On November 10th, 2018, Jack Lu, the founder and CEO of Wanchain, sat down for a live streamed in depth discussion with 8BTC’s Helen Wang. Their discussion focused on technology driven change, and on how cross chain infrastructure will lead to a more mature and rich crypto-economic ecosystem. Below is the English translation of their conversation.

8BTC: Perhaps our friends on the other side of the screen are already familiar with you as the founder of Wanglu Tech, a company which provides blockchain solutions for government and enterprise. What initially inspired you to launch Wanchain, another blockchain focused project?

Jack Lu: I’ve actually had the concept for a project like Wanchain for quite some time, and I jumped at the chance to make it a reality it as soon as I saw that the time was right. For those of us involved in the development of blockchain technology, we are always focused on evaluating the shortcomings of the current technology, and working on how to improve it. Everyone knows that the current internet functions excellently for the transmission and spread of information. The emergence of blockchain, however, is helping the Internet to shift from an internet of information to an internet of value. However, unlike today’s internet, blockchain in its current state is more like a string of disconnected “chains” than an interwoven “net.” Information and value do not flow smoothly between different blockchains, which greatly reduces the application value of blockchain technology. The core intention of Wanchain is to overcome the challenge of interchain transmission of value and information, and to truly make the internet of value a reality.

8BTC: I want to first ask Mr. Lu about the origin of the name of the “Wanchain”, because it makes me naturally think of the “World Wide Web” (Translator’s note: in Chinese, the words Wanchain and the World Wide Web are very similar — Wanweilian 万维链 and Wanweiwang 万维网). We know that the origin of the Internet was the ARPANET set up by the USA military during the Cold War era. Later the TCP/IP protocol used by ARPANET was established as the standard out of many existing network communication protocols. Following this, the inventor of the World Wide Web, Tim Berners Lee, made his creation available freely without patent as a gift to humanity. Since then, the Internet has flourished into the rich ecosystem we have today. So when I saw the name “Wanchain”, I had a hunch that you always wanted to do something big. Can you talk about the meaning of the name “Wanchain” and the ideas behind it?

“We are building bridges between blockchains to achieve a true internet of blockchains” — Jack Lu

Jack Lu: It’s actually quite a coincidence. In 2015, I was on a domestic tour to publicize and expand our business. During a visit to a museum as a part of the tour, I was very surprised to see a picture of myself and my project on display. I had a realization at that time. Seeing myself there made me realize the historical relevance of my work in blockchain, and planted in me the seed for the idea of Wanchain. The World Wide Web connects countless local area networks and allows for the effective sharing and circulation of information. Wanchain has similar ideals and ambitions. That is, we hope to use Wanchain to set up a cross chain bridge for transfer of both value and information. Chain-to-chain communication will connect all blockchains together to create the new internet of value. As for the name “Wanchain,” another way of writing Wanglu Tech is, Wan Glu Tech, Wanchain, like glue, binds different block chains tightly together. In short, we hope that Wanchain can stimulate and promote blockchain technology and benefit the entire blockchain industry.

8BTC: The Internet transmits information while blockchains generally transmit value. But the current status quo is that each chain carries value within itself, and there is no true transfer of value directly between chains. In the big picture, how do you think the challenge of connecting chains can be divided into different aspects?

Jack Lu: I think it can be divided it into three different aspects.

The first is the redefinition of value. Before blockchain emerged, value was more in the form of physical objects, such as houses, cars, and so on. There was the risk of forgery and falsification of information off chain. After the emergence of blockchain, due to its decentralized, tamper-proof, and immutable features, it provided a better environment for the preservation of value. Before value is transmitted, it must be mapped from off-chain to on-chain. After being put on chain, the value is secured and cannot be tampered with. This stage requires accuracy and fairness, and is a generalized process.

