ChainX Whitepaper

Saturday, February 20, 2021
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Content 2 The Layer2 Background 3 platform for Overview 4 Bitcoin Overall Structure 6 Economic system 8 Consensus algorithm 12 Account system 13 Community autonomy 14 Bitcoin financial platform 19 Digital asset gateway 28 Polkadot second-layer relay chain 29 Roadmap 30

Background 3 Bitcoin, a blockchain-based digital currency ChainX is committed to Layer 2 expansion with 21 million fixed supply, has seen its value and asset gateway research of Bitcoin, well grow from almost zero to $20,000 in the past positioned to provide high-performance 11 years after its birth, which shows the transaction trusteeship and interoperability hallmarks of Bitcoin as a trading commodity. among chains in asset transfer. Bitcoin was awarded the title of "Digital Gold" in 2017 due to its irreplaceable features like anti-inflation, decentralization, globalization, Layer 2 technology is often dubbed as an anonymity and so on. "off-chain" solution, expanding blockchain networks while retaining the decentralized advantages of distributive protocols. A good The meteoric rise of DeFi, Paypal’s olive- blockchain ecosystem requires some branch policy to take cryptocurrencies Bitcoin changes in the framework to balance included onboard, the newly-established security, decentralization, and scalability. digital currency exchange by the That’s where layer 2 platform and protocol Development Bank of Singapore, and the which reduces the burden on the base layer ostentatious display of support by Grayscale (root chain) is needed by reassigning part of in buying Bitcoins, events like these are too the data processing of the main chain to layer many to exemplify one by one, but the 2, thereby enhancing the scalability of the underlying importance and meaning far entire blockchain network. Blockchain is exceeds the market value growth from embarking on an evolving path towards a $4,000 to $20,000. This indicates that Bitcoin multi-layered system. The layer 2 expansion is being re-recognized as a payment method, looks set to create new "usable" blockchain perhaps only a tip of the iceberg in terms of systems with its influence percolating its full potential. Along with that, there are through other industries, ushering an era also macro practices by the financial market: where blockchain layer 2 application Bitcoin's spillover effect (DeFi), derivatives scenarios payment included will be market, grayscale fund, etc. flourishing without damage being done to layer 1. The hidden potential of Bitcoin is being tapped and released as it holds the key to ChainX Asset Gateway, the first project the digital currency world and leads towards developed on Substrate, works as the asset deeper blockchain breakthroughs. A transfer hub for the Polkadot ecosystem, groundbreaking technological change connecting assets outside Polkadot via its spearheaded by blockchain technology has inter-chain messaging protocol, opening gotten underway in recent years, aiming to transferring routes among multiple chains start another major technological shift after after success achieved in single ones. It the Internet. Among many, the one that has has gradually evolved into Polkadot's received the most attention is Bitcoin’s Layer second-layer relay chain, routing external 2 solution with extensive research being done mainstream assets including Bitcoin into on it to expand and enhance the Polkadot and incubating financial performance of blockchain. derivatives and services.

