Implementing a neutral, accountable, and robust governance
In typical Ethereum-based networks, ostensibly anonymous end users sign transactions. If you look at a transaction, there is always a blockchain address/wallet that signed it, but this is just an anonymous entity or individual. It must be that way for blockchain applications to guarantee privacy. But compliance with regulations requires accountability.
LACChain solved the problem by creating two signature levels, buffered by a permission layer on Hyperledger Besu. It works like this:
- Any entity can join the LACChain networks by deploying a node.
- Nodes can be validators, boots, writers, and observers. Entities choose their deployment environment, which can be cloud or on-premises. There are only a few minimum hardware requirements for nodes to perform properly.
- Entities must comply with the terms and conditions for LACChain testnets and the Adscription Agreement for LACChain Mainnet. Per the T&C, every node operator is responsible for the transactions they send to the network and their content. This is enforced by requiring each writer node that broadcasts transactions to sign them, in addition to the anonymous end-user signature.
Along with the work on the infrastructure and governance, the project team considered two other issues: self-sovereign identity and quantum resistance.
LACChain implemented protocols for self-sovereign identity that are inclusive and respectful of personal data. “In the era of digital wallets and verifiable credentials, we’ve been concerned people might be left behind,” says Allende. “Already, there is an inclusion problem in many areas.”
Allende, a quantum physicist, also looked ahead to future attacks by quantum computers. “Quantum computers will be available over the next few years,” he says. “And people aren’t going to raise their hands to say they have a quantum computer that forges signatures and steals assets.”
LACChain uses a solution developed by IDB Lab, in collaboration with Cambridge Quantum Computing and Instituto Tecnologico de Monterrey. The solution uses CRYSTALS-Dilithium Signature Algorithm and FALCON post-quantum algorithms to implement an attack-resistant layer on top of blockchain networks.1
“It’s unique,” Allende says. “The solution is open source because we believe it’s a necessary resource for the community. It’s better to act now, before quantum computers are robust enough to hack blockchain.”
Yet even with strong governance and advanced security, LACChain faced two significant challenges related to sustainability.
Developing tools for economic sustainability
The first sustainability issue was economic. It wasn’t simply a question of how to remain economically sustainable without transaction fees or cryptocurrency. It was also a question of whether the network could sustain fair access and avoid DoS attacks with “free” transactions.
All transactions on an Ethereum-backed network require GAS, which covers the computational power needed to process a transaction. Typical GAS Distribution Protocols allow account owners to request GAS. However, this opens the possibility a permissioned entity could transfer GAS to a non-permissioned entity. It also risks these permissioned or non-permissioned entities accumulating GAS and provoking a DoS attack to collapse the network.
LACChain developed a new GAS Distribution Protocol to solve these problems using smart contracts. This protocol assigns GAS per block to permissioned writer node accounts, not end-users.
Distribution is also dynamic and dependent on how stressed the network is. If fewer entities use the network at a specific time, more GAS is available for them. If more entities use the network, less GAS is available. The network makes sure there is no saturation.
It’s a smart contract-based solution. Smart contracts evaluate transactions sent to the network and keep an on-chain accounting of how much GAS each node is using per block. They check that a permissioned writer node signed the transaction, and that the writer node has enough GAS remaining for the present block to register that transaction.
Depending on how much GAS and technical support it requires, an entity chooses from three membership levels for the Mainnet—Basic, Standard, and Premium—while the Testnet is free to use.
The project team developed the GAS distribution protocol using Hyperledger Besu and its open-source resources. The team also created a second protocol with Hyperledger Besu. This one rotates validator nodes using an algorithm to maximize performance and decentralization.
The membership levels and protocols help support the economics of the project and the fair distribution of resources to participants. But they didn’t solve the other sustainability issue, which was operational: IDB Lab projects have end dates.
Introducing a non-profit orchestration entity
LACChain was never intended to stay governed by the initial project team. But without the team of IDB Lab and LACChain Partners, how would LACChain support the entities using the network?
Technical support and security assurances attract users to LACChain Networks. Someone needed to coordinate with the different working groups across the network. Someone needed to permission new nodes. Someone needed to sign the Adscription Agreements with node operators.
The team solved this problem by creating LACNet, an international non-profit association based in Uruguay. It’s funded by Red Clara—a non-profit that connects the academic community in Latin America—and LACNIC—the Internet Addresses Registry for Latin America and the Caribbean—in collaboration with IDB Lab.
LACNet orchestrates the LACChain Networks developed by the LACChain Alliance. “LACNet provides centralized orchestration that gives regulatory accountability, technical support, and resiliency to the infrastructure,” says Allende. “After that, everything is as decentralized as possible.”
In February 2022, the neutral LACNet began orchestrating LACChain. More than 60 projects are using the LACChain networks today. And while LACChain and LACNet have campaigns and attends events, most times, entities come to them seeking solutions.
