pNetwork v3 - the path to decentralisation

In a world where the lines between centralisation and decentralisation are often blurred, pNetwork v3 aims to be the definitive answer to the call for true decentralisation, bringing clarity, security and innovation to the forefront.

pNetwork position in the DeFi sector

When pNetwork v1 was first released in 2019, the landscape of cross-chain solutions was scarce, with only a few early-stage alternatives, such as Ren, wBTC, and imBTC.
Now, in 2023, there are more than 80 different cross-chain solutions, demonstrating how strong the need was and is for bridges that can foster connectivity, reduce fragmentation and improve interoperability between different networks.
However, despite the impressive proliferation of such solutions and approaches, none has emerged as the dominant solution, liquidity remains fragmented and security concerns reduce confidence in bridges.

Today, pNetwork is on a mission to be something different, building on the roots of its past experience, but with new principles and strengths.

pNetwork is getting ready to unleash pNetwork v3!

The mission remains the same: to create an easy-to-use cross-chain solution that connects different networks, in order to reduce fragmentation and isolation between ecosystems, liquidity, arts and communities.

The objectives to be achieved in building pNetwork have always been:

  • inclusiveness, achieved through the integration of non-EVM chains, among others, which are often "forgotten" by other bridges due to their complexity; without ignoring the involvement of DAO members in key decisions regarding the protocol and treasury funds;

  • usability, achieved through the development of a user-friendly dApp and a simple, transparent and efficient user journey to exchange tokens;

  • interconnectivity, achieved with pNetwork v2 and its host-to-host feature, which allows cross-chain swap of tokens between multiple (non-native) host chains, speeding up operations and reducing unnecessary barriers.

  • and decentralisation, partially achieved with the introduction of the PNT governance token and the DAO logics that govern the most important decision and the DAO treasury.

These features are the backbone of pNetwork and are here to stay.

To date, pNetwork has achieved more than $1.1 billion in cross-chain transactions and secured up to $280 million in crypto assets (TVL on November 2021). It has been able to remain competitive in the 4 years since its inception, thanks to its ability to be flexible and deliver real value even in market downturns.

However, the protocol must evolve with the industry to remain competitive and thrive in the next phase of the DeFi industry.

Decentralisation needs to be cool again

Although the word 'decentralisation' has been on everyone's lips for a long time, very few protocols have fully embraced it.

While DeFi protocols have become more mature and robust over time, they have tended to add (or retain) elements of centralisation to make it easier to introduce new features and overcome problems and limitations (such as speed), at the expense of full decentralisation. By relying on architectures with multiple points of centralisation, not-fully-decentralised protocols are more vulnerable to exploits, as it increases the attack surface by relying on a single person and limited access points that can be easily compromised.

Source: @CamiRusso on Twitter
Source: @CamiRusso on Twitter

Also, decentralised protocols can be limited, locked or made inaccessible when they rely on third parties servers that are centralized (like AWS, Microsoft Azure and Google Cloud), or when a dApp’s external components (like a wallet required to connect with the dApp) are made incompatible with the dApp itself (e.g. Wallet Connect 2).

Picture from Maggie Love pitch “Saving Web3 Protocols from the Fate of Web2 Companies” @EthCC[6], Paris - Livestream here:
Picture from Maggie Love pitch “Saving Web3 Protocols from the Fate of Web2 Companies” @EthCC[6], Paris - Livestream here:

As far as possible, decentralised projects and their dApps should operate as frictionlessly and independently as possible, but this turns out to be impossible if elements of centralisation are involved.

On the other hand, centralised companies are moving closer to the decentralised world with their own public blockchains (such as Binance with BNB chain and Coinbase with BASE), but centralised elements remain hidden behind the curtain.

@MacroMate8 on Twitter,
@MacroMate8 on Twitter,

The result of this convergence is a mix of decentralisation and centralisation at the core level of products that are intended to be decentralised, leading to confusion, mistrust, and security issues.

This “centralization in decentralisation” undermines security, limit transparency, compromise accessibility and loose control over the protocol.

The approach to decentralisation must gradually return to its original concept, purified of the shortcuts and compromises that centralisation entails.

Decentralisation needs to be cool again.

