Lazer: blockchain without boarders

Cryptocurrencies in their current state are not able to reach their fullest potential, for
reasons to do with limitations that are inherent to currencies in general, as well as of the
underlying blockchain technology that supports each cryptocurrency. A “service layer”
solution is proposed that will unify these blockchains and ultimately enable them to
operate more efficiently both in and of themselves, and between one another.
Cryptocurrencies have attracted tremendous amounts of investment and interest from
the public, as well as the finance world. In spite of the fact that they (and their
underlying blockchain technologies) are in many ways superior to fiat currencies and
their banking systems, they are restrained from realizing large-scale success. Three key
reasons for this are as follows;
 Blockchains are not easily interoperable (e.g. Bitcoin cannot easily be traded with
Ethereum, except through a third-party exchange)
 Transactions are not instant (they can take as long as several minutes or even
hours)
 Incomplete anonymity (the movement of coins can be highly traceable)
As individual cryptocurrencies grow, they meet the virtually universal fate that it is
impossible for any currency to be the world’s “primary” currency. As there are 180
currencies worldwide (recognized by the United Nations), it is clear that this fate is
shared with fiat currencies as well. Just as standardized banking systems such as
SWIFT were able to bridge the gaps between different banking systems, a similar
solution can do the same with blockchains, creating harmony across multiple
cryptocurrencies. The proposed solution will also optimize transaction speeds and
improve anonymity. Further, it will capitalize on this harmony to create a decentralized
exchange for cryptocurrencies (alleviating the inefficiencies of centralized exchanges).
In addition, it will introduce a derivative of the Casper protocol before Ethereum
introduces it - which makes blockchains safer, more scalable, and more energyefficient.

Limitations of Current Blockchain Solutions
Traditional blockchain technologies face several practical issues, which are hindering
the adaptation of these technologies into mainstream use. We will be focusing on the
blockchain technology implemented in Bitcoin as the central case study to demonstrate
its limitations. We believe that the blockchain mechanisms used in Bitcoin are wellestablished,
and have the largest base of installations as of this writing. Further, most
other cryptocurrencies use similar concepts in their blockchains. Hence, we believe the
limitations that Bitcoin faces are representative of those that are faced by other
cryptocurrencies as well.
The Bitcoin network faces the following challenges as of today;
3.1 Lack of Scalability
As per the Bitcoin Wiki, the maximum transaction rate of the current Bitcoin blockchain
implementation is limited to a maximum of ten transactions per second.
This is far behind the current capacity of payment networks such as Visa, which are
capable of processing several thousand transactions per second. A comparative
analysis "Bitcoin and Ethereum vs Visa and PayPal – Transactions per second", gives
insight into this competitive discrepancy.

Incomplete Privacy
Anyone can track transactions, using open blockchain explorers. As such, essentially
any person could discover private information such as wallet balances, recurring
payments, and recipient names. The pseudonym privacy offered by the blockchain is
only secure as long as the pseudonym is not tied to an individual. A considerable
amount of research (Bitcoin Transactions Aren’t as Anonymous as Everyone Hoped)
has gone into proving the weakness of the anonymity provided by most blockchain
implementations. The Bitcoin Wiki article "Anonymity" provides an overview of the
anonymity issues that Laser will seek to address.
Incomplete Fungibility
Fungibility is the property that detaches individual units of a currency from its past
owners. Hence, a US dollar coming from any source has an equivalent value to any
other US dollar. For instance, dollars sent by Alice will have the same market value as
those coming from Bob, even if Alice may have a bad market reputation. This
characteristic makes US dollars fungible. However, since Bitcoin transactions are
traceable in the current blockchain implementation, individual coins can have their value
tainted if it is known that they once belonged to an undesirable party. As such, the
fungibility of Bitcoin units cannot be guaranteed.
Lack of Interoperability
When it comes to making transactions with other blockchains, the Bitcoin network does
not support such transactions. In the fast-growing virtual economy, a lack of
interoperability between different cryptocurrencies will become a major problem. The
need of the hour is to have a network on which different currencies can be exchanged
between blockchains in a trusted environment with minimal fees. Most current
implementations of blockchain lack this feature, forcing each of them to operate in
isolation from other blockchains.
No Incentive for Full Node Setups
Full nodes are the backbone of the Bitcoin ecosystem, and for almost all of the different
blockchain implementations. Specifically in the case of the Bitcoin network, there is a
general misconception that the network is controlled by miners. While there is some
truth to this, it is not completely true. The Bitcoin Wiki article "Bitcoin is not ruled by
miners" goes into greater detail about this. A further explanation regarding how full
nodes enforce the consensus rules can be found here by Danny Hamilton.
A textbook incident of miners not following the consensus rules was witnessed in July
of 2015 on the Bitcoin network (Some Miners Generating Invalid Blocks). It was found
that many of the miners were not verifying the transactions at all before including them
in the blocks. The outcome of this was a six-block fork of the Bitcoin network, which
resulted in a loss of around USD $50,000 worth of Bitcoin, as well as some doublespends.
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Overall, a blockchain having more full nodes results in a faster, more stable, and more
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decentralized network. Although proponents of Bitcoin advocate that users are
incentivized by the heightened overall network security that comes from running a full
node, it is our opinion that a user should be fully confident of the security, whether they
run a lightweight node or full node. This is why our solution incentivizes full nodes;
compensating those who choose to operate them, and not causing those who don’t to
feel under-secured in any way.

