRoot;
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uint256 version;
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uint256 timestamp;
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bytes signatures;
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}
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mapping(bytes32 => Channel) public channels;
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mapping(bytes32 => ChannelState) public proposedStates;
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function proposeSettlement(
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bytes32 channelId,
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bytes calldata encodedState,
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bytes[] calldata signatures
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) external {
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require(signatures.length >= channels[channelId].threshold);
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ChannelState memory state = decodeState(encodedState);
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proposedStates[channelId] = state;
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emit SettlementProposed(channelId, state.stateRoot, block.timestamp);
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}
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function challengeSettlement(
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bytes32 channelId,
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bytes calldata newerState,
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bytes[] calldata signatures
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) external {
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ChannelState memory newer = decodeState(newerState);
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require(newer.version > proposedStates[channelId].version);
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proposedStates[channelId] = newer;
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emit SettlementChallenged(channelId, newer.stateRoot);
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}
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function finalizeSettlement(bytes32 channelId) external {
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Channel storage channel = channels[channelId];
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require(
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block.timestamp >=
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proposedStates[channelId].timestamp + channel.disputeWindow
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);
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// Execute settlement based on CRDT state
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executeSettlement(channelId, proposedStates[channelId]);
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}
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}
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```
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### Emergency Exit
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```rust
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// Any participant can exit with their provable balance
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impl MultiPartyChannel {
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fn emergency_exit(&mut self, participant: ParticipantId) -> ExitProof {
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// Calculate participant's balance from CRDT
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let balance = self.calculate_balance(participant);
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// Generate Merkle proof of operations
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let proof = self.generate_balance_proof(participant);
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// Create exit request
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ExitProof {
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channel_id: self.channel_id,
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participant,
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balances: balance,
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operations_root: self.operations.merkle_root(),
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proof,
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timestamp: now(),
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}
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}
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}
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```
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## Security Analysis
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### Byzantine Fault Tolerance
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```rust
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// Byzantine participant can only:
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// 1. Refuse to sign (but channel continues)
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// 2. Submit invalid operations (rejected by CRDT rules)
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// 3. Go offline (others continue operating)
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impl SecurityChecks for MultiPartyChannel {
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fn validate_operation(&self, op: Operation) -> Result<()> {
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match op {
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Operation::Transfer { from, amount, .. } => {
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// Check balance sufficiency
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ensure!(self.get_balance(from) >= amount);
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// Check signature
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ensure!(self.verify_signature(&op, from));
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}
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Operation::OrderPlace { maker, .. } => {
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// Check maker has funds
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ensure!(self.can_place_order(maker, &order));
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// Check risk limits
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ensure!(self.check_risk_limits(maker));
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}
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}
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Ok(())
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}
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}
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```
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### Economic Security
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```rust
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pub struct ChannelSecurity {
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// Participants must bond stake
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pub min_stake: u128,
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// Misbehavior leads to slashing
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pub slashing_conditions: Vec<SlashingCondition>,
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// Rewards for honest participation
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pub reward_mechanism: RewardMechanism,
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}
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pub enum SlashingCondition {
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InvalidStateSubmission,
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DoubleSpending,
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Griefing,
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Censorship,
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}
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```
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## Performance Characteristics
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### Throughput
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- **Two-party channels**: ~1000 tx/second
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- **Multi-party (10 participants)**: ~10,000 tx/second
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- **Multi-party (100 participants)**: ~50,000 tx/second
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*Performance improves with more participants due to parallelism*
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### Latency
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- **Operation confirmation**: <10ms (local CRDT update)
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- **Cross-participant sync**: ~100ms
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- **On-chain settlement**: 1 block + dispute window
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### Capital Efficiency
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```
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Traditional Channel (2-party):
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- Capital locked: 100% of channel capacity
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- Utilization: Often <50%
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CRDT Multi-party Channel:
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- Capital locked: Stake + active positions
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- Utilization: Can exceed 100% through netting
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```
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## Implementation Guide
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### Step 1: Initialize Channel
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```typescript
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const channel = new MultiPartyChannel({
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participants: [
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{ id: "alice", pubkey: alicePubkey, stake: 1000 },
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{ id: "bob", pubkey: bobPubkey, stake: 1000 },
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{ id: "carol", pubkey: carolPubkey, stake: 1000 },
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],
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rules: {
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minStake: 100,
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disputeWindow: 3600, // 1 hour
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maxLeverage: 10,
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},
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});
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await channel.deployContract();
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await channel.fundChannel();
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```
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### Step 2: Perform Operations
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```typescript
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// Each participant operates independently
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// Alice places order
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await channel.placeOrder({
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maker: "alice",
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side: "buy",
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price: 2500,
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amount: 10,
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});
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// Bob places order (simultaneously)
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await channel.placeOrder({
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maker: "bob",
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side: "sell",
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price: 2505,
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amount: 15,
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});
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// Carol executes trade (simultaneously)
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await channel.executeTrade({
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taker: "carol",
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buyOrderId: "alice_order_1",
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sellOrderId: "bob_order_1",
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amount: 5,
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});
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```
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### Step 3: Sync and Settle
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```typescript
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// Periodic sync between participants
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await channel.syncWithPeers();
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// Anyone can propose settlement
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const state = channel.getCurrentState();
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const signatures = await channel.collectSignatures(state);
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await channel.proposeSettlement(state, signatures);
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// After dispute window
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await channel.finalizeSettlement();
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```
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## Future Enhancements
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### 1. Cross-Channel Routing
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```rust
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// Route payments/trades across multiple channels
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pub struct ChannelNetwork {
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channels: Map<ChannelId, MultiPartyChannel>,
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routing_table: RoutingTable,
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}
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```
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### 2. Zero-Knowledge Privacy
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```rust
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// Hide balances and operations while maintaining verifiability
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pub struct PrivateOperation {
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commitment: Commitment,
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nullifier: Nullifier,
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proof: ZkProof,
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}
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```
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### 3. Automated Market Making
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```rust
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// Built-in AMM algorithms for liquidity provision
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pub struct AmmStrategy {
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curve: CurveType,
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parameters: AmmParams,
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rebalancing: RebalancingRules,
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}
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```
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## Conclusion
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BFT-CRDT multi-party state channels represent a paradigm shift in off-chain scaling:
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- **Massive Parallelism**: Thousands of operations per second
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- **True Multi-Party**: Not limited to two participants
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- **No Coordination**: Participants operate independently
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- **Byzantine Tolerant**: System continues despite malicious actors
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- **Capital Efficient**: Better utilization through netting
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This enables entirely new categories of decentralized applications:
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- High-frequency decentralized exchanges
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- Real-time prediction markets
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- Massively multiplayer financial games
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- Instant cross-chain swaps
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- Decentralized derivatives trading
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The key insight: **By embracing eventual consistency instead of fighting for strict ordering, we unlock massive scalability while maintaining security.** |