Interledger Approaches

Abstract

While blockchains and more generally distributed ledger technologies (DLTs) are passing over their hype curve peak, their shortcomings are becoming more apparent. One relatively recent approach to address their performance, scalability, privacy, and other problems are to use multiple different DLTs instead of relying on just one. While there are no really established standards for combining several DLTs, a few repeating patterns can be observed. In this paper, we present a survey of interledger approaches, discussing and comparing their underlying mechanisms. A shared motivation for all of the discussed interledger solutions is to move away from the 'one chain rules them all' model to one that allows the interconnection of multiple ledgers, with different features and advantages, while also supporting innovation. The interledger approaches discussed in this survey include 1) atomic cross-chain transactions, 2) transactions across a network of payment channels, 3) the W3C Interledger Protocol (ILP), 4) bridging, 5) sidechains, and 6) ledger-of-ledgers. The approaches are compared according to whether they support the transfer or the exchange of value, their interconnection trust mechanism, complexity, scalability, and transaction cost.