Overview 4 ChainX, the earliest launched project in polkadot ecosystem, is based on Substrate which is a blockchain framework development platform designed by the Parity team led by Gavin Wood, Ethereum’s former CTO. It has universally applied State Transition Function (STF) and modular components to reach consensus in terms of network and configuration. In addition, it conforms to the standards and conventions of the underlying data structure, in particular the Substrate Runtime Module Library (SRML), which allows rapid creation of a new chain. And ChainX attributes a substantial part of its growth and progress to the universal applicability of the Substrate framework. ChainX is committed to the research and contracts, efficient light-client protocol, Off- application of Bitcoin layer 2 expansion, chain worker, and multi-signature, what’s digital asset gateway and Polkadot second- more it is highly compatible with Polkadot. layer relay chain. In terms of governance and operation, ChainX adopts a dynamic asset mining model for safe governance and “One Asset One Vote” mining model, efficient consensus; in terms of technical pioneered by PoS consensus and adopted by implementation, ChainX manages to cross ChianX, stipulates that no ICO is planned and mainstream cryptocurrencies onto chains assets like BTC, ETH and EOS deposited by with different structures through the "light users through inter-chain technology should node + trusteeship" scheme and forms a participate in mining at their market value digital asset gateway through its along with the native token. For fear of unfair decentralized Bitcoin trusteeship and inter- competition, pre-mining practices and chain mirroring mechanism to make grounds computing power monopoly are prohibited for transactions of all sorts of cryptos on the with a fair distribution system of PCX whose same chain; besides, as the second layer of generation model follows the footstep of Polkadot, ChianX dissects multi-chain Bitcoin, gradually halving the supply of new frameworks, builds parallel transfer bridges coins. Digital assets crossed onto ChainX can and facilitates transactions among multiple be traded with other tokens on DApp parties. exchanges, associated with Bitcoin financial derivatives and generate fair prices in terms of assets’ market value for mining. The initial version of ChainX is based on Substrate 1.0 and operates smoothly for one and half years. After Polkadot 2.0 was The decentralized light-node technology that officially released, ChainX spared no efforts to ChainX currently adopts integrates upgrade its mainnet and launched the 2.0 mainstream digital assets across chains, with version at the end of November 2020. On the Bitcoin standing as a prominent success. In base framework of Substrate 2.0, ChainX 2.0 the future, more upgrading and combines and coordinates various functions improvements can be expected in the inter- like hybrid PoS consensus, on-chain council chain technology with added help from governance, Wasm virtual machine, native methods like independent execution of smart

Overview 5 trustee, MPC, and homomorphic encryption; At the era of digital economy, everything is an more Bitcoin financial derivatives will pop up asset with value which can be traded. and flourish; and more mainstream Cryptocurrencies represented by Bitcoin are currencies such as ETH, ERC20, EOS, ADA, no exception and play an increasingly and ZEC will be connected to ChainX. At the important role in this new round of same time, equal importance should be international financial and monetary game, attached to communities where users are which also paves the way for the meteoric encouraged to transfer inter-chain assets rise to fame of the underlying blockchain among one another and contribute to refine technology. However, different chains were the system, so that Bitcoin is stimulated with isolated with no meaningful connections not constant value flow and DApps equipped to mention inter-chain asset transfer, free with the latest smart contract technology are value flow or low-friction exchange. If the incubated. dilemma couldn’t be solved, there would be no connectivity and interoperability among chains. To break the stalemate, ChainX expands the layer 2 network of Bitcoin, serves as the digital asset gateway and Polkadot second-layer relay chain to create a safe and stable inter-chain transfer system for assets form all sorts of ecosystems.

Overall Structure 6 X-BTC. X-DOT PCX Asset DEX BTC Derivatives Cross-chain PCX Module DEX Module module Relay Module ChainX Runtime Bitcoin Ethereum Synchronize node / Authentication node / TEE node Polkadot… ChainX network, built on Substrate, is a cross-level inter-chain interoperable asset gateway, consisting of PCX, DEX, inter-chain and relay modules, Bitcoin Layer 2 financial platform and Polkadot second-layer relay chain. The main components include:

Overall Structure 7 PCX module an operating program based on the native token PCX, it mainly includes functions performed by PCX such as staking, paying fees, on-chain governance, distributing inter- chain mining rewards, and backing Bitcoin financial derivatives. PCX is related to most programs running on ChainX. DEX module A cross-asset transaction module, it promotes circulation of assets on different chains while minimizing transaction costs. Inter-chain module An entering or exiting module for different chain assets and X-Token, it mainly includes an inter-chain transaction verification system, on-chain mintage program, trusteeship program, and deposit and withdrawal program for X-Token. Relay module a window of information exchange and verification between ChainX and outside chains, it mainly includes chain information update program, chain monitor program, and inter-chain information collection and transmission program.

