The Aventus solution to the digital asset problem

A number of industries and participants have adopted platforms like IBM’s over because they cannot sacrifice scale or privacy.

However, at least in the proof-of-concept stage, they are prepared to sacrifice independence and accept lower levels of security than that afforded by Ethereum.

With the Aventus Protocol, there is no trade-off. Organisations are free to benefit from the combination of private and public without the drawbacks.

The following chapter will introduce Aventus’ solution to the current problems of technology. It will give you a high-level overview of the Aventus Protocol’s system architecture, how it is used, and how it will benefit digital asset issuers, managers, and owners.

The Aventus Protocol

The Aventus Protocol is a Blockchain solution that combines the scale and privacy of private Blockchains with the security and independence of public chains.

It solves issues with scalability by taking transaction processing off-chain and uses cutting-edge ‘zero-knowledge proofs’ for privacy. The ultimate goal of the Aventus Protocol is to improve standardisation, trust, and security across value chains. It does this while lowering costs, reducing friction, and generating entirely new asset services.

The following section will explain the protocol’s key functions and how they work. A Layer 2 solution

The Aventus Protocol is what is known as a ‘Layer 2 Solution’.

This means that it is built on top of an existing public Blockchain network, in this case Ethereum. This layer 2 Solution processes transactions ‘off-chain’.

The purpose for this is to solve the scalability problems of Ethereum, while maintaining the benefits of security and independence.

This in itself is not new. To address the shortcomings of public Blockchains, various developer communities have moved to creating ‘Layer 2’ or, more accurately, ‘Execution Layer’ solutions.

In the case of , for example, Lightning has become the de-facto scaling solution. Initial implementations of these solutions tend to either be suboptimal rehashes of the base Blockchain, or are too specific to be commercially viable. Furthermore, a trade-off is evident between preserving the full security of the base Blockchain and transaction finality with high throughput.

The Aventus Protocol, however, is a cutting-edge Layer 2 solution with privacy considerations.

Description Example A Layer 2 Solution is built on top of an Imagine Sally buys her Ed Sheeran tickets existing Blockchain to improve immediately upon launch. scalability. The tickets she buys are transacted across the The Aventus Protocol is a secondary hypothetical Aventus Protocol in which the Layer 2 Blockchain solution which lets Aventus Solution does not exist. process transactions more efficiently, independent of the Ethereum Tickets usually sell out in minutes. Blockchain. This is known as ‘off-chain’ processing. But this time, Ed Sheeran’s team are panicking, how can it be that they have only sold 10% of tickets? Transactions are processed and verified more efficiently by Aventus Nodes (see Well, without the Layer 2 Solution to process section 3.2.2.1 Aventus Nodes). transactions through nodes ‘off-chain’, the entire network could only process 100 tickets per second. They are then batched together into Aventus Blocks and sent to the That means fans would have to wait hours for their Ethereum Blockchain where they are tickets to be processed. made public. However, with the Layer 2 Solution, transactions are In this sense, Aventus is a Blockchain batched by Aventus Nodes and then sent to the within a Blockchain. Ethereum Blockchain.

This way, fans can buy tickets at true scale. Summary

Off-chain processing allows the Aventus Protocol to more quickly verify transactions while still benefiting from the security of the public Ethereum Blockchain. The processing is handled by Aventus Nodes, which batch transactions together before making them public.

More information: https://www.ibm.com/blogs/systems/storage-for-blockchain-and-modern- distributed-database-processing/ https://media.consensys.net/the-state-of-ethereum-layer-2-protocol-development-2- f22b2603abd6

This means the Aventus Protocol can process transactions faster than a public Blockchain, while still preserving the properties of Ethereum where transactional information is made public.

This is where zero-knowledge proofs come in.

Zero-knowledge proofs and Sigma protocol for privacy

All transactions on the Aventus network can contain a private piece of information that can be verified, without disclosure, using a Sigma Protocol.

This can be anything the user wants to remain confidential. It can be as simple as their identity information, or a secret piece of information given from the vendor to the owner for the purpose of proving ownership. What’s more, the Sigma Protocol can let customers redeem their assets with a different vendor, e.g. in the case of loyalty cards.

