Thursday, June 20, 2024

GEO Protocol vs. other projects – a comparison

Recently, GEO Protocol announced investment in its seed round by New York-based CoinFund. Let’s make a brief comparison of the project with other projects of a similar nature.

Goals / Vision

GEO Protocol is a Layer 2 project with the aim to provide interoperability for value transfer networks, meaning that its technology allows for connecting blockchain and other real world registries into one global network of value exchange and transfer (Internet of Value). Also, the protocol can act as an off-chain scaling solution for blockchains. GEO Protocol is focused on providing the network effect for its participants.

Interledger is a Layer 2 project that aims to connect ledgers, banks and currencies.

Lightning network is a Layer 2 technology built on top of the Bitcoin network aimed at adding scalability to it, increasing network throughput and lowering transaction latency.

Celer Network is a Layer 2 scaling platform that enables off-chain transactions for payment transactions, as well as generalized off-chain smart contracts. The project aims for various blockchains only (no real world registries or banks).

Interoperability possibilities

GEO Protocol is blockchain-agnostic, not tied to any particular ledger. It can interact with and connect any registry including non-blockchain ones (traditional finance).

Interledger is designed to connect all of the blockchains and other types of ledgers. Interledger was meant to be ledger-agnostic and was built upon a ledger abstraction. The project can already connect to 10 blockchains and several Layer 2 projects (Lightning, Raiden, etc).

Lightning Network is currently compatible only with the Bitcoin blockchain, but promises to be able to connect more in the future. However, connecting LN to ledgers that are not forks of the Bitcoin codebase would most likely require reimplementing Bitcoin scripts on top of other ledgers.

Celer Network is blockchain-agnostic, and scales different blockchains. Primarily it is focused on Ethereum ecosystem.

Currency / Asset Support

GEO Protocol supports any asset: crypto, fiat, and any other real-world assets (like gold, kW of energy, stocks, ownership rights, etc), that can be digitized and/or tokenized. The protocol provides a possibility of multi-hop and multi-asset atomic payments.

Interledger can handle multiple assets. For example, it uses Internet-style non-source routing so that nodes do not need to constantly broadcast their changing exchange rates throughout the network.

Lightning Network is more of single-asset network than a multi-asset network. Considering the approach where the node has to store and update the view of the whole network, it’s probably not achievable to update the exchange rates constantly in real time. Also, the atomicity approach using HTLC may cause an incentive to exploit the “free option” problem and steal from nodes providing cross-currency liquidity.

Celer Network currently supports only ETH and Ethereum-based tokens. They promise to add more assets in the future.

Topology collection and routing algorithm

GEO Protocol uses distributed transaction processing where each node knows only its first-level connections and performs all transaction-related algorithms independently. The GEO network supports atomic multipath payments. Routing is limited to seven hops, providing efficiency for payment path building with the help of a modified Ford-Fulkerson algorithm. This enables virtually unlimited scalability of the network.

Interledger’s routing is partially centralized. Routing is performed by special Connector nodes. This requires routing tables of entire network segments to be stored by a limited number of Connectors, which significantly limits network scalability, as well as throughput.

Lightning Network uses Dijkstra algorithm (LND) + Bellman-Ford (ACINQ). Sphynx is used for privacy. Each node needs to have a static view over the entire network meaning inefficient routing in case of network growth (limited scalability).

Celer Network uses distributed balanced routing that is based on the Backpressure algorithm. Every few seconds, each node in the network calculates the load of its neighbours and sends payment to a node with minimal load. Channel imbalance (difference between incoming and outgoing transactions) is also taken into account. This  algorithm doesn’t provide the shortest path – instead it provides optimal throughput for the whole network. As for topology, each node stores information about its first-level connections.

Transaction Atomicity

GEO Protocol ensures full cross-chain transaction atomicity due to an Observer chain that guarantees finality of payments. Observers are responsible for conflict resolving, but possess no information about payment details and transaction participants. Basically, Observers will interfere in rare cases of transaction problems caused by network connectivity issues, for instance.

Interledger uses HTLA (Hash Time-Lock Agreement) which is essentially a HTLC modification. If a cross-chain payment passes through a blockchain that doesn’t support HTLC, the Connectors (special Interledger nodes that are responsible for routing) can replicate it using alternative methods, so that all contract provisions (e.g. payment time, amount, payment unlock conditions) are met. HTLA is an agreement that’s based on trust between participants, but all payments are divided into small parts, so if one of the intermediaries steals the money then it will lose its reputation. This approach doesn’t provide 100% atomicity, just like HTLC, but is compatible with any registry.

Lightning Network uses HTLC. This approach doesn’t fully protect against loss of funds, and also isn’t good with multiple assets.

Celer Network uses HTLR (Hashed Time-Lock Registry) with mainly the same features. HTLR has two dependency endpoints: Is Finalized and QueryResult. The former returns whether or not the preimage has been registered earlier than the block number, and the latter returns whether or not it has been registered at all. The two features can eventually be merged. It should be noted that HTLR is always on-chain and doesn’t work outside blockchains.

Privacy

GEO Protocol. In the GEO network, each node stores information only about its own direct connections and transactions. No one on the network is able to see any operation of others by design. Also, GEO Protocol’s architecture makes it possible to use post-quantum cryptography, which makes GEO network future-proof.

Interledger routing decisions are made at each hop so nodes do not need a full view of the network. Onion routing or mix networks can be built on top of the core protocolю. While this intentionally was not built into the core protocol, it would be possible to build a TOR-like system on top of ILP. Onion routing protocols obscure details such as the end recipient’s address by bouncing traffic around among circuits of participating nodes.

Lightning Network uses Onion Routing (Sphinx).

Celer Network implements the DBR (Distributed Balanced Routing) algorithm that can be seamlessly integrated with Onion Routing to preserve anonymity for sources/destinations. Due to its multi-path nature, the DBR algorithm naturally preserves the privacy regarding the amount of transferred value, without using any additional privacy-preserving techniques (e.g., ZKSNARK).

  1. Bank Execs See Attracting Gen Z As One Of The Biggest Challenges Of The Year Read more
  2. Pro Con Artist Cautions ‘No One Is Un-Scammable’ As Revolut Warns More Scams Reported Among Gen-Z And Millennials Than Boomers Read more
  3. Corpay to Acquire Cross-Border Payments Company Read more
  4. ZA Tech Rebrands as Peak3, Raises US$35M Series A led by EQT Read more
  5. UK’s Global Fintech Community on Track for Further Integrity and Ethics Skills Boost with Innovate Finance and CISI Certificate in Ethical AI Partnership Read more