Interledger. A Payment Protocol Inspired by IP. Adrian Hope-Bailie Evan Schwartz Stefan Thomas

Transcription

1 Interledger A Payment Protocol Inspired by IP Adrian Hope-Bailie Evan Schwartz Stefan Thomas

2 Agenda 1. Project Background 2. Ledgers and the Problem with Payments Today 3. Interledger Packet and Protocol Flow 4. Addressing and Routing 2

3 Agenda 1. Project Background 2. Ledgers and the Problem with Payments Today 3. Interledger Packet and Protocol Flow 4. Addressing and Routing 3

4 Project Background Interledger Whitepaper & Implementation Published in October 215 Established W3C Community Group (19+ participants) mailing list, #interledger on irc.w3.org Community Workshops Held in San Francisco and London First Real Money London Workshop 4

5 Business Adoption (Early Days) Ripple Integrating Into Core Product for Banks BigchainDB Integrating Into Blockchain Gatehub and Bitstamp Integrating Cryptocurrency Exchanges Interest From Central Banks, Banks, Payment Service Providers, Blockchain Companies, Foundations Seeking Payment Interoperability Interest From Protocol and Platform Developers Seeking to Incorporate Micropayments 5

6 IP and Project Resources Nonprofit Foundation Being Chartered in Luxembourg to Hold IP, Patents on Interledger To Be Used Only For Defensive Purposes IP Will Be Available Royalty-Free Community Resources Hosted on interledger.org Specs, Code, Issues on GitHub: github.com/interledger (Includes Working Reference Implementation) 6

7 Agenda 1. Project Background 2. Ledgers and the Problem with Payments Today 3. Interledger Packet and Protocol Flow 4. Addressing and Routing 7

8 Ledgers Track Accounts and Balances Sender Ledger Recipient 8

9 Payments Are All About Ledgers 9

10 Central Ledger Model 1

11 Distributed Ledger Model 11

12 The World Will Never Agree On One Ledger 12

13 The Problem: Payment Networks are Disconnected ACH Blockchain Mobile Money Card Networks 13

14 Agenda 1. Project Background 2. Ledgers and the Problem with Payments Today 3. Interledger Packet and Protocol Flow 4. Addressing and Routing 14

15 We Need a Protocol for Payments Across Payment Networks ACH Blockchain Mobile Money Card Networks 15

16 The Interledger Protocol (ILP) Interledger is a suite of protocols for transferring digital assets between accounts on different ledgers. Interledger provides: A standard for addressing digital asset ledgers and accounts A protocol for orchestrating transfers on independent ledgers to facilitate secure multi-hop payments 16

17 Interledger In One Slide address: amount: expiry: condition: "us.wf.bob" "123.2" " T9::1Z" "cc::3:4a7depj8f9..." 17

18 Ledgers Track Accounts and Balances Sender Ledger Recipient 18

19 But Not Everyone Is on the Same Ledger 19

20 Connectors Relay Money Connector Alice 1 1 Bob

21 Connectors Convert Currencies Connector Alice 1 1 Bob

22 ILP Packet Instructs Connectors address: "us.wf.bob" Hierarchical identifier amount: "123.2" Decimal amount 22

23 us.wf.bob

24 Sender Attaches Packet to Local Transfer us.wf.bob Alice 1 1 Bob 11 24

25 Connector Forwards the Packet via Another Transfer us.wf.bob Alice 1 Bob

26 If Connectors Fail, Would We Lose Money?? Alice 1 1 Bob 11 26

27 Holds Provide Security 27

28 Ledgers Provide Hold Functionality Alice 1 11 Bob 28

29 Holds Are Dependent on Conditions + Expiries ROLLBACK EXECUTE 29

30 Condition Fulfillment Executes Transfer ROLLBACK EXECUTE 3

31 Timeouts Cause Funds to Be Returned ROLLBACK EXECUTE 31

32 The Interledger Packet Includes Details for Holds address: amount: expiry: condition: "us.wf.bob" Timestamp (ISO 861) "123.2" " T9::1Z" "cc::3:4a7depj8f9..." Crypto Condition 32