The implementation of zero knowledge also minimises attack vectors concerning Aventus nodes, and asset distributors attempting to manipulate digital asset transactions.

In the case of tickets, we use zero knowledge proofs so that a ticket owner can prove they have the “barcode for entrance the door” data without having to show the barcode. This means you can prove you are the legitimate ticket owner without having to show the ticket. This helps ticket owners prove ownership without having to reveal private information. To achieve this, we use cryptographic primitives to link an owner to an asset in one direction.

Description Example

The Aventus Protocol leverages zero- Imagine the Ed Sheeran concert is 18+ due to knowledge proofs (ZKPs) to address the explicit content. Sally needs to add her problem of privacy on the Ethereum identity to the ticket she just bought as well Blockchain. as prove her age.

The goal is to prove a statement without Naturally, he does not wish to share her leaking extra information. name, address, and date of birth information publicly. ZKP lets you prove you know something to someone without actually revealing the So she uses zero-knowledge proof over the information. The term ‘zero knowledge’ Aventus Protocol. originates from the fact that zero information about the secret is revealed, but the second Using zero-knowledge proof cryptography, verifier is rightfully convinced that the first she can prove to the verifier who she is and party holds the information. authenticate the transaction using a cryptographic fingerprint without having to Why would you need to prove you know a reveal her age or identity information. secret without revealing it? If Sally decides to sell the ticket, she can do When you do not trust the other party but so on a ticket reseller website. still need to persuade them that you know it. Here, the ticket reseller and new ticket owner On the Aventus Protocol, a user can choose will require proof of Sally’s identity. to make certain parts of their transactions private by using a ZKP. Using a zkp, Sally can prove her identity without having to reveal her driving licence, This could include, but is not limited to: passport, or sensitive information directly.

• Identity information • Transaction value • Asset details, etc. The implementation of zero-knowledge also If Sally decides to sell the ticket, she can do minimises possible ways that the network so on a ticket reseller website. could be attacked, and prevents asset distributors from manipulating digital asset Here, the ticket reseller and new ticket owner transactions by obscuring key information. will require proof of Sally’s identity.

The decision to opt for the Sigma Protocol is Using a zkp, Sally can prove her identity because the Aventus use case is narrow without having to reveal her driving licence, enough such that generality is not required. It passport, or sensitive information directly. also allows for faster proof generation, which has allowed us to create a proof on a smartphone in less than one second.

Our previous implementation of zk-SNARKs resulted in proof generation that was too slow on mobile devices, and produced expensive verification.

We will continue to explore other zero knowledge proofs as development of the Aventus Protocol advances.

Zero-knowledge proofs are an advanced form of cryptography that allows a ‘prover’ to prove a piece of information is true to a ‘verifier’ without revealing anything about the information.

On the Aventus Protocol, ZKPs are used to protect the privacy of transactions, and add another layer of security. By employing this system, the protocol allows users to transact assets secretly, while still ensuring that all transactions can be validated on the Blockchain.

More information on Sigma protocols: http://www.cs.au.dk/~ivan/Sigma.pdf Aventus combines the scale and privacy of permissioned Blockchains without trading off the security and independence benefits of public chains. We achieve this by employing a Layer 2 Solution that solves for scale, and uses cutting-edge zero knowledge proofs to solve for privacy.

Today, the Aventus Protocol can scale to thousands of transactions per second, and is completely GDPR compliant. In its current state, it preserves key components of decentralisation, with certain elements made open source. A future, full-release will be entirely decentralised and wholly open source.

With Aventus, myriad unknown participants can interact with each other without significant compromise on transaction finality and speed. We have done this by restricting our problem domain solely to digital asset exchange (issuance, transfer, and communication), which allows us to take shortcuts in computing and finalising state.

Recap

• The Aventus Protocol is a Layer 2 Solution. • This means it processes transactions via its own nodes, and then adds them to the Ethereum Blockchain. • The reason it does this is to overcome the problem of scalability on Ethereum, while still benefiting from its security and independence. • The problem of privacy is addressed by employing a type of cryptography known as zero- knowledge proofs. • These proofs allow users to add confidential information to transactions without revealing this information to the public, and while still allowing for the transaction to be publicly validated. • The Sigma Protocol means users get their proof via their mobile in less than a second. • The ZKPs add another layer of security to the protocol.