Economic system 8 Token generation The cryptocurrency PCX (P stands for Polkadot) issued by ChainX has 21 million supply in total. In the initial dividend round or the first 210,000 cycles, 50 PCXs are distributed as rewards in each cycle, and 25 PCXs for the second round. 20% of the issuance in the initial round which accounts for 10% of the total goes to the founding team for ongoing development and all the subsequent issuance goes to the community. Mining ChainX adopts “One Asset One Vote” mining model which is composed of two forms: inter- chain asset mining and voting mining. All participating parties compete together with PCX as the computing power unit. Inter-chain asset mining means that various because PCX as the native token naturally assets such as BTC, ETH, etc. that enter comes with greater mining power, which in ChainX through depositing, mapping or other return encourages users to hold more PCX. means participate in mining with virtual computing power calculated for each. Independent calculating methods are applied Voting mining refers to voting or staking real to each inter-chain asset such as fixed PCX to certain nodes to participate in mining. computing power calculation, market price discount calculation, etc., which will be explained in detail later. The calculation method is mainly determined by community voting. Inter-chain assets are discounted when participating in mining

9 Computing power The current ratio of inter- ChainX is a PoS system where total computing power consists of PCX voting chain assets to PCX in terms mining power and inter-chain asset virtual of mining power is set at 1:9 computing power with the system’s security guaranteed by PCX, the more PCX, the better. which can be adjusted In addition, as an inter-chain asset gateway, through community voting, ChainX connects assets from other chains, which means the maximum the more assets it connects, the greater the value. Native assets and inter-chain assets mining power of all inter- both participate in mining, competing with chain assets is set to 10% to while reinforcing each other. In order to avoid ensure PCX voting mining sudden influx of inter-chain assets overwhelming the system in the early stage, power greater than or equal dynamic mining model is adopted to cope to 90%. with rapid surges of inter-chain assets with a fixed dividend ratio between the two. Changes in mining model are determined by the chain governance referendum. Calculation formula Power total Total computing power Power total = Power real + Power virtual Power real = Staked Power real Computing power by staking Power virtua l= sum ( Power c ), c ∈ { X-BTC, X- PCX ETH, S-DOT, ... } Power c = Amount c·Fixed Power virtual Virtual computing power of C·UbiquitousDiscount inter-chain assets Power c Total virtual computing power of The current mining power cap for all inter- inter-chain asset C chain assets is 10%, that is Power virtual : Power real = 1:9 Fixed C Fixed multiplier of unit inter-chain asset C, with current Fixed BTC = 400·PCX When Power virtual : Power real > 1:9 , the upper limit rule takes effect. Amount c Total amount of inter-chain UbiquitousDiscount = Power real : 9 Power asset C vitual UbiquitousDiscount Dynamic discount for When Power virtual : Power real <= 1:9 inter-chain assets the upper limit rule becomes invalid. UbiquitousDiscount = 1

Economic system 10 Income distribution ChainX's mining income go to four parts: the founding team, the Treasury, PCX mining users and inter-chain asset mining users. The distribution of income can be readjusted with a referendum in future community governance. The income data in the figure below is calculated based on the hard cap income mining 6.4% inter-chain Team Treasury PCX mining 20% 16% 57.6% R pcx =R total · 80% · 80% · 90% R team =R total · 20% R virtual= (Power virtual / Power real ) · R real R cap values = periodic dividend · 80% · 80% · 10% R treasury =R total · 80% · 20% + R remain R remain = R cap values - R virtual Power real : Computing power by staking R real : Income from PCX real mining power, PCX which is R real = periodic dividend · 80% · 80% · 90% Power virtual : Virtual computing power of inter-chain assets R cap values : Hard cap income of inter-chain asset dividends R total : Total amount of PCX generated in a dividend cycle R virtual : Actual mining income of inter- chain asset which goes to mining users R team : Team income from the initial dividend cycles R remain : esidual mining income of inter- chian asset which belongs to the treasury R treasury : Treasury incom

11 Team This part of earnings goes to the Total income is calculated according to founding team to cover ongoing development the engagement and activities of inter- costs chain assets and PCX with income for a single node obtained through the proportion of real and virtual nodes, Treasury This part of earnings belongs to the Treasury for community development and and then income for a user is parachain slot auctions. calculated with regards to the number of votes he or she has cast. When the total number of inter-chain assets PCX mining users This part of earnings is surges to the upper limit, a discount on rewards to PCX mining users. all inter-chain assets will be imposed compounded with the existing ones. Earnings of inter-chain asset mining are rewards to the mining users. The specific amount is calculated according to the ratio of virtual mining power of inter-chain assets and real mining power of PCX with the upper limit set at 1:9, if not exceeding the limit, extra earnings go to the Treasury.