Existing Work
Unlike other solutions such as Dash[28], which are specific implementations of
blockchain, Laser is geared to work with any blockchain, without any need for changes
in the underlying protocol. Additionally, the functionality enhancement to utilize the
added services of Laser is limited to the full nodes or the validator nodes – not the other
parts of the network. This allows multiple blockchains to interoperate parallel to one
another while retaining each blockchain’s built-in security properties.
Most of the current solutions for interoperability across blockchains are either limited to
inter-chain transactions of native currency across the participating blockchains (such as
Metronome[26]), or they are limited by compliance requirements of the participating
blockchain. For instance, AION[27] needs a participating blockchain to implement the
‘locktime’ feature, which is not present in IOTA. Such compliance requirements limit the
applicability of the solution – and in turn, the adoptability of the solution in the market.
With our current approach, the only compliance requirement for the participating
blockchains is to have the multi-signature capability, which is present in almost all
blockchains. This easy-to-meet compliance requirement will allow for very easy
adoption of our solution.

Proposed Solution for Better Privacy, Faster
Transactions, and Better Interoperability
In this paper, we propose a solution to address the issues of privacy, near-instant
transactions, and inter-chain operability. We introduce a service layer that is made up of
full nodes.
This layer, termed the servicenode layer, will help in achieving a more secure and robust
blockchain network.
The design of Laser provides for incentivization of the nodes which form the
servicenode layer for providing its services. This will cultivate strong user interest in
operating such nodes – to the benefit of both the servicenode layer, and every
blockchain on which it operates.

Overview
The central idea of Laser revolves around operating the servicenode layer on top of an
existing blockchain as shown in Figure 1. It runs in parallel to the existing blockchain,
sharing computing resources between both blockchains to perform functions as
needed.
For a full node on a given blockchain to be escalated to a servicenode, all of the
following conditions must be met:

Collateral: The requirement of collateral creates a high entry barrier to dishonest
players, making it an expensive and risky endeavor to deploy multiple rogue
nodes on the servicenode layer, as it will require a substantial commitment of
capital to attempt this. Further, with the possibility that the collateral will be
confiscated from nodes that exhibit dishonest behaviour, it disincentivizes such
conduct – as the collateral can be confiscated upon discovery of this behaviour.
The value of the collateral can be decided based on the market value of the
cryptocurrency of the underlying blockchain.
SLA (Service Level Agreement): Servicenode operators will be required to
commit to guaranteeing network service with at least 99% uptime. This assures
users of constant and steady service.
Dedicated IP Address: This acts as an identifier for the servicenode.
Node is not a Miner/Validator: In the case of blockchains that support miners
and validators, a full node that is seeking to become a servicenode cannot be
performing these functions. This is because the underlying blockchain network is
responsible for confirming the transactions.

Laser Blockchain
We propose the launch of a blockchain called Laser by hard-forking the Ethereum
blockchain. We will also introduce a new cryptocurrency called Photon as part of the
Laser blockchain.
All holders of Ethereum (ETH) and Ethereum Classic (ETC) before the hard fork will
receive an equal number of Photons on upgrading their software.

Initial Distribution of Photons
The total supply of Photons will be capped at 42 million units.
All ETH and ETC holders will be entitled to Photons under the proposed distribution
plan, as below.

30% (12.6 million Photons) will be pre-mined for the company.
15% (6.3 million Photons) will be pre-mined for the servicenode crowdsale.
30% (12.6 million Photons) will be generated by the miners. Note that eventually the
mining will be replaced with PoS by Q4 2018.
25% (10.5 million Photons) will be airdropped to Ethereum and Ethereum classic
holders. The Photons allotted to the Ethereum and Ethereum Classic holders will be 5%
of their current holdings.
Current holders of Ethereum and Ethereum Classic will be incentivized to begin staking
on the Laser network through a targeted airdrop. Currently it is estimated that they will
be rewarded with a yearly payout of 36% in Photons.