The following section will introduce the Aventus Protocol’s network architecture, and explain how each element works to improve digital asset exchange.

Network architecture

The Aventus Protocol is split into three tiers, each of which is responsible for different functions of the network:

• Tier 1: where the Aventus Protocol interacts with the Ethereum Blockchain. • Tier 2: where initial verification and transaction processing takes place. • Tier 3: where third parties create mobile and web applications that use the Aventus Protocol.

These three tiers, when combined, deliver fully on scalability, security, privacy and independence.

The following sections explore each tier in more depth. Tier 1 — Ethereum Blockchain

Within Aventus’ architecture, the base-Blockchain is the ultimate adjudication and audit layer, and is where a participant in the ecosystem can objectively resolve any Tier 2 disputes.

A fully decentralised public Blockchain is a key attribute of Tier 1 as it delivers the highest degree of security and independence. This is crucial in industries such as ticketing, which are plagued by low trust. Tier 1 uses a combination of Merkle roots, adjudication, and governance processes to finalise asset transfers.

Description Example A fully decentralised public The consensus mechanism makes sure that the digital Blockchain is a key attribute of Tier 1 assets transacted aren't susceptible to fraud in the value as it delivers the highest degree of chain. security and independence. This is why, when Ticketmaster and See Tickets are both For this purpose, the Aventus selling Ed Sheeran tickets for The O2 — even though Protocol uses the Ethereum Ticketmaster has a long standing relationship with The Blockchain. O2 — See Tickets knows that they are getting an equal allocation of tickets with equal priority.

The Aventus Protocol uses Ethereum public Blockchain as its Tier 1 layer. This is because Ethereum offers high levels of security and independence. It creates a ‘trustless’ environment in which participants do not need to know each other nor have agreements in place.

More information: https://ethereum.org/ Merkle roots

Description Example Asset transfers on the Aventus Protocol are Imagine Sally buys four Ed Sheeran tickets. handled in Tier 2, where they are processed into Aventus Blocks. She gives one to Dan, and has two spare that she would like to give to another couple with Merkle trees are a way of structuring data for whom they often spend time. efficient and secure verification (see section 3.2.2 Tier 2). Unfortunately, the other couple is away on holiday, so Sally decides to sell the remaining Inside these trees are the details of every asset two tickets. transfer. The Aventus Protocol handles the transfer of In Tier 1, the root of this tree (known as a the two tickets, where the transactions are Merkle root or the Aventus Block hash) is processed into Merkle trees. posted to the Ethereum Blockchain where it is made public. Inside these trees, you’ll find the details of every asset transfer. The Merkle root is a hash value for all transactions that take place in its respective This allows the new ticket holders, as well as Tier 2 tree. This lets anyone verify the validity the concert management staff, to verify of a transaction by checking the hash value of ownership. the root rather than check each transaction individually. Description Example By posting these roots onto Ethereum, anyone What’s more, the concert management staff can look up any transaction on the Aventus can do this at scale, with all 100,000 tickets, Protocol. This allows them to prove ownership by checking the hash value rather than and transfer an asset at any time. thousands of transactions one by one.

Summary

Merkle trees are a way of structuring data that lets someone efficiently verify the information in the data set. In Tier 1, the root of this tree (the Merkle root), is posted publicly on the Ethereum Blockchain. In terms of digital assets, this means anyone can check the existence, ownership, and transfer of an asset at any given moment. Within the Aventus Protocol, a Merkle tree is an Aventus Block, and a Merkle root is an Aventus Block hash.

More information: https://brilliant.org/wiki/merkle-tree/

Adjudication

Description Example Since asset transfers are processed privately Sally and Dan have been dating for a while on Tier 2 by Aventus Nodes (see section 3.2.2.1 when Sally discovers something terrifying Aventus Nodes), Tier 1 allows these about her new boyfriend. transactions to be challenged publicly by posting them to the Ethereum Blockchain. He has been lying about the fact he likes Ed Sheeran. Sally is horrified, but the betrayal If, for instance, a node on the Aventus Protocol does not end there. tries to commit fraud, anyone can challenge their activity and prevent it being added to Dan has tried to sell the same concert tickets the (see section 3.4.4.2 Challenging multiple times to make a little extra cash this fraud on the Aventus Protocol). month.