12 ChainX adopts the "Babe+Grandpa" hybrid consensus, Polkadot's brand- new mechanism whose most notable feature is to separate block confirmation from block generation with Babe module generating blocks every 6 seconds and Grandpa making the final confirmation. In the traditional POW algorithm, the mining power of a single machine is weak, unable to generate blocks independently, which leaves joining a mining pool or building one by one’s own the only option and results in only 10 mining pool nodes per chain. The initial POS chain usually has about 7 nodes, and follow-up ones only dozens of nodes. Therefore, blockchain’s decentralized advantages are kept untapped with ordinary users unable to become consensus nodes thus having no access to the ledge and having to rely on large organizations. The number of Consensus nodes in ChainX starts from a few dozen, and gradually grows as the community evolves. At the initial stage, cloud servers are needed to build consensus nodes. Later users only need to download the desktop wallet to generate blocks, but good internet environment and computing power are required, or punishment may be incurred if any block is delayed. The punishment funds will be transferred to the Treasury and future referendums will be held to decide how to use it. The node’s profit model is to obtain 10% mining income of users, and the specific proportion can be modified by future referendums. Node dropout or other malicious behavior will be punished by reducing daily user rewards. The election cycle for each verification node is one hour and nodes will be ranked according to the number of votes. If a node fails to be selected as verification node, becomes a synchronizing node, and heartbeat transactions also need to be initiated with a real node and empty nodes are not allowed. Votes of both consensus nodes and synchronizing nodes participate in the mining reward distribution with the same benefit rate so that the advancement of synchronizing nodes will not be compromised.

Account system 13 ChainX currently charges a In order to prevent DDOS, users need to pay gas fee for transactions, and the system will transfer transaction for only charge the corresponding fees according to 0.0001PCX. As ChainX's the complexity of different operations. Users also have different accelerating options performance and throughput according to the network congestion to gradually improve, fees achieve flexible control. It seems that users become lower and can be need to pay fees which however can be balanced out by the mining income obtained ignored. In the late stage of through mining and holding assets in the network development, early stage, enough to meet the trading additional issuance of chains demands of non-frequent users. Besides, consensus nodes draw transaction fees to will gradually slow down and the node rewarding pool when packaging and user's mining income mainly voting users can benefit from it. Therefore, comes from transaction fees Users can still use the chain "for free" even in this closed system, and most of the mining and various kinds of users can make earnings with only a handful punishment fees. of super-frequent users paying fees. Gas fee is traditionally charged due to low throughput of the chian, which leads to high transaction costs. PCX mainly has the following uses Miner fees Market value unit Pay miner fees, similar to miner fees in the As the unit for asset mining, all assets are Bitcoin network. converted into votes based on the PCX price, similar to ECR20 in Ethereum. Collateral function As the core collateral of bitcoin derivatives Exchange medium and trusts, it is the Risk Modeling standard of In the system-integrated transaction Dapp, it bitcoin finance and the main tool to improve serves as the base currency and exchange trust creditworthiness. medium for obtaining other assets. Metrics The measurement standard in POS consensus elections . The more votes people get, the greater the responsibility. It is also a mortgage and voting tool for on-chain governance.