The second is the circulation of value. All these different blockchains map value to their chain, but they all do so in different ways. Each chain has different characteristics, different technical specifications, and there is no direct interaction between them, thus forming isolated islands of value. This isolation of value is a great challenge for the entire blockchain industry, and bridges are needed to overcome this challenge and allow for the true circulation of value.

The third is the standardization of cross chain interoperability. Undoubtedly, a relatively complete cross-chain solution will emerge, and then based on it, standards will be formed. Under these standards, all blockchains will be connected in a single network through which value flows freely without barriers.

8BTC: For those who don’t have a deep understanding of the technology, it may seem that cross-chain simply allows for the assets of one chain to be used on another chain. How is Wanchain’s cross chain technology different from cross asset trading done on popular exchange platforms? Recently, BitGo, Kyber Network and Republic Protocol jointly launched WBTC as a Bitcoin anchored currency. Is this also a feasible solution for the cross chain transfer of value?

Jack Lu: To illustrate the difference between our cross-chain technology and cross chain token transfer carried out by exchanges, I will simply make three points.

First, in terms of meaning, the meaning of cross-chain is very broad. Here, cross-chain refers to the transfer not only of assets, but also information — as well as the digitized forms of various valuable items, such as houses, cars, and even mobile phones. This requires for the transfer of information between different chains. The transfer of tokens which happens on exchanges does not allow for any direct communication between chains. Rather the exchange merely transfers the assets from one user’s account to another, without any direct cross chain communication. This is a fundamental difference between cross-chain technology and token transfer on exchanges.

Second, in terms of form, we are working to achieve cross chain transfer of value by staying true to the ideal of decentralization. Currently, most exchanges use a centralized method for token transfer not based on blockchain technology. This means that security depends on the credibility of a trusted third party, which is contrary to the ideal of decentralization.

Third, in terms of structure, with cross-chain technology we hope to remove the current barriers between blockchains, allow for the communication between chains, and for the circulation and interoperability of value. This is a revolutionary step for the blockchain industry. It is directly related to the role that blockchain will play in human life in the future. Exchanges provide a platform for the purchase and sale of tokens, and provide services of holding and redeeming tokens for the majority of users. Centralized exchanges are a temporary phenomena in the context of blockchain, and as cross chain technology advances, will surely disappear in the long river of history.

Now, as for WBTC, in fact, this is actually a mapping of value onto the Ethereum blockchain. The process itself depends on the authority and credibility of several entities. For example, when a new WBTC is minted, the process must be approved by a trusted third party. This process is in essence a centralized one. This is not necessarily saying that WBTC does not serve a use. In fact, WBTC is a way to realize asset transfer, but you need to consider the security and universality of this method.

8BTC: Cross-chain technology itself is not a very new concept. In 2012, Ripple proposed a public notary mechanism. Other mainstream technologies include side chains, relays, hash locking, and distributed private key control. What are the principles behind each of these? What are the advantages and disadvantages of each?

Jack Lu: This is quite a professional question. I will address it in a relatively easy-to-understand way.

First, let’s talk about the notary mechanism in which the cross-chain work is completed by one or several people. Through this mechanism the notary provides evidence and verification of exchange between the two chains to ensure the security and integrity of the two-sided transaction. The advantage of this method is that it is efficient and simple to implement, but the disadvantage is that the entire cross-chain mechanism is dependent on finding a safe and credible notary.

Next let’s talk about side chains. Let me first discuss two concepts. If we want to transfer the asset from chain A to chain B, then we can call chain A the original chain side and chain B the cross chain side. In the transfer process, the original chain side needs to add a SPV verification script to verify the data on the cross-chain side. Similarly, if you want to implement the two-way asset flow process, you need to add verification scripts on both sides. The shortcoming is that the two-way asset flow requires modification of the mechanism of each chain, and scripts must be added for each different chain, which means this method is not easily generalizable and has a high cost.

