Blocknet aims to build an “internet of blockchains” with communication tools designed to allow nodes from different blockchains to exchange tokens and information. These tools enable decentralized applications to access data from any blockchain, from a decentralized exchange to a consumer-facing application, that runs a node through Blocknet. This inter-chain flexibility will, for example, allow an application to build smart contracts on NEO that utilize Filecoin’s storage network. Bocknet empowers developers to build applications that can pay for certain features on different blockchains through one codebase.
Blocknet also enables direct cross-chain atomic swaps for decentralized exchange. In traditional decentralized exchanges, token pairs are limited to one blockchain. For example, Radar Relay and Paradex can only leverage the Ethereum chain via 0x. This limitation hampers the functionality of all blockchain-based applications and incurs significant waste a la transaction fees across chains. Blocknet enables the decentralized exchange of almost any token without utilizing a centralized service (e.g. Binance) and eliminates token conversion fees.
Blocknet’s core technology includes three components: XBridge (an iInter-chain network overlay), XName (a blockchain router), and XChat (a peer-to-peer data transport mechanism).
The XBridge is a serverless DHT-based peer-to-peer network. DHT is a secure protocol used by services like BitTorrent and the Pirate Bay to locate users without requiring the IP addresses of network peers. XBridge enables searching for, locating, and broadcasting between nodes on different blockchains so Blocknet can send transaction information through APIs to more than one blockchain.
XName is a blockchain router, which takes the information throughput of XBridge and applies it to different blockchains in the Block network via an inter-chain address system. XName is still early-stage technology, and the main challenge in developing this system is the tradeoff between cost and truthfulness of lookups performed on different networks. Looking up information on different blockchains requires node involvement for which certain incentives are necessary, and this may increase the cost of doing business on Blocknet. Currently Blocknet mitigate these costs by allowing nodes to bootstrap themselves through a hard-coded query to a trusted provider or by querying their peers on XBridge. But these are temporary solutions since they involve trusted intermediaries.
XChat is the peer-to-peer data transport for Blocknet, which decentralized application (dapps) developers commonly used when building on a particular chain (e.g. Ethereum’s Whisper). XChat allows dapps to perform more complex trustless operations on the blockchain besides simply transferring value. This communication protocol is important to allowing dapps to signal to each other via publish small amounts of information when being used. In essence, XChat is a small end-to-end encrypted peer-to-peer chat-room module for dapps running on separate blockchains.