14 Tricameral governance structure is adopted by ChainX at the advice of Polkadot for better decentralized community governance, including Referendum Chamber, Council and Technical Committee. In addition to the three, X-Association and Treasury are introduced to enrich the framework of community autonomy. Referendum chamber The Referendum Chamber has the most members (all token holders) and the highest authority. All "legislations" (Runtime logic modifications) must go through a democratic referendum. Now that ChainX is based on Substrate2.0, the community or Council can submit a proposal for referendum. If approved, the system automatically modifies ChainX’s Runtime logic and upgrades without forking. Council Given the fact that referendum alone cannot rule effectively, that’s where the Council comes handy in dealing with day-to-day affairs. Council members are elected by token holders with Phragmén election algorithm. There are currently 11 members on the Council and 7 more as alternates, with re-election every 24 hours which generally sees few changes. Council election Participation Users who run for the election should submit a candidate application form to the Council with 10 PCX staked which will be returned if they are elected as a member or alternate, otherwise the Treasury will lay claim to it. This mechanism helps eliminate malicious participation which unnecessarily occupies chain resources. Voting Users holding PCX can cast their ballots at the Council page. Each vote at most selects 16 candidates with the amount of voting assets specified and 0.01 PCX staked. Casted votes can be withdrawn at any time with staked assets returned. Announcing result Each election cycle lasts one day. Votes are counted after the cycle to form new Council.

15 Main responsibilities of the Council Revoking penalties The Council has the right to revoke staking penalties caused by network errors if the threshold of at least 1/2 of the members is met Submitting referendum proposals The Council has the right to submit a referendum proposal to upgrade the RUNTIME logic if certain consensus is reached within the Council. Calling out a referendum The Council has the right to call out a referendum at the last minute with 2/3 majority when a malicious or wrong referendum proposal is about to implement. Staked assets behind the improper proposal are confiscated by Treasury. Voting on Treasury proposals The Council votes on Treasury proposals and Tips which are approved if 3/5 or more members agree, and rejected if over 1/2 members disagree.

16 Technical Committee Main responsibilities of the technical committee Submitting emergency proposals Technical committee has the right to submit an emergency proposal with the Council’s permission when a bug or upgrading need is detected. The proposal immediately goes through the referendum without further delay. Vetoing the Council’s referendum proposals Technical committee has the right to veto proposals with the Treasury getting the staked assets if unanimous agreement is reached within the committee or the root cause (such as sudo or Council) triggers the process.

17 X - Association X-Association, a non-profit organization, is fully committed to the development of the chain of ChainX and surrounding ecosystem. X-Association is composed of experts and enthusiasts who are no stranger to ChainX’s chain, community management, blockchain technology and development, and stand ready to contribute to ChainX for a long time. X-Association membership The initial members including 1 secretary general and 4 secretaries are elected by the Council, but to ensure management e!ciency and continuity, X-Association when fully established, decides the replacement of personnel on its own and reports to the Council about the changes. The council has the right to remove one or more members with two-thirds majority. Dynamic working groups under X-Association, led by the secretary general or a secretary, are set to complete specific tasks. With the permission of the Council, X-Association performs the following duties Providing advice or consulting services Supporting, promoting and governing to the development and new planning ChainX communities (fans and of the chain developers) Providing direct technical support to Coordinating and managing various ChainX’s users and developers development teams of the chain Releasing reports on work and fund usage on a regular basis to the council and the community X-Association’s funding source and funding management X-Association has a separate PCX account to which grants from the Council are issued regularly. The account is a 3/5 multi-signature account with the secretary-general and 4 secretaries holding private keys respectively. The account is renewed if there are personnel changes.

18 Treasury The Treasury is a PCX funding pool to which staking penalties on the network, residual income of inter-chain mining, staked assets in running for the Council election, and confiscated assets of failed proposals flow. The Treasury provides financial support to projects promoting ChainX development and facilitating ecosystem growth. As the network grows, contributing individuals, organizations and companies are eligible to apply for treasury funds as incentives.

