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Rebuilding Ripple on Ethereum

Ripple is a P2P payment network with an integrated foreign exchange market. It supports any possible currency. In it’s core it is based on a public distributed ledger containing liabilities between individuals and organisations (IOUs). The network depends on the trust relations between its members. Transferring a value within the network between A and B requires a direct or indirect path in this web of trust. Moreover, the ledger  contains a distributed foreign exchange market, which makes it possible to convert between currencies in real-time.

In this blog post, I want to sketch how a Ripple-like implementation could look like in Ethereum.

Asset Contract

First of all we need a contract to represent an asset that network participants can agree on. This could be a fiat or a crypto currency, but it also could be bonus miles, loyalty points or similar.

contract Asset {
 string public description;
 string public id;
 uint public decimalUnits;
 
 mapping (address => bool) public accepted;
 
 function Asset(string _description, string _id, uint _decimalUnits) {
  description = _description;
  id = _id;
  decimalUnits = _decimalUnits;
 }
 
 function accept() {
  accepted[msg.sender] = true;
 }
 
 function reject() {
  delete accepted[msg.sender];
 }
}

An asset has a description, an id, and how many decimal units are used. For instance, we would model US Dollar and European Euro as:

Asset USD = new Asset("USD Currency", "USD", 2)
Asset EUR = new Asset("EUR Currency", "EUR", 2)

With the accept function, network participants are agreeing upon a specific Asset instance. Network participants can only use assets that they have accepted.

EthRipple Contract

data model

After defining the Asset contract, we can now specify the data model for the EthRipple contract itself. We’ll need the following model elements:

ACCOUNT

Every participant in the network needs an ACCOUNT struct storing his ASSETs. The assets are identified with their contract addresses.

struct ACCOUNT {
 mapping (address /* of an Asset */ => ASSET) assets;
}

mapping (address => ACCOUNT) accounts;
ASSET

An ASSET consists of all IOUs that a participant holds and of all his asset exchange offers (XCHG).

struct ASSET {
 mapping (address => IOU) ious;
 mapping (address /* of an target Asset */ => XCHG) xchgs;
}

xchgs – Offers for exchanging this asset for another asset.
ious – list of debtors for this asset.

IOU – “I owe you”
struct IOU {
 uint amountOwed;
 uint maxAllowed;
}

The IOU struct describes how much of a specific asset (e.g. USD) a debtor owes to the lender (amountOwed). Moreover, it describes how much a lender trusts that a potential debtor is going to pay him back (maxAllowed). During a transfer, amountOwed will always be less than or equal to maxAllowed.

E.g.:

IOU iou = accounts[JOHN].assets[EUR].ious[ANDY];
iou.maxAllowed = 100;
iou.amountOwed = 10;

iou.maxAllowed = 100 – JOHN trusts ANDY that he’ll pay his debts up to 100 units of the EUR asset.

iou.amountOwed = 10 – currently ANDY owes to JOHN 10 units of the EUR asset.

XCHG – Asset Exchange
struct XCHG {
 uint validUntil; 
 uint exchangeRateInMillionth;
}

This struct represents the offer to exchange an Asset for another Asset at a specific exchangeRate which is equal to exchangeRateInMillionth/1,000,000. Note that here we have to work with unsigned integers since Ethereum’s Solidity Compiler has no support for decimals yet. validUntil is used to limit an offer to a specific period of time.

E.g.

XCHG xchg = accounts[JOHN].assets[EUR].xchgs[USD];
xchg.exchangeRateInMillionth = 1100000;

xchg.exchangeRateInMillionth = 1100000 – JOHN offers to exchange EUR for USD at a rate of 1100000/1000000 (1,10).

Operations

The minimal interface for the contract offers methods to modify IOUs and asset exchange offers. And finally, there is a ripple method for sending assets through the web of trust to a specific destination. Note that sending a value in this case means changing the IOU records along the path in the web of trust. If required, the sent asset can also be exchanged for another asset (e.g. converting EUR to USD).

 function modifyIOU(address debtor,
                    Asset asset, 
                    uint newAmountOwed, 
                    uint newMaxAllowed);
 
 function modifyXCHG(Asset fromAsset, 
                     Asset toAsset, 
                     uint exchangeRateInMillionth, 
                     uint validUntil);

 function ripple(address[] chain, 
                 Asset[] assetFlow,
                 uint amount);

function modifyIOU(address debtor, Asset asset, uint newAmountOwed, uint newMaxAllowed) – with this function the msg.sender can reduce the amount owed by a debtor or he can change the maxAllowed amount for this asset/debtor. The amountOwned can only be reduced, never increased.

function modifyXCHG(Asset fromAsset, Asset toAsset, uint exchangeRateInMillionth, uint validUntil) – with this function the msg.sender can publish new offers for converting fromAsset to toAsset at an exchangeRate which is exchangeRateInMillionth/1000000.

function ripple(address[] chain, Asset[] assetFlow, uint amount) – this function is the main workhorse. It allows the msg.sender to transfer an asset to a destination address, which is reachable within the web of trust that is encoded via IOU relations.

