The Balance Between Decentralization and Efficiency

Yeah. I was very happy when Rohan pulled up scalability as his last topic, because that's a very nice bridge first off. I wanna thank you all for being here. I want to thank the organization of DIC. It's great fun being here. Yeah. Who am I? I'm ma Kaiser. I am a business developer at poly and a researcher of decentralized financial systems, an economist by education. So don't worry. We are not going in depth cryptography right now. I'm going to speak today on the balance between efficiency and decentralization. And I'm coming from as was already mentioned from a little bit different direction.

I'm we are starting off with a few general blockchain challenges. Then we move towards how poly attempts to solve them.

What is, what kind of product is on the market? And then we have a deep dive into identity because at last we are at the EIC, right? Okay. Let's begin. Okay. It does work. Public blockchains are currently simply not so suitable for companies. That is a statement that is not that bold. As in contrast to many predictions, not the entire global economy is on chains right now, unless I missed something and I'm willing to present you some reasons why that might be the case.

First off transactions are quite costly, depending on the network, of course, but generally the first layer is not inexpensive. Then often they are still relatively slow and limited in what they can do. And these delays can turn expensive for companies. There is barely any confidentiality option because that would be oxymoron, right? Public blockchain with confide confidentiality. That's hard to do.

I mean, there are solutions somehow, but it's not, it's not trivial of a problem, especially for companies now. And then touching upon the, a topic the first time there's no trustless or standardized identity payment right now, not even a trustless or standardized identity framework.

So far, that is in wide application. Now you might say two things.

Now, one thing might be, Hey, why don't you use blockchain ecosystem X, Y, Z. They solved all of these problems. Yes. That leads me to my next problem. You can't really connect to other blockchains that, well, these systems are not highly interoperable. At least not in a trustless fashion, retail investors will have to go with their centralized exchange or try out some shady looking protocol because not many bridges are that well established. It's a pity.

And for that matter, sometimes even layer two solutions, scaling solutions, rollups channels, whatever they cannot interconnect between one another all the time. And of course also information chains are not well interconnected. And at that point, it even becomes troublesome for web three startups to actually use blockchain systems from time to time. So therefore I conclude public blockchains as they are not really ready for supply chain finance and so on. And entry polyp. Polyp is all about secure and trustless, DLT infrastructure.

We are a spinoff of the technical university of SDA, the chair for it, security and cryptography. And we have the vision of opening up blockchain ecosystems for companies, for individuals and for other blockchain ecosystems. And by the way, not only blockchain ecosystems, but also non blockchain ecosystems. But we'll get to that in a second. What are we doing on the market first and foremost or?

Yeah, first and foremost, we are a software developing company, but we have currently three streams and consulting is picking up quickly because especially in Germany, you kind of, you kind of need to clarify lots of things when it comes to blockchain business models. And we have a lot of experience and a lot of, or some successfully finished projects already, despite just having started consulting right now, then we have two software frameworks, two SDKs.

One is a marketplace solution, which basically allows you to deal with NFTs gaming, all of these things, but neither the client nor the marketplace operator really needs trust into us or into the operator. You can really use that marketplace without paying gas fees, but still trustless leave. And the framework I want to focus on today is the framework. It's about bringing IOT and finance together using the estate channel framework. And that's basically what we will focus on before I show you how that works. Let me briefly show you some features. The Perone SDK is a, it is highly programmable.

That means you can execute arbitrary logic within a channel framework channel framework. I'll explain it in a second, but maybe as a teaser so I can ring some bells and some heads lightning network also uses channels. We are a little different from that, but just so that you have a rough idea in mind, you can execute any logic within these channels.

I already, I already teased that a little bit Perone with Perone made it possible to be independent from single blockchain ecosystems that enables Peron not only to be a scaling solution, but also an interoperability solution. And within that solution, you are, you can always roll back to the public blockchain. So it's not an own blockchain or anything.

You are, you can be public or you get to be public with the aggregation of whatever you are doing within that channel, but you're not exposed. Not every single transaction, not your entire business. Logic is exposed and out there. And obviously as a spinoff of an it security chair, that is a highly secure protocol, but still quite usable because we have modularity in mind when we, when we developed it.

And that means it's not only compatible to your favorite DLT database network stack, but also quite easy to use, feel free to check out, oh, one thing I forgot you can actually use these channels offline, which sounds quite crazy, but it's quite interesting for especially industrial partners and manufacturing partners. Yeah. You can check out a demo version at a yeah. At an URL that I'll show you later on. Now let's get into how these things work.

The, the Perone SDK is an approach to scaling peer to peer transactions. That means you don't, you don't have like a giant marketplace with X random people in that case, but rather you have some sort of business partner you're on the left hand side and you want to do business with the gentleman on the right hand side. And you want to, yeah, you want to do this as cheap as you can because doing that on public Ethereum, you easily have more transaction costs than maybe the value of your actual transaction.

So what you wanna do is you wanna maximize the transactions that you move off chain, that you move into the channel. And how does that go about, well, you first need to deposit whatever volume you wanna trade or whatever information you wanna move to the parent smart contract. And then you get to transact within a parent channel. A channel is opened up by a third party that you don't need to trust, or you can also do it yourself or your business partner can do it for you.

It doesn't really matter who opens up that channel in that case, because in the end, and I explained why in a second, you don't need to trust anyone using that channel. So you go about transacting performing your business logic.

Maybe, I don't know, you do some aggregation of micropayments for your electric vehicle or something like that. You have like a thousand or probably even more by now transactions per second at abso absolutely zero cost. I already mentioned it's highly interoperable. So it doesn't really matter on which blockchain ecosystem you or your partner are, could be different ecosystems as well. And as I said, you can execute any logic. And then I also mentioned it's highly secure. It's provably secure. We have like 80 pages papers, basically just proving that this is solid and Bulletproof concept.

And yeah, then you transact. And in a third step, when you're done transacting, you say, okay, we are done. Now we've traded a month or just a few second, or we did our business. Then we go back to the blockchain and settle. And instead of 50,000 times transaction costs, you had just had two transactions. And that's a pretty nice concept.

Now, the, I said, all of this works trustless leave. How does that happen?

Well, pretty simple in the end, both of you compute, if you're, if you're an enterprise or check yourself if you're a private person or can, you can actually do both. If the state is correct, did the guy cheat, cheat me in any way? Did is the state that I'm seeing in the channel, the same state that I'm calculated that I calculated. And if that's the case and I say, okay, I didn't get cheated. Then I sign off the settlement. Otherwise I can say, no, wait a second. Something went wrong and I can roll back the entire thing. And basically only had the first transaction cost.

And I could could say, I'll never do business with you again, but there was no damage done. Or I could say, let's move it to the blockchain.

You know, I think you cheated me. Let's let's verify this. So that's quite elegant solution to remain trustless without losing the perks. Oh yeah. Without becoming inefficient and slow. Now we are at an identity conference, right? So let's talk, oh, I forgot to mention Ethereum Parker. Lot for dot cosmos. Doesn't really matter.

But again, let's go to the identity topic. We are at an identity conference now, what are you going to do with Peron and identity?

Well, let's have a look at how decentralized identity management works so far and how Peron can go and bring secure and efficient credential payment to that space. Well, currently you, as a person request a certificate at someplace might be a hotel, might be a bank, might be your public library and you get this certificate issued.

But, and that works U usually in the physical world, that's, that's not an issue, but now that we are in a more digitalized and globalized world, that might become more tricky because you don't know the library down road. You don't know the guy and you don't really wanna risk not getting your certificate. They don't wanna risk not getting their money because they don't know you. So that's a problem. The buyer just doesn't wanna take the risk.

The seller doesn't necessarily want to take the risk and business becomes a lot more troublesome or you have some trust assumptions, and that's the way it's currently going. So therefore certificate payment is not really trustless or atomic. It doesn't happen at the same time. And the payment process is even if you somehow manage to do that decent in a decentral way, then the payment process is not integrated, but separated.

It's like, okay, let's do this cool identity transaction. And then I don't know, my centralized payment provider opens up. That's the pity as well. So what we are currently working on is two modules. First module is payments. So I already said it should be something that's seamless. So it should be easily integrable into an ID wallet. It should be agnostic to ecosystem because in the end, lots of identity people here I have already talked to at this beautiful conference.

They, they say, what blockchain? Oh, I don't know.

So yeah, agnostic to the ecosystem is an important factor as well. Then you kind of want a payment to be, yeah, you, you want to have the option for a simple purchase of a certificate or of credentials or of any kind.

And yeah, we, we built that module basically for the Hyperledger areas framework, which is yeah, quite the leading protocol within the decentralized identity management world. Then as cryptographers and security experts, we build a second module, which we call module security names are still work in progress. And that enables you to recover, lost documents.

Like, let's assume I got my digital wallet on my phone. My phone gets stolen. My digital identity on my phone, my phone gets stolen or is broken or just dies on me for some reason. I don't want to have to pay anyone to reissue that to me. Right. I I'd like to recover that.

And maybe, yeah. And I can't do that with that module because distributed cryptography, the distribution of cryptographic keys actually allows us to, to recover these things. And that protects you, that that creates higher security protects you against system failure, cyber attacks, as I said, device theft, or losing your device or something like that.

And yeah, that's basically a blood threshold cryptography. So if you lose your phone and you have the, like the issuer and maybe some service provider still having a part of your key, not your entire key, then you can, and two out of three are still in existence, then you can restore whatever you lost. So that's a good thing right now that enables us to actually have a decentral certificate issuance with trustless payments that is network agnostic.

And as I said, this, these modules, they work of course on several blockchain ecosystems, but also on several network stacks, they work on your favorite database. They, they, they are highly compatible. We build a proof of concept implementation, check out the GitHub. I'm thinking the slides are shared. You already have access to that. Yeah. Have a look at it. If you're a developer or just interested, I think it's well documented. Yeah. Now who am I to claim all of these things whose polyp well, polyp we've been working together in that team configuration for roughly five years.

We started off as a research project back then, we were still named. We have several industry projects successfully completed together. We have more than 25 years of blockchain development and analysis experience. And we have grants from, we are currently having the trust of several top blockchain foundations. If you wanna reach out, please do so we have many.

Yeah, you, you, you see some of our supporters and partners down there. We are always interested, especially in this identity space, but in general, also for partnering up for doing cool pilot projects with new technology. And also we'd like to learn a little bit about your questions. That's it so far, reach out to me on LinkedIn, follow us on LinkedIn, Twitter, medium. Send me a questions or send your questions to the stage. If you have some, I would be a pleasure to get in touch with you.