The Layer2 platform for Bitcoin 19 Bitcoin financial platform

The Layer2 platform for Bitcoin 20 The Bitcoin network cannot integrate light Bitcoin trusteeship nodes of other chains to form smart contracts, which means assets are trapped in their own systems. ChainX came up with a scheme to break the dilemma with the "light node + trusteeship” scheme that allows chain crossing. So far Bitcoin light-node bridge and X-BTC1.0 trusteeship scheme have been finished, enabling completely decentralized mapping of Bitcoin onto ChainX. In addition, the latest logic framework of X-BTC trusteeship has been established and will be launched in the foreseeable future. X-BTC1.0——Trust node trusteeship scheme In X-BTC 1.0, trustees are good-performing In X-BTC 1.0 trusteeship scheme, users nodes in ChainX’s testnet, with new nodes initiate a transaction from a Bitcoin account chosen by abdicating ones, which requires to a multi-signature trustee address by the Council’s permission before taking effect. adding ChainX’s account address in the Note There is a hot multi-signature address or to bind the two addresses together, which contract and a cold one generated by each once done, does not need repeating second trust node. Funds are transferred to new time for the network can automatically addresses after each renewal with users recognize the binding. X-BTC is issued based having access to the real-time data of inter- on the transactions of users’ Bitcoin address. chain assets flow and reserves, thus no trust node can unilaterally misappropriate the fund.

The Layer2 platform for Bitcoin 21 X-BTC 1.0 trusteeship process Inter-chain deposits Run Bitcoin light nodes on the chain, and send Header in real time by Relay to keep the Real-time Relay longest chain updated; ChainX Txs Users transfer assets to the hot Header X Bitcoin address of a trustee with ChainX Light-client address in hexadecimal form and other information attached Inter-chain Tx Header X to OP_RETURN with which transfer bridge can identify related ChainX users; Relay monitors the Bitcoin network and submits related information including Tx Proof path and OP_RETURN to the transfer bridge after pinpointing the block in which this transaction is located and obtaining the permission from the chain.; The transfer bridge after verifying Tx and OP_RETURN note decrypts the ChainX address attached to OP_RETURN and issues the transferred amount to that address. Inter-chain withdrawal Users submit a Bitcoin withdrawal application to Users’ Withdrawals ChainX; The recording module in ChainX transfer bridge or gateway locks the corresponding X-BTC and keeps the application 2/3 Multisig information in record which is Hot/Cold Address trackable with a unique ID; The withdrawal information is periodically obtained by a trustee which forms the withdrawal text; ChainX transfer bridge locks the corresponding withdrawal amount after receiving the text which also requires other trustees to sign; Relay submits the text after required signatures are signed to the Bitcoin network; Relay then submits the withdrawal transaction and its proof path to the transfer bridge after the transaction is confirmed; Transfer bridge closes the withdrawal record and destroys the locked X-BTC after Tx id proved to be valid.

The Layer2 platform for Bitcoin 22 X-BTC2.0——Vault trusteeship X-BTC 2.0 is a trustless and highly efficient scheme inter-chain asset system based on the XCLAIM framework through which two protocols are introduced to enable distributive, transparent, consistent, and anti- censorship cross-region blockchain transactions. The most prominent difference from X-BTC 1.0 is the Vault (asset custodian) mechanism which allows more people to engage in assets’ chain crossing. X-BTC 2.0 Vault advantages XCLAIM overcomes the limitations of centralization in the following ways Security auditing log Proof of transaction inclusion Build a log to record all users' behavior Relay is used to prove to ChainX the on Bitcoin and ChainX correct behavior on Bitcoin Proof or punishment Excessive collateral XCLAIM does not rely on last-minute Untrusted Vaults, subjected to fraud proof (which renders the system collateral (PCX), have to establish a passive), but requires proactive proof of mechanism to mitigate exchange rate correct behavior fluctuations

The Layer2 platform for Bitcoin 23 X-BTC 2.0 Vault scheme process Inter-chain deposit Vault locks collateral on the ChainX chain; Prove”Lock” Smart Users transfer Bitcoins to Vault User Contract for locking; Submit lock proof to ChainX; BTC X-BTC ChainX smart contract locks the amount in Vault and issues X- User Vault BTC to the user’s account. Inter-chain withdrawal Users burn X-BTC through ChainX smart contract; User Smart Vault transfers Bitcoins to the Contract Verify user after witnessing the unlock Release collateral event; Release BTC Burn X-BTC Vault submits the release proof Prove”Ralease” to ChainX to unlock the User Vault collateral. Unlock event