Considering the relations below, JOHN can send money to ALEX via ANDY.

// JOHN and ANDY trust each other that they'll be paying their debts up to 1000 units of the EUR asset.
accounts[JOHN].assets[EUR].ious[ANDY].maxAllowed = 1000;
accounts[ANDY].assets[EUR].ious[JOHN].maxAllowed = 1000;

// same for ANDY and ALEX
accounts[ANDY].assets[EUR].ious[ALEX].maxAllowed = 1000;
accounts[ALEX].assets[USD].ious[ALEX].maxAllowed = 1000;

If JOHN want to send 10 units of the EUR asset to ALEX, he would call the ripple function like this

ripple([JOHN, ANDY, ALEX], [EUR, EUR], 10) 

The second array parameter means that JOHN is transferring EUR to ANDY and that ANDY is also transferring  EUR to ALEX. There is no conversion between assets. After the transaction has been committed to the blockchain, we would see the following changes in the IOU records.

// JOHN and ANDY trust each other that they'll be paying their debts up to 1000 units of the EUR asset.
accounts[ANDY].assets[EUR].ious[JOHN].amountOwed = 10;
accounts[ALEX].assets[EUR].ious[ANDY].amountOwed = 10;

If JOHN wants to send EUR, but ALEX wants to receive USD, the transfer would work if ANDY would have an active asset exchange offer for exchanging EUR to USD. Moreover, there also has to be an established trust relation between ANDY and ALEX for the USD asset.

The function call would be:

ripple([JOHN, ANDY, ALEX], [EUR, USD], 10) 

Note that the path within the web of trust is calculated off-chain and passed as input to the ripple function. There is no need to do this expensive calculation on-chain.

Try it yourself

I deployed this contract on the Morden Testnet. Feel free to try it yourself.

Contract Addresses

EUR Asset 0x110c1b256c180ddBBFF384cA553Bf7683Ce8a02c
USD Asset 0xFa33639783B5ae93795A4aeCF86985eB95EA0B39
Ripple    0x33f03cea07586f42900fbf46df6a7f596345bec1

Asset Interface

[ { "constant": true, "inputs": [], "name": "decimalUnits", "outputs": [ { "name": "", "type": "uint256" } ], "payable": false, "type": "function" }, { "constant": false, "inputs": [], "name": "accept", "outputs": [], "payable": false, "type": "function" }, { "constant": false, "inputs": [], "name": "reject", "outputs": [], "payable": false, "type": "function" }, { "constant": true, "inputs": [], "name": "description", "outputs": [ { "name": "", "type": "string" } ], "payable": false, "type": "function" }, { "constant": true, "inputs": [], "name": "id", "outputs": [ { "name": "", "type": "string" } ], "payable": false, "type": "function" }, { "constant": true, "inputs": [ { "name": "a", "type": "address" } ], "name": "isAcceptedBy", "outputs": [ { "name": "", "type": "bool" } ], "payable": false, "type": "function" }, { "inputs": [ { "name": "_description", "type": "string" }, { "name": "_id", "type": "string" }, { "name": "_decimalUnits", "type": "uint256" } ], "type": "constructor" }, { "payable": false, "type": "fallback" } ] 

