XCHAIN - L1.2
The first infinity
1. Executive Summary
The progression of emerging technologies often follows a cycle: applications generate the need for advanced infrastructure, which then facilitates the creation of new, more powerful applications. Traditional, general-purpose blockchains have laid the groundwork for decentralized applications but now face challenges in scalability, speed, and reliability as these applications grow. Similar to how Web 2.0 infrastructure evolved to accommodate particular use-cases, blockchain systems must also advance to enable mass adoption of major Web 3.0 applications. We introduce XCHAIN, a domain-focused Layer 1 blockchain tailored for high-performance trading operations. It employs groundbreaking techniques in transaction sequencing, block validation, and multi-threading optimized explicitly for trading platforms.
2. Overview
Without a doubt, trading platforms represent the most universally utilized category of applications in the cryptocurrency ecosystem. Although centralized exchanges handle most trading activity, Decentralized Exchanges (DEXs) have emerged as a crucial innovation with potential to be the linchpin of the crypto world. They appear in various forms—Automated Market Makers, order books, NFT marketplaces, and even in-game trade platforms. Despite their pervasiveness and growing influence, DEXs remain underserved in terms of infrastructure optimized for their unique requirements of reliability, speed, and scalability.
The primary reason for this discrepancy is the inadequacy of existing, general-purpose blockchains to furnish the specialized environment needed for DEXs to rival centralized platforms. To address this issue, we present XCHAIN—a purpose-built Layer 1 blockchain meticulously engineered for trading activities. At the core of XCHAIN is our proprietary 'QuantumSync' consensus algorithm and a multi-layered parallel processing architecture designed to minimize latency and maximize transaction throughput.
Moreover, XCHAIN incorporates a state-of-the-art order matching engine, employing a series of frequent batch auctions to ensure equitable pricing while minimizing the potential for frontrunning. Additionally, this document will delve into unique user experience enhancements offered by XCHAIN, such as integrated pricing oracles and bundled transaction sequencing.
By developing a specialized infrastructure tailored to the unique challenges and opportunities of trading platforms, XCHAIN aims to bridge the performance gap between centralized and decentralized trading ecosystems, propelling the latter into mainstream adoption.
3. Advanced Protocol Architectures in XCHAIN
XCHAIN operates on a refined version of the Cosmos SDK and Tendermint Core to meet the specific needs of high-performance trading platforms. We've carried out extensive customizations to both these frameworks, introducing features that significantly enhance performance and optimize trading operations.
3.1 QuantumSync Consensus Mechanism
3.1.1 Dynamic Transaction Dissemination
In a conventional network, full nodes broadcast incoming transactions randomly to their peers. Upon receiving a transaction, a validator assesses its validity and adds it to their local memory pool. XCHAIN, however, uses Dynamic Transaction Dissemination to streamline this process. Instead of sending full transaction data, block proposers send a lightweight proposal containing unique transaction IDs and a reference to the complete block. This minimizes data transfer and expedites the consensus process. Validators who already possess the transactions in their memory pools can immediately reconstruct the full block, significantly cutting down on validation times.
3.1.2 Proactive Block Processing
Traditional Tendermint consensus has validators receiving, verifying, and then progressing through voting steps. In XCHAIN, Proactive Block Processing allows validators to initiate transaction validation the moment they receive the first block proposal. This data is initially stored in a temporary cache and only committed to the chain if the block gains network acceptance. This mechanism substantially reduces latency and improves throughput.
3.2 Multi-Layered Parallel Processing
3.2.1 Dynamic Transaction Processing
XCHAIN's innovative DeliverTx logic is designed for parallel processing. To avoid conflicts and ensure deterministic outcomes, XCHAIN utilizes dependency mappings which designate which transactions can be processed concurrently and which must be serialized. By dynamically adjusting transaction flow, XCHAIN optimizes processing time and resource utilization.