The Layer2 platform for Bitcoin 24 X-BTC 3.0——MPC-based X-BTC 3.0 manages to cross assets onto trusteeship scheme other chains with MPC in a network composed of Trader nodes which contribute computing power to sustain the system. There are two main branches in MPC (Multi- party Computation): "secure multi-party computation based on garbled circuits" and "secure multi-party computation based on secret sharing", and X-BTC 3.0 uses the latter which is based on Shamir's Secret Sharing to encrypt and send out data. ChainX plans to start with 100 seats and 28- day election cycle. All trader nodes are randomly grouped with the private key pieces they are holding renewed every 48 hours. Assume each group has N nodes, and each transaction requires signatures of at least M nodes(M<N) to be approved. There is also a punishment system in place to deter trader nodes from violating the agreement for improper gains. The main advantage of X-BTC 3.0 is the complete decoupling between MPC and the contract module, which means the chain is able to connect with other chains as long as the MPC algorithm is supported by the chain and compatible with other chains. MPC’s high compatibility with multi-chain system is a prominent advantage and it is o!-chain, which avoids the risk of contract being hacked, another highlight.

The Layer2 platform for Bitcoin 25 How MPC works Encryption S1 S2 Sercet S3 Sercet SM Decrypt SN

The Layer2 platform for Bitcoin 26 X-BTC 4.0——Decentralized and X-BTC 4.0 modifies the MPC algorithm and autonomous trusteeship scheme resets the threshold to enable users to hold the private key pieces themselves, what’s more the pieces they hold have the veto right, which means a user’s assets cannot be moved without his or her involvement in decryption, thereby guarantees BTC asset security in the trust and greatly reduces the amount of collateral needed to a level even lower than the amount of inter-chain assets. This is the most ideal solution. For example, if a user wants to redeem X-BTC, the steps are as following Calculate the number of needed encrypted pieces and send the request to relevant trader nodes; N trader nodes respond with their own pieces; These nodes then send the request to other trader nodes in the same group; When a node receives more than M pieces, Signature_share_nodes are construted, along with Signature_share_user to retrieve the private key and complete the transaction signature.

The Layer2 platform for Bitcoin 27 Bitcoin derivative platform Mixed Assets BTC Futures Light node BTC Option Digital assets ETN Trusteeship Digital assets ETF Bitcoin Bitcoin financial platform

Digital asset gateway 28 Digital asset ChainX asset gateway is composed of two parts: decentralized Bitcoin gateway trusteeship and inter-chain asset mirroring. Users deposit and collateralize bitcoins for X-BTC which is used in transactions with synthetic assets of other cryptocurrencies, so that all sorts of cryptos can be exchanged and traded on the same chain. Synthetic asset of cryptos is a mirroring simulation of the target asset. Like derivatives in the traditional financial market, virtual assets pegged to cryptocurrencies are created, with blockchain functioning as the traditional trading market. In short, what the synthetic asset does is to copy prices of original cryptocurrencies, so that people can directly trade these virtual assets on the chain. ChainX inter-chain asset mirroring uses X-BTC as locked collateral to map or generate synthetic assets which can be exchanged through smart contracts without requiring a trading medium. ChianX rewards X- BTC holders who issue synthetic assets for the contribution they’ve made, thereby encouraging users to hold and lock X-BTC whose value is pegged to Bitcoin. BTC Token PCX X-Token DOT X-BTC X-Token Collateral BTC custody inter-chain Synthetic asset mirroring asset circulation

Polkadot second-layer relay chain 29 Polkadot second- layer relay chain Relay Chain Relay Chain ChainX relay chain Bridge Trade DAPP The highest security guarantee, responsible Para-chains Para-chains Para-chains for the overall security consensus of the second-layer network. Parallel transfer bridge Split transfer bridges to independent parachains to share the burden. Transaction parachain Provide free matching services to assets within the system to improve transaction throughput. DAPP Parachain Various applications developed by the community can run independently with inter- chain connection being in place.

Roadmap 30

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