EthRipple Interface

[ { "constant": false, "inputs": [ { "name": "fromAsset", "type": "address" }, { "name": "toAsset", "type": "address" }, { "name": "exchangeRateInMillionth", "type": "uint256" }, { "name": "validUntil", "type": "uint256" } ], "name": "modifyXCHG", "outputs": [], "payable": false, "type": "function" }, { "constant": true, "inputs": [ { "name": "fxAddr", "type": "address" }, { "name": "fromAsset", "type": "address" }, { "name": "toAsset", "type": "address" } ], "name": "queryXCHG", "outputs": [ { "name": "", "type": "uint256" }, { "name": "", "type": "uint256" } ], "payable": false, "type": "function" }, { "constant": false, "inputs": [ { "name": "fromAsset", "type": "address" }, { "name": "toAsset", "type": "address" } ], "name": "deleteXCHG", "outputs": [], "payable": false, "type": "function" }, { "constant": false, "inputs": [ { "name": "debitor", "type": "address" }, { "name": "asset", "type": "address" } ], "name": "deleteIOU", "outputs": [], "payable": false, "type": "function" }, { "constant": true, "inputs": [ { "name": "lender", "type": "address" }, { "name": "asset", "type": "address" }, { "name": "debitor", "type": "address" } ], "name": "queryIOU", "outputs": [ { "name": "", "type": "uint256" }, { "name": "", "type": "uint256" } ], "payable": false, "type": "function" }, { "constant": false, "inputs": [ { "name": "debitor", "type": "address" }, { "name": "asset", "type": "address" }, { "name": "newAmountOwed", "type": "uint256" }, { "name": "newMaxAllowed", "type": "uint256" } ], "name": "modifyIOU", "outputs": [], "payable": false, "type": "function" }, { "constant": false, "inputs": [ { "name": "chain", "type": "address[]" }, { "name": "assetFlow", "type": "address[]" }, { "name": "expectedExchangeRateInMillionth", "type": "uint256[]" }, { "name": "amount", "type": "uint256" } ], "name": "ripple", "outputs": [], "payable": false, "type": "function" }, { "inputs": [], "type": "constructor" }, { "payable": false, "type": "fallback" }, { "anonymous": false, "inputs": [ { "indexed": false, "name": "lender", "type": "address" }, { "indexed": false, "name": "debitor", "type": "address" }, { "indexed": false, "name": "asset", "type": "address" }, { "indexed": false, "name": "newCurrent", "type": "uint256" }, { "indexed": false, "name": "newMax", "type": "uint256" } ], "name": "EventUpdateIOU", "type": "event" }, { "anonymous": false, "inputs": [ { "indexed": false, "name": "lender", "type": "address" }, { "indexed": false, "name": "debitor", "type": "address" }, { "indexed": false, "name": "asset", "type": "address" } ], "name": "EventDeleteIOU", "type": "event" }, { "anonymous": false, "inputs": [ { "indexed": false, "name": "xchgAddr", "type": "address" }, { "indexed": false, "name": "fromAsset", "type": "address" }, { "indexed": false, "name": "toAsset", "type": "address" }, { "indexed": false, "name": "exchangeRateInMillionth", "type": "uint256" }, { "indexed": false, "name": "validUntil", "type": "uint256" } ], "name": "EventUpdateXCHG", "type": "event" }, { "anonymous": false, "inputs": [ { "indexed": false, "name": "xchgAddr", "type": "address" }, { "indexed": false, "name": "fromAsset", "type": "address" }, { "indexed": false, "name": "toAsset", "type": "address" } ], "name": "EventDeleteXCHG", "type": "event" }, { "anonymous": false, "inputs": [ { "indexed": false, "name": "xchgAddr", "type": "address" }, { "indexed": false, "name": "fromAsset", "type": "address" }, { "indexed": false, "name": "toAsset", "type": "address" }, { "indexed": false, "name": "exchangeRateInMillionth", "type": "uint256" } ], "name": "EventExecuteXCHG", "type": "event" } ]

 

Full Source Code

The Golden Private Blockchain Use Case 

During the last months we have seen a lot of press releases about blockchain projects everywhere, but only few of them are more then just experiments. We also saw many notes about private blockchains as a solution for enterprises. Private blockchains are a good story for consultant companies and their skin deep powerpoint writers with expensive cufflinks. However, we haven’t seen good use cases yet in all these power point slides, just repeating arguments and sales stories. So where is the real private blockchain killer application? More or less every problem addressed by private blockchains can be solved with already existing technologies and software architecture patterns. 
 
Most IT system in enterprises follow the centralized architecture paradigm, e.g.: 
a) MDM (Master Data Management), data from different sources will be collected and consolidated in central databases, then the data will be processed, checked etc. with some algorithms or human interactions and at the end the data will be distributed to different target business applications.
b) Central BPM (Business Process Management) systems will be triggered by an event, it pulls some data from other sources, process them, generate reports, trigger new events etc. 
 

centralsystems.001

  
We can continue and continue to all the different other centralized systems and architecture pattern. We build centralized solutions, because we learned centralized architectures are good, however, in decentralized or silo organizations it is difficult to establish such structures. In this kind of organizational structure, we find very often poorly organized data exchanged via Excel and emails. BPM solutions perform poorly too due to the fact that it is difficult to establish and enforce exactly specified business processes. 
 
Central systems also ignore circumstances of local data aspects, not all data has the same importance for all business applications, very often you need individual data and data rules for single data consuming business app. 
 
How DLT (distributed ledger technologies) and smart contracts instead could help to integrate applications in a decentralized/silo organization where centralized architectures break on the organizational structure?
 
In a DLT-based solution there is no central system. Every business application is equal and can participate in the P2P network by contributing or consuming data from the distributed ledger. How an application contributes or how it consumes data is a local decision of the application itself. For instance, if it needs a specific frontend, it can be implemented in the context of the specific application in need of it.  
central systems2.002
 
This is a new software architecture paradigm which could lead to better scalability, less redundancies and lightweight integration of applications in technologically and organizationally decentralized environments. 
 
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