LITEX - Distributed Value Exchange Ecosystem Based on Layer 2 Techn...

This article will give a brief introduction about what is LITEX all about and why is it so important.

What is layer 2 or Protocol layer?

Though almost everyone knows about blockchain, not so many can really understand / use / enjoy the services that offered by blockchaim or related DAPPs. The reasons can be boiled down to the following questions:

Low efficiency of mainchain. Public blockchains like Bitcoin, Ethereum by using POW as consensus mechanism, require every transaction to be processed and synchronized in the network. So the max number of transactions per second will be limited. While Bitcoin supports seven transactions per second and Ethereum twenty-five, Visa, on the other hand, supports up to 47,000 transactions per second at peak processing power. Obviously, such low efficiency is not strong enough to support so called killer dapps, so the scalability has always been the first class problem to be settled urgently.
Isolated Public chains. In recent years, public chains besides Bitcoin and Ethereum are becoming prevalent. EOS, for example, have received a lot of attention. However, the public chains are isolated from each other, and the information between them cannot be shared for crpto aseets or smart contracts, so cross-chain communication is in need to achieve interoperability.

To solve the problems mentioned above, developers hope to find solutions in protocol layer, which can also be called layer2. Layer2 should be built upon its mainchain, and it can extend the utility of public blockchains outwards, letting us have interactions off-chain that can still reliably refer back to that core kernel if necessary.

With layer2, the efficiency of mainchain can be better, information can be shared among public chains, and the costs will also be much lower.

What makes LITEX different?

LITEX is a fully decentralized value exchange ecosystem. It is built on the layer 2 technology, and is able to realize off-chain transaction and cross-chain communication, which solves the two main pain points of blockchain. It carries the upper-level applications such as micropayments and decentralized exchanges. Through API layer, LITEX opens up its fundamental functions and supports rich value exchange ecosystem, connects between the digital / crypto world and the reality, and builds the infrastructure of blockchain world.

Till now, LITEX is working closely with top experts in Chinese Academy of Sciences, and has made some remarkable progress and has launched its testnet V0.2 on Oct. 24 2018 which demonstrates three main achievement - BTC off-chain transaction (Splicing in / splicing out), BTC distributed fast routing and BTC&ETH cross-chain atomic swap.

Technically, for different public blockchains, there are several layer 2 solutions, like Lightning Network for Bitcoin, State Channels, Plasma, and Truebit for Ethereum. But LITEX has its own technical edge compared to these solutions.

Lightning Network is a practical approach to improve transaction capacity and reduce transaction delay using a network of off-chain micropayment channels. In LN, any two participants can collectively build a bidirectional off-chain channel by depositing funds into the channel. They can later agree on any new allocation regarding the funds which are already committed to the channel. What’s more, with RSMC (Revocable Sequence Maturity Contract) and HTLC (Hashed Timelock Contract), participants without mutually shared off-chain channels are still able to make transactions by finding a path connecting different participants between them.

However, several fundamental functions and limitations are still left to be developed and improved. One limitation is the malleability of payment channels. In particular, the channel with fixed capacity does not support dynamic deposit and withdraw, which will result in extra fees for channel management and other possible inconveniences in many scenarios.

Wanting to improve payment channels’ malleability, LITEX address both dynamic channel deposit (a.k.a. splice-in) and withdraw (a.k.a. splice-out) problems. LITEX have constructed a case to demonstrate that at least one on-chain broadcast is necessary for splice-in and splice-out. LITEX then propose two approaches for splice-in and splice-out that only result in one on-chain broadcast, reducing the number of necessary broadcasts to the minimum.

Why layer 2?

Since Satoshi Nakamoto pictures Bitcoin as a “peer to peer cash system”, blockchain is related to finance from the start. Someone says blockchain is Internet 2.0, while Internet is about the transmission of information, blockchain is about the transaction of value. So LITEX knows that VALUE EXCHANGE is the key factor in blockchain world. Since there are many technical pain points present, LITEX determined to solve these with the most challenging technology - layer 2.

LITEX is willing to help extend the applicability and scalability of blockchain by developing underlying technology of infrastructure.

Team

Core team members of LITEX all graduated from Peking University and and technical members are mainly from the Computer Department of Peking University and the Chinese Academy of Sciences.

Team also has rich experiences both in the game payment industry and blockchain technology. So the team is quite familiar with how to apply blockchain technology to payment industry. Founder of LITEX Leo Wang was a major manager from one of the Chinese industrial payment company Yibao. And later he founded a game payment company with an annual profit of more than 10 million.

Consultants of LITEX have strong industrial background as well. Jeffrey Wernick, from the United States, investors from Japan, media support from South Korea, and industry support from Australia, and we are looking for technical community participants, developer community participants and user participants in our community all over the world.

Progress

LITEX is currently developing FundCasc based on The Lightning Network Daemon (lnd), and had published our test network v 0.2.