In this sense, the Tier 1 Ethereum layer acts as Dan runs an Aventus Node to manipulate the adjudicator before transactions are set in transactions to try and sell the same concert stone on the ledger. tickets.

Discovering this, Sally challenges Dan’s data by posting them publicly to the Ethereum Blockchain.

This proves that Dan was committing fraud, and his data is not added to the ledger.

Summary

By posting the details of asset transfers publicly on the Ethereum Blockchain in Tier 1, it is easy to challenge and prevent fraudulent activity regarding asset transfer.

Governance

Description Example Aventus employs a democratic voting system whereby Let us say Lucy, our Blockchain every token holder has a vote in the rules that govern the lover, wants to reduce the root system. deposit for a node to process a transaction from 300AVT to It is in Tier 1 where these governance parameters are set 200AVT so she can process more and maintained. transactions from her node without tying up all her tokens. This includes defining rules around: Lucy then initiates a vote. The • How much AVT an Aventus node processing Aventus community votes in her favour, blocks needs to stake, or deposit, in AVT and the proposal passes. • How long that deposit is held until it is released back, if no challenges occur Every token holder receives one • How long people have to challenge transactions before vote per token they hold. they are deemed safe Those with a greater holding of These rules can be voted on and altered (via consensus) by AVT have a greater voting voice in AVT holders on a quarterly basis. the governance of the network.

As such, the Aventus Protocol is adaptable and can change dependent user requirements.

Summary

AVT token holders in Tier 2 vote on the governance of the protocol and require consensus to pass new rules that are maintained in the Tier 1 public Blockchain architecture. This ensures that the network is self regulating, fair for all participants, and can evolve as industries change. Recap

• Tier 1 is what is known as the ‘open Blockchain adjudication layer’. • It is here that the data regarding asset transfers on the Aventus Protocol is posted publicly to the Ethereum Blockchain. • This allows the existence, ownership, and transfer of an asset to be checked and proven at any time. • It also allows fraudulent activity to be easily challenged and prevented. • Finally, it is in Tier 1 that network governance is determined. • This determines the ‘business logic’ of the protocol, i.e. how the network operates and evolves over time.

Changes to the network are only passed if agreed upon by consensus by Aventus Nodes.

Tier 2 — The Aventus Network Layer

The Tier 2 layer deals with the initial verification and processing of transactions. It is where asset management platforms send transactions for processing by Aventus Nodes..

Aventus network nodes will function much like existing Blockchain networks today (e.g. Ethereum, Ripple etc.).

Aventus Nodes

Description Example

As with other Blockchains, the Aventus Imagine Sally sells one of her spare Ed Protocol relies upon nodes to process Sheeran tickets on a ticket resale website. transactions. The website builds on the Aventus When a transaction takes place on an Protocol and is running a Tier 2 Aventus asset transfer platform (in Tier 3), it is Node so it can forward its ticket resale sent to an Aventus Node for processing. transactions to the Aventus network.

This transaction is then forwarded on to The ticket sales are sent to other network the other nodes in the network, which nodes for verification which create a pool creates a shared memory pool of of unprocessed transactions. unprocessed transactions. They combine into an Aventus Block for These transactions are combined into a quick and efficient processing, which is Merkle tree for more efficient processing. then posted to the Tier 1 Ethereum Blockchain where they are made public. The Merkle root of this tree is then posted to Tier 1, where the transactions Although she might not understand how are processed and made public on the it happens, the sale of Sally’s ticket on Ethereum Blockchain. the resale website is safe and secure — and possible at scale — because it For creating these Merkle trees, the passes through all three tiers. Aventus Nodes are rewarded financially (see section 3.4 Token economics).

Summary

Tier 2 is the Aventus layer. It is here that the nodes process and verify private transactions before being posted publicly to the Ethereum Blockchain. Tier 2 also connects Tier 1 and Tier 3 allowing for third party integrations.

Proof-of-authority consensus

Currently, the Aventus PoA network boasts tk X transactions per second at its theoretical limit, with a minimum confirmation time of tk X seconds. Confirmation times vary by digital asset type, since some (e.g. Ticketing) have a less stringent requirement on fast confirmation times than others (e.g. Loyalty).