Relays refer to the collection and encapsulation of data of one chain on for use on another chain for the verification of data. For example, the well-known Polkadot project encapsulates cross-chain information for Ethereum. Encapsulated data of Ethereum’s block is added to Polkadot’s own chain to provide verification of transactions on Ethereum. The advantage is that the verification information can be completely stored in Polkadot’s own chain, and it is convenient to collect evidence, but the disadvantage is that the amount of data will continue to grow. Essentially, they are maintaining all the cross-chain information in their own chain. The amount of data increases with the increase of the number of links and over time. This method has poor scalability, and the ability to determine the legitimacy of cross-chain data collected is another a problem.

Hash locking is not a complete cross-chain technology solution. It is only part of a cross-chain solution. It takes advantage of the unidirectionality of hash functions, which means that it is impossible to recreate the source data from the output of a hash function. It allows for ensuring the atomicity of cross chain transactions, guarding against the possible loss of assets. In this case, this technology is part of the cross-chain mechanism of Wanchain.

Distributed key control is an account management method. It goes without saying that account locking is often involved in cross chain mechanisms. Account locking ensures the consistency in the total number of assets. For the control of locked accounts, distributed secret sharing can be used. In this way, the manager of the account is a group, rather than an individual, and the members of the group use multi-party computing technology to generate the account address. Each member of the group receives only one fragment of the key. With a certain minimum threshold number of key fragments, members of the group can coordinate calculations for the operations on the account. It is worth noting that the original private key of the account exists, but no one entity ever holds it, so this method is safe and reliable. Compared with multi-signature methods, the advantages are that this method is highly versatile, has low data requirements, and strong fault tolerance. At present, Wanchain uses distributed key control for the management of locked accounts in its cross-chain mechanism. This is also an important way for Wanchain to connect with other chains without changing the original chain’s mechanism.

8BTC: In the context of so many cross-chain solutions, we would like to know, how is cross chain implemented on Wanchain?

Jack Lu: Wanchain hopes to realize a universal, safe and efficient cross-chain solution through a technology-centered development route. There is no flowery high concept solution in Wanchain’s approach. We approach the problem of cross-chain head on with a direct and straightforward solution which deals with the core difficulties of cross-chain. Let me briefly talk about the cross-chain process approach by taking Ethereum as an example.

In Wanchain, cross-chain transactions are carried out by a group of nodes called the Storeman group. This group establishes a locked account on Ethereum and Wanchain through multi-party key generation. At the same time, on Wanchain there is a WETH contract (Wanchain-wrapped ETH), which is a standard ERC20 contract in which each WETH corresponds to one ETH. If the user wants to send his ETH to Wanchain, he needs to initiate a transaction carrying secret data “s” on Ethereum to transfer his ETH to the locked account of the Storeman group. The secret data “s” is the hash value of source data X. The Storeman group then monitors the cross-chain activity and generates an equal amount of WETH for the user on Wanchain. The user is able to initiate a transaction on Wanchain when they provide the source data “X” to the contract in order to obtain control of the WETH tokens. This mechanism is essentially a complete closed loop controlled by a hash lock. The reverse process is similar — the user’s WETH token will be locked, and the Storeman group turns back ETH for users on Ethereum. The Storeman group guarantees the validity of both sides through the secret data set by the user. After a successful transaction and the ETH is released on Ethereum, the user’s WETH token is destroyed.

The cross-chain mechanism of Wanchain has the following characteristics:

First, the locked account mechanism is based on elliptic curve multi-party computing and is compatible with almost all existing blockchains. It does not require any of the blockchain’s mechanism to be added or modified, and works with the account mode of various different blockchains. In other words, Wanchain can theoretically connect with any other chain.

Second, account generation, updates, signature generation, etc. are all completed using secure multi-party computation and decentralized account management. The security of the entire cross-chain process is based on the 51% honest hypothesis, and does not depend on the credibility of individual third parties.

Third, the management of the locked account is done with threshold key sharing. Even if a key fragment is lost or one of the nodes in the Storeman group is not online, the cross-chain transaction can still be completed normally.