There’s a new sheriff in town - MiCA walks into the room

A push towards full decentralisation is also given by the introduction of MiCA (Markets in Crypto-Assets) regulation in the European Union, which aims to introduce a comprehensive legal framework to harmonize regulatory requirements for cryptocurrency services across Europe. The regulation will require crypto exchanges and digital wallet companies to get licensed to operate in the EU. Licensed companies will be subject to strict disclosure and consumer protection requirements.

@vutalikButerin on Twitter,
@vutalikButerin on Twitter,

MiCA does not explicitly address decentralised finance (DeFi) protocols, however, partially decentralised crypto services are subject to the MiCA regulation, while fully decentralised services provided without intermediaries are not. (Source: DeFi and MiCA: How much decentralisation is enough?).

The law on these matters is still very opaque, and it's impossible to predict how it will develop.
Whatever the case, the adoption of a completely decentralised protocol will certainly contribute to lowering users’ entry barriers and delivering a frictionless experience.

pNetwork’s road to decentralisation

pNetwork v1 and pNetwork v2 are only partially decentralised, and both architectures have elements of centralisation.

Being aware of these issues, we've worked to reduce the centralisation points as far as possible keeping the current infrastructure (pNetwork v2), while building the pNetwork v3 which embraces decentralisation at its core, by default in all its infrastructure’s components.

Some of the actions implemented to make the pNetwork v2 protocol more decentralised are:

  • pNetwork dApp website available on decentralised domain (ENS + IPFS) - some of the benefits are:

    1. Censorship resistance: Decentralised domains (ENS) and decentralised content hosting (IPFS) make it more difficult for bad actors or other entities to censor or block access to a DeFi project's website or application.

    2. Resilience: A distributed network of nodes hosting content and maintaining the domain registry makes the system more resistant to attacks, hardware failures, and other issues that can cause downtime in centralized systems.

    3. Transparency and security: The use of blockchain technology for domain registration and ownership ensures that the process is transparent, secure, and resistant to fraud or manipulation.

  • pNetwork dApp can be pointing to third-party nodes - this assures that:

    1. Network resilience: If a single node or a group of nodes goes down, the dApp can still function by connecting to other nodes. This ensures that the dApp remains operational even in the face of network disruptions, reducing the risk of a single point of failure or control.

    2. Improved Privacy - Giving users the option to choose which nodes the dApp connects to provides them with more control over their data and transactions. This can be particularly important for privacy-conscious users who want to ensure that their data is not being monitored or controlled by a single entity.

    3. Improved User Control - Because the user can easily run the open source code without any backend infrastructure and connect it to their own node, it is easier than ever to have full control over the dApp, even running everything locally on their own laptop.

  • Inclusive governance via the pNetwork DAO - granting:

    1. Democratic Decision-Making: decisions are made collectively by the community, rather than being concentrated in the hands of a few individuals or a central authority. This decentralisation of power can lead to more democratic and transparent decision-making processes, which can ultimately result in better outcomes for the project.

    2. Resilience and Security: a DAO distributes decision-making power, making it harder for bad actors to manipulate the system or for mistakes to have a significant impact on the project, making the project itself more resilient and secure.

    3. Automatic vote execution: DAO proposals can be programmed with a dedicated script that triggers a smart contract and executes the approved proposal. In this way, the execution of a DAO vote can’t be impeded by anyone and DAO members are the only ones who have control over it by voting for or against the execution of that proposal.

All these actions already position pNetwork as one of the projects in the DeFi industry that values decentralisation, privacy and security the most.
However, the actual architecture is not yet fully decentralised and deeper changes need to be made.

pNetwork v3 is our answer to the purest level of decentralisation, at its core and in all its branches. pNetwork v3 will remove all aspects of centralisation, while retaining all the principles that characterise pNetwork.

Decentralisation is king, pNetwork v3 is queen

The pNetwork v3’s architecture is completely decentralised from its new design, and new actors (Relayers, Sentinels, Guardians, and the DAO) have been introduced to avoid any centralized entity requirement.

pNetwork architecture, in a nutshell:

The new architecture uses the optimistic approach and multi-provers.
The optimistic approach expects an actor, called Relayer, to make a proposal for the issuance or redemption of a pToken; after the proposal, a period of time, called challenge period, allows other actors to verify the legitimacy of the proposal, which is optimistically expected to reflect the original request of the user who instructed the swap.

If the proposal