Description Example

The Aventus Protocol currently uses a Imagine that Lucy, our favourite proof-of-authority consensus mechanism Blockchain enthusiast, runs an Aventus to maintain the ledger. Node.

This means that the nodes responsible To do so, she sold some Bitcoin to afford for updating the ledger are chosen based the stake in AVT tokens. on their proven identity. In our case, these nodes are owned and operated by the Lucy’s node has a high reputation score Aventus Protocol Foundation and its because she keeps the node up and has partners. an excellent challenge history.

The protocol allows for full, public When Sally sells her Ed Sheeran ticket, transparency of both incoming and Lucy’s node is one of those chosen to processed transactions. verify the transaction and add the transaction to the ledger. Nodes follow a deterministic schedule to propose blocks to the network by From there, the nodes post the Merkle batching transactions into Merkle roots. tree — containing Sally’s ticket transaction — to Ethereum. However, it is not truly decentralised and, therefore, independent. This decision was In return, Lucy’s node earns a fraction of made to promote the protocol the processing fee. commercially, and create a testbed for the configuration of Aventus’ upcoming proof-of-stake network (see section 3.6 Future development). The full release of the Aventus Protocol will be completely decentralised.

Summary

In Tier 2, the Aventus Nodes receive, process and validate transactions from asset transfer platforms. These transactions are batched up into Merkle trees for more efficient processing. Nodes are then selected ‘randomly’ in alignment with the Aventus Node Reputation System to achieve a consensus for validation. Finally, they send the Merkle root of these trees to Tier 1 where they are processed and made public. Tier 3 — The SaaS and custom implementation layer

Building on top of the Tier 2 protocol layer is the Tier 3 client application domain, i.e software-as-a- service, web and mobile applications, etc.

Here, third parties can extend upon and monetise the key attributes of Aventus’ Tier 2 solution by developing bespoke solutions for clients operating in digital asset supply chains.

Software development kits (SDKs)

Description Example A key part of Tier 3 is the Aventus SDKs. Lucy’s passion for Blockchain unleashes These tools allow third-party developers her entrepreneurial potential. to easily create applications that utilise the Aventus Protocol. As well as being a node, she sees potential in the various SDKs she could If you’re familiar with coding, you can build. She spends her evenings deciding liken it to web applications. In the same which of the possibilities she should way that HTML and HTTP can be used focus on first. She is not yet sure to build and deliver a variety of web whether to build: applications, the powerful abstractions offered by Tier 2 can be used to serve a • Dashboards and software tools for variety of clients’ needs. issuing, transferring and redeeming assets. To this end, we have started creating a • Global distribution networks in which family of SDKs that can support some allocations and digital asset rules are interesting use cases, such as ticket backed by the Blockchain. delivery, a specific implementation of • Powerful communication systems messaging (e.g. ticket communication), between asset issuers, vendors and and rules-based inventory distribution. current owners, where messages are encrypted and delivered via the The flexibility of the Aventus network Blockchain to the asset itself. gives clients the opportunity to • Data analytics and visualisation tools experiment and discover yet more to view and use the rich digital asset applications that leverage our Layer 2 data sets found on the Blockchain. Solution. • New marketing tools where micro- distribution, referrals, and affiliate sales are tracked independently and rewarded with micropayments based on preprogrammed rules.

Summary

Tier 3 is where anyone wishing to build something can interact with the Aventus Protocol. This could include, for example, asset issuer platforms, tech companies, marketing companies, or anyone who sees value. Software developers can use the Aventus development kits to produce all sorts of applications that can benefit from the integration of Blockchain. Recap

• The Aventus Protocol is structured in 3 tiers. • Tier 1 creates a public record of asset transfers by adding transaction information to the Ethereum Blockchain. • This allows assets to easily be tracked and traced at any given moment, and for fraud to be identified and prevented via the auditability and security of Blockchain. • In Tier 2, the Aventus network nodes process transactions sent to them from third-party platforms. • This increases the speed at which transfers can be normally processed on the public Ethereum Blockchain. • In Tier 3, asset transfer platforms connect with the protocol via software development kits. • Developers can use these kits to create applications for better asset management by integrating Blockchain.