Fourth — cross-chain atomic transactions. We use a hash locking mechanism to ensure the atomicity of cross-chain transactions, prevent the loss of assets in the user’s cross-chain operation process, and improve cross-chain security.

8BTC: Does Wanchain’s method of cross-chain transactions create fluctuation in the value of assets on a blockchain?

Jack Lu: No, and there are three main reasons.

One is that cross chain transactions do not create new tokens. Instead, it maps tokens from one chain to another, and does not change the total number of circulating tokens.

Second, an important consideration in the design and implementation of Wanchain is the versatility and adaptability of the solution. In Wanchain’s cross-chain process, there is no need to make any changes to the original chain, so it doesn’t have any influence on the specifications of the original chain.

Third, in terms of any price fluctuations, the direction of the cross chain transaction is not relevant. Implementing cross chain simply improves the ability for value to circulate across all chains. If anything, it will increase the value of all the crossed chains. This is an ongoing process, for both Wanchain and all the other chains it is connected to. Cross-chain will promote the development of the entire blockchain technology and industry, and it will inevitably be accompanied by growth in value.

8BTC: When a registered asset is transferred from the original chain to the Wanchain, a Wanchain node will issue a corresponding equivalent token for the user in the existing contract. How is this anchoring mechanism designed?

Jack Lu: The assets in the original chain correspond to a single contract on Wanchain. In the case of Ethereum, there is a WETH contract on Wanchain, and ETH held by the user will also be mapped to the token in this contract, and this ERC20 standard contract supports token transaction, which guarantees the liquidity of the assets in Wanchain. The circulation of assets between contracts allows different chain’s assets to flow in Wanchain.

If the tokens in each chain are regarded as national currencies, Wanchain’s own token can be regarded as the US dollar, but that is not to say we require all exchanges to be done through the Wanchain token. The Wanchain’s token is only used by user as a trustable asset that carries various applications, it is a symbol of rights, and the purpose is to encourage and carry out the flow of various assets.

8BTC: What technical difficulties will be encountered in the implementation of cross-chain?

Jack Lu: There are three main technical difficulties in the process of asset transfer.

The first is how to verify the legitimacy of information on one chain from another. This is the basis of cross-chain transactions. Since different chains exist in isolation from each other, it is difficult to verify the validity of transactions, which makes cross-chain transactions difficult. Currently, Wanchain uses the Storeman group to verify on chain data. We pioneered the idea of “signature as consensus”, that is, as long as a valid signature is formed from the locked account, the validity of the transaction on the original chain is definitely determined by the Storeman group’s consensus. This concept is guaranteed by cryptographic principles such as multi-party calculation and threshold key sharing.

The second is the locking of assets. In order to ensure a consistent total number of tokens, cross-chain assets need to be locked on their original chain. Many existing cross-chain mechanisms lock assets through a centralized approach, so that the security and credibility of the entire mechanism must depend on a central trusted authority. Wanchain has adopted a decentralized method for account management in which the Storeman group uses threshold secret sharing and multiparty computation to create signatures. This method is secure and highly versatile, it is a good solution to this challenge.

The third is the atomicity of the transaction. The current common method is hash locking. Wanchain also uses hash locking and time locking to complete this function, which is crucial for cross-chain.

8BTC: Public chains, private chains, and consortium chain can all access Wanchain, but the question is, what is the motivation for each to link with Wanchain? What is the cost to them? What are the benefits?

Jack Lu: That’s a great question. In fact, for each public chain, they do not need to actively integrate with Wanchain, so there is no question of motivation. There is no cost for them. Any chain can be connected to Wanchain. As mentioned above, the original intention of Wanchain is to connect blockchains in order to create an internet of value. We want to provide a way for each chain to interact and communicate. Currently, the barriers isolating different blockchains is a serious challenge for the industry. The benefits for each public chain to be connected are obvious. Limiting circulation of value internally to one blockchain necessarily limits the long-term development of each chain. Connecting blockchains will inevitably increase the value of the entire blockchain industry.