33 Funds Are Committed From Left to Right COMMITMENT Alice 1 11 Bob 33

34 Sender Puts Funds us.wf.bob cc::3:4a Alice Bob 34

35 Connector Gets Notification of Funds on Hold us.wf.bob cc::3:4a Alice? 1 11 Bob 35

36 Connector Puts Funds on Hold us.wf.bob cc::3:4a Alice? 1 11 Bob 11 36

37 Recipient Gets Notification of Funds on Hold us.wf.bob cc::3:4a Alice? 1? Bob 11 37

38 Recipient Triggers Payment by Fulfilling the Condition 38

39 Transfers Are Executed Right to Left EXECUTION Alice? 1? Bob 11 39

40 Recipient Signs Receipt Alice? 1? Bob 11 4

41 Signature Fulfills Condition, Ledger Releases Held Funds Alice? 1 Bob

42 How Does the Connector Get Reimbursed?? Alice? 1 Bob 11 42

43 Connector is Notified That Funds Have Been Released Alice? 1 Bob 11 43

44 Connector Passes on the Recipient s Signature Alice? 1 Bob 11 44

45 Receipt Releases Funds from Hold Alice 1 1 Bob 11 45

46 Sender Gets Non-Repudiable Proof of Payment Alice 1 Bob 11 46

47 Transfers Are Committed L2R, Executed R2L COMMITMENT EXECUTION 47

48 Simple Primitive Can Be Extended to Longer Paths 48

49 Interledger Enables a Network of Payment Networks 49

50 Based On a Simple Packet Format address: amount: expiry: condition: "us.wf.bob" "123.2" " T9::1Z" "cc::3:4a7depj8f9..." 5

51 Agenda 1. Project Background 2. Ledgers and the Problem with Payments Today 3. Interledger Packet and Protocol Flow 4. Addressing and Routing 51

52 Interledger Addresses ledger account address: "us.wf.bob" 52

53 Interledger Addresses ledger subledger account address: "us.wf.bob.mary" 53

54 How does the sender know what amount to send? 54

55 Liquidity Curves Determine Exchange Rates Connie 55

56 Connectors Set Rates per Ledger Pair Ledger B Ledger A Ledger C A B A C Ledger D A D 56

57 Connectors Advertise Their Routes Ledger Z Carmine A B 57

58 Synthetic Routes Are Created Z A A B 58

59 Synthetic Routes Are Created Z A A B =Z A B 59

60 And Added to the Routing Table Z A B Connie Z A C Connie Z A D Connie 6

61 Routing Tables Grow Quickly Z A Local Z A B Connie Z A C Connie Z A D Connie Z C Local Z C E Chao Z C F Carl 61

62 Autonomous Systems 62

63 Core vs. Periphery 63

64 Routing a Payment us.wf.bob.car

65 First We Route Up us.wf.bob.car

66 Then Across us.wf.bob.car us.wf 66

67 Then Across us.wf.bob.car us.wf 67

68 And Finally Down us.wf us.wf.bob.car us.wf.bob 68

69 And Finally Down us.wf us.wf.bob us.wf.bob.car us.wf.bob.car 69

70 Some Ledgers Aren't Real Ledgers us.* us.wf us.wf.bob us.wf.bob.car 7

71 In Summary... Interledger is a suite of protocols for transferring digital assets between accounts on different ledgers. Interledger provides: A standard for addressing digital asset ledgers and accounts A protocol for orchestrating transfers on independent ledgers to facilitate secure multi-hop payments 71

72 Interledger Enables: Network-Agnostic, Minimal Standard for Payments Interoperability Universal Payments Between Any Accounts on Any Connected Ledger Competitive Landscape for Ledgers and Connectors Micropayments in Any Currency New Payments Use Cases and Business Models Neutral Protocol That Can Be Built Into Other Standards 72

73 interledger.org 73

74 Appendix: Risks and Mitigations 74

75 Senders and Receivers are isolated from risk by ledgerenforced holds. 75

76 Connectors that fail to pass on fulfillments may lose money 76

77 Recipient Signs Receipt Alice? 1? Bob 11 77

78 Signature Fulfills Condition, Ledger Releases Held Funds Alice? 1 Bob

79 ...And the First Hold Expires!!! Alice 1 1 Bob

80 Connector That Fails to Pass on Fulfillment Loses Money Alice 1 Bob

81 Connector Risk Mitigation Strategies Redundant Ledger Connections Connect More Reliable Ledgers Price Risk Into Spread Incentivize Retries 81

82 Interledger enables payments to be retried 82

83 Sender Sees Money Returned, But They Wanted to Pay Alice 1 Bob

84 Sender Can Retry Payment us.wf.bob cc::3:4a Alice 1 1 Bob

85 Connector Is Notified of New Funds on Hold us.wf.bob cc::3:4a Alice? 1 Bob

86 Connector Passes on the Recipient s Signature Alice? 1 Bob 11 86

87 Receipt Releases Funds from Hold Alice 1 1 Bob 11 87

88 Sender Gets the Receipt, Connector Gets the Money Alice 1 Bob 11 88

89 In multi-hop payments, connectors are incentivized to retry through the same route 89