3.2.2 Market-Specific Parallelism
In the final stages of block processing, XCHAIN handles market orders through its native matching engine. Orders affecting distinct markets are processed concurrently, speeding up execution times. Developers have the flexibility to define inter-market dependencies during smart contract deployment, ensuring seamless integration with existing trading strategies.
3.3 Integrated Real-Time Price Oracles
XCHAIN features built-in price oracles that offer real-time asset pricing. Validators are mandated to participate as oracles, ensuring robust and accurate market data. The system is designed to have rapid voting windows, as short as one block, providing up-to-the-minute asset valuations.
Validators who fail to participate effectively or provide incorrect data are penalized through a scoring system that tracks their performance over multiple voting periods. Consistent non-compliance or incorrect data provision leads to penalties, maintaining a high level of accuracy and reliability in price data.
By focusing on these advancements, XCHAIN aims to bridge the performance and functionality gaps that have hampered the widespread adoption of decentralized trading platforms. Through specialized consensus mechanisms, multi-layered parallel processing, and real-time price oracles, XCHAIN presents a groundbreaking solution optimized for the future of decentralized trading.
4. Advanced Order Matching Engine
XCHAIN delivers a comprehensive solution designed for blockchain technology, enabling users to move assets and deploy a wide range of smart contracts. One of its standout features is the proprietary Order Matching Engine, designed specifically for decentralized exchanges (DEX) built on the XCHAIN platform.
4.1 Introducing XLOBs with XCHAIN
The Order Matching Engine lets DEXs built on XCHAIN deploy their own XLOBs (XCHAIN Limit Order Books). It standardizes order books across the blockchain and offers the capability to establish custom trading markets.
4.1.1 Market Formation
To set up a new order book (akin to launching a new trading market), two key steps are required:
Deploy a smart contract on XCHAIN.
Submit a transaction to add this new order book to the previously deployed smart contract. This includes specifying the asset, base pricing unit, and minimum price variance.
4.1.2 Supported Order Types
The engine accommodates several types of orders:
Limit Orders: Purchase or sell an asset at a defined price or better.
Market Orders: Execute a trade at the best available market price.
Fill-or-Kill Orders: Instant execution or cancellation without partial completion.
Stop-Loss Orders: Auto-sell or buy when an asset hits a preset price.
Cancel Orders: Removal of existing orders from the order book.
Partial order completions are permitted for limit, market, and stop-loss orders if the liquidity is insufficient.
4.1.3 Order Lifecycle on XCHAIN
Transactions on XCHAIN’s Order Matching Engine are processed atomically within a single block. Upon submission, the engine sorts and holds these in its internal memory state. The processing of orders is highly optimized, ensuring maximal liquidity and minimal slippage.
4.1.4 Hook Integration
XCHAIN allows the registration of hooks for customized functions, supporting activities like flashloan repayments within the same block as the trade settlement.
4.2 Asset-Neutral Order Book
The engine's design enables flexible asset representation, providing DEXs the freedom to choose their asset management style.
4.3 Uniform Price Clearing
To minimize the impact of MEV (Miner Extractable Value), the engine employs a uniform price-clearing method, ensuring all market orders are executed fairly.
4.4 Efficiency Through Order Bundling
XCHAIN introduces two types of order bundling for improved performance:
4.4.1 User-Side Bundling
Users can bundle orders across various markets, optimizing gas costs and improving market liquidity.
4.4.2 Blockchain-Level Bundling
To further reduce latency, XCHAIN employs a single virtual machine instantiation for processing multiple orders, resulting in significant speed gains.
4.5 Fee Structure
At launch, no trading fees will be charged at the blockchain level, though this is subject to future governance decisions. DEXs can integrate their own fee structures.
4.6 Expandable Middleware
The flexibility of XCHAIN’s Order Matching Engine anticipates a range of middleware solutions that DEXs can implement to enhance their offerings.
By offering such an array of features, XCHAIN aims to revolutionize the decentralized exchange landscape.
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