Fully on-chain blockchain systems: a feasibility analysis based on LogLog and ZipZap

Abstract

This thesis compares two separate tokenization systems to ascertain the contexts where a fully on-chain approach is viable. Both systems were developed by the author, featuring somewhat homologous functionality in spite of great differences in industrial context and performance. Note that although the work on LogLog has been published already, work on ZipZap is still ongoing. Thus, descriptions of the latter will not be as rigorous as with the former. LogLog When it comes to sustainability, many certification systems live and die by their capacity to track a volume from source to destination. This is because customers (and consequently, auditors) are increasingly concerned with where products are sourced (“Are these local materials?”) and what is their environmental impact is (“How much CO2 did this generate? Was this made from recycled goods?”). The Forest Sustainability Council (FSC), one of the largest forestry authorities in North America, created many of its standards and frameworks to meet these market demands. The FSC is responsible for tracking the provenance of all wood volumes that its members use and labelling the volumes accordingly. Though widely respected, their certifications rely on trusted third parties and extensive record keeping, two characteristics that do not efficiently address problems like bribery and “creative” inventory practices. Blockchain technology is an attractive solution, since it offers many novel and valuable improvements to provenance-based certifications, such as increased traceability, auditability and access to information. However, distributed ledger systems are not without their limitations. Notably, they are often inefficient in their capacity to store large amounts of data and/or metadata, which is why many researches often suggest a multiple-database approach where large files are kept off-chain. That type of design entails significant trade-offs for the sake of lower transaction fees: imperfect traceability (changes to off-chain files are not necessarily tracked), lower availability (introducing more systems that all need to be up) and a diminished level of informational integrity (off-chain files are much more easily modified). In contrast with these approaches, we propose LogLog: an entirely on-chain system for tracking wood volumes throughout a supply chain and enforcing FSC certification standards. LogLog is ERC-1155 compliant and meets the base requirements for a forestry supply chain. Our Proof-of- Concept demonstrates the power and flexibility of smart contracts when expressing complex domain-specific semantics related to supply chains in the forest industry (like determining the correct labelling for a volume using the FSC category matrix, or calculating the FSC percentage of a volume, for example). We successfully implemented two reference implementations of our design using Solidity and deployed them over the Ethereum blockchain. Our evaluation uses realistic parameters and suggests our prototype is a viable alternative to current multiple-database systems in contexts where data integrity is a strict requirement. ZipZap In the last few years, the energy industry has increasingly invested into smart grid technologies. Smart grids are power grids with a high degree of automation and enhanced data collection capacities. However, another concurrent industry trend is the decentralization of the aforementioned power grids. More data means more risks and although a higher degree of decentralization means greater availability, it also results in a massive attack surface area increase. These facts have been some of the primary motivations driving industry specialists to consider blockchain systems to help automate operations (using smart contracts) and ensure data integrity (due to blockchains’ inherent cryptographic characteristics). HydroQuebec is no exception to this trend. Having a vested interest in developing possible ways to integrate DLTs into smart grids, they sponsored our research into the topic. ZipZap is the first step towards a full-fledged blockchain-based smart grid system. At its current development stage, ZipZap is a blockchain solution for local energy tokenization, although its range of use cases will expand to include at least some form of price bidding and IoT integration. Also, just like LogLog, ZipZap is ERC-1155 compliant. We created three ZipZap prototypes: Heavyweight, Featherweight and Lightweight. The first one is fully on-chain, and the two latter are hybridized. All three were developed in Solidity and deployed using Ethereum. Our evaluation uses realistic parameters and suggests that although none of the current prototypes are economically viable, changes in scale and/or choice of blockchain system could easily result in a viable alternative with otherwise minimal data structure modifications.

Date	21 Jun 2021
Original language	American English
Awarding Institution	École de technologie supérieure
Supervisor	Kaiwen Zhang (Supervisor) & Mustapha Ouhimmou (Co-supervisor)