Hello Liquidity Community and friends of the Liquidity Network, yesterday (13 December 2018) our COO, Guillaume Felley, conducted an AMA with TokenGazer via WeChat. Chinese community impressed us with many enthusiastic questions in a full hour! We appreciated all the intelligent questions and please stay tuned for future AMA announcements!
For those who missed the live AMA, no worries. We have consolidated all questions and answers for your convenience below.
- Q: With regard to scalability, can you tell us the main difference between Liquidity Network and Raiden Network?
A: While we are both second layer scaling solutions our approaches are radically different. Raiden is based on 2 party payment channels (Similar to the Lightning Network in Bitcoin). Our approach to scaling is based on NOCUST multi party payment hubs (See: https://eprint.iacr.org/2018/642.pdf). NOCUST is the key piece of technology that we are developing.
- Q: Liquidity Hub is an interesting thing. Please explain Liquidity Hub more detailed. For users, how to become a Liquidity Hub?
A: At the moment we operate the only hub and everybody is free to join as a user. Once you’re in you can make off-chain payment that are instant and without transaction fees. Further we plan to open source and allow anyone to operate a Payment Hub. These hubs will be interoperable through efficient payment channels and the use of the REVIVE protocol
Q: When is it implemented? Is there a road map?
A: So far, we have not communicated on the date of deployment of REVIVE.
- Q: Lighting Network is poor for usability and reliability, how do you foresee the user experience and reliability of liquidity hubs with any sort of distributed backups?
A: Liquidity Network has the advantage over the Lighting Network that routing payments is easy for us. Because there is a smaller number of node in the network
Q: User experience is bad as there is numerous steps for the setup, would be the same case for LQD?
A: Regarding user experience we offer several advantages over LN: you can join the network without doing any on-chain transactions (such as opening a channel). Additionally with liquidity much less fund lockup (collateral) is required.
Q: Less collateral we can understand; kind of a pooling effect. The usability is still not clear for me, would you elaborate a bit? Thanks.
A: Sure, in the lightning network you need to collateralize 100% of your transactions and collateral is isolated in each 2 party payment channel. With NOCUST hubs you can pool collateral. It is allocated in bulk for all users at constant cost.
- Q: What do you think of Raiden network? It has been developed for more than 2 years. Why can’t it be launched?
A: Payment channel networks have a lot of problem unsolved, such as accurate routing, inefficiencies due to collateral lockup, bad UX due to online presence requirement etc. It will be delayed for as long as these are not solved.
- Q: I think a smaller number of nodes in the network are contrary to decentralization? Furthermore, the nodes are operated by you now?
A: Depends how you define decentralization, architecturally it is more centralized but payment hub are non-custodial. It means that you don’t need to trust the operator. Your funds are never at risk no matter how malicious is the operator.
- Q: Do you have enough project development experience to start a business after graduation?
A: Our CEO has business experience in his previous ventures (Hatforce, Chainsecurity)
Q: Just the CEO has experience? So he’s the one who led you and arranged your work?
A: Sure, as a CEO he leads the operations
- Q: How does the network settle disputes when they arise from off-chain transactions? What role do miners play in this process? What incentives are there for them to maintain honest.
A: The NOCUST smart contract impartiality settles the disputes. Users should audit their account and open a dispute if needed. The operator has to prove his honesty by providing the correct signatures/Merkle proofs. If the operator fails to prove his correct behavior the payment hub enters into recovery mode. No more payments are allowed and users should withdraw their funds.
- Q: REVIVE is an important algorithm in Liquidity Network, some more information about REVIVE?
A: REVIVE is indeed an important algorithm. It allows to re-balance payment channels off-chain. The current implementation doesn’t make the use of revive, we plan to use it further to interconnect several payment hubs.
Q: So you mean there is only one center now?
A: Currently yes, but keep in mind that is a non-custodial hub.
- Q: On what basis do users trust the impartiality of the smart contract? Besides, wouldn’t this recovery design establish a weak point in the hub that one double-spend will force the whole hub into recovery mode, which might halt other user’s transactions’ processing?
A: You are right, a single double spend would halt the hub. This is a big incentive for the operator to not try to cheat at all. The other user processing transactions will be covered by collateral money at the expenses of the operator
- Q: Then what is required to become or host a hub? Is there any stakes that needs to be put down or it requires a certain amount of PoW to be done? Because for me the “hub” design looks West Union’s branches around the world where I can send money to another country and let West Union’s branches re-balance them. Therefore the degree of decentralization really depends on how distributed the hubs are, or in other words, how hard/easy it is for a third party to become a hub.
A: No proof of work needed, the hub needs to stake some coins to guarantee recent transactions only. Your analogy is correct; each branch can be a hub. But the setup is slightly different. In Bitcoin or Ethereum if you have one single node your system is insecure. While in Liquidity if you have one single hub your system is still secure. No additional consensus mechanism is required.
Again, thank you so much for your analytical, insightful questions and the lively discussion. This sort of response is what we hoped for. Stay tuned for future AMA, events, and other news. We truly appreciate your belief and support in Liquidity Network.
For questions please join us on Telegram https://t.me/liquiditynetwork/
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iOS App: https://itunes.apple.com/ch/app/liquidity-network-wallet/id1395924630?l=en&mt=8