8BTC: We noticed that in August of this year, Wanchain joined the Ethereum Enterprise Alliance (EEA). In September, it joined Hyperledger . Is there any intention to break the gap between the public chain and the consortium chains in the future? If this boundary is broken, what does it mean for the industry?

Jack Lu: Yes, since we want to build the internet of value, we must bridge the gap between public chains and consortium chains without disturbing the transmission of value between the chains. Once this challenge is overcome, it means that the value of consortium chains can flow into public chains, and the value of public chains will also flow back to consortium chains. We know that consortium chains are the ones typically used by enterprises or enterprise associations. The value represented on contortion chains is typically backed by real assets, while that of public chains is typically virtual. Once the two can be exchangeable, it will be like dreams coming into reality. Public chains will no longer be isolated islands of value, rather they will come to represent real value. This will be a great boost to the adoption of public chains, but also a huge test. It will speed up the process of good money expelling bad money. This will lead to a massive revolution in which real assets circulate freely on blockchains, and the blockchains becomes a completely realized value system — the new internet of value. It will eventually become one of the fundamental infrastructures of our lives, as the internet is today.

“It will eventually become one of the fundamental infrastructures of our lives, as the internet is today.” — Jack Lu

8BTC: Wanchain 3.0 was released this week. What are the key updates compared to previous versions?

Jack Lu: Wanchain 3.0 has established a cross-chain link with Bitcoin, allowing for seamless transfer of value between Wanchain, Bitcoin, and Ethereum. Along with 3.0 we have also achieved cross-chain with ERC20 tokens, which is quite a breakthrough. As the original digital currency, Bitcoin itself does not have a smart contract function, which limits the implementation of certain mechanisms. This release of Wanchain breaks this limitation. By linking with Bitcoin, Wanchain allows for the creation of smart contracts which make use of Bitcoin. For users, the launch of Wanchain 3.0 provides them with a way to make use of their BTC for a wide variety of applications.

8BTC: Finally, can you tell us something about Wanchain’s future plans?

Jack Lu: Our future developments have four main focuses.

First, we will continue to conduct in-depth research in the field of cross-chain technology. We will connect to more chains through continuous iterative upgrades of our own technology, let more value flow, actively promote the formation of cross-chain standards, and provide the blockchain based internet of value for the future.

Second is to conduct in-depth research in the field of consensus mechanisms. We will propose and implement efficient and secure consensus methods, and promote the future development of blockchain consensus mechanisms. Ultimately we will create a community-recognized, efficient, safe, practical and useful consensus layer for Wanchain.

Third we will to conduct in-depth research in the field of privacy protection. We will upgrade the current privacy protection scheme for both efficiency and security, and simplify and improve on the efficiency for users.

The fourth is to conduct in-depth research on blockchain economic models, explore the governance models of blockchain, and propose a set of economic incentives supported by economic theory.

The fifth is to develop our ecosystem by encouraging and assisting all kinds of blockchain applications to take root in Wanchain. Wanchain, as a multi asset platform, intends to act as the backbone for a variety of applications which improve and strengthen the entire Wanchain ecosystem.

About 8BTC

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— https://news.8btc.com/

About Wanchain

Wanchain is a blockchain platform that enables decentralized transfer of value between blockchains. The Wanchain infrastructure enables the creation of distributed financial applications for individuals and organizations. Wanchain currently enables cross-chain transactions with Ethereum, and today’s product launch will enable the same functionalities with Bitcoin. Going forward, we will continue to bridge blockchains and bring cross-chain finance functionality to companies in the industry. Wanchain has employees globally with offices in Beijing (China), Austin (USA), and London (UK).

You can find more information about Wanchain on our website. Additionally, you can reach us through Telegram, Discord, Medium, Twitter, and Reddit. You can also sign up for our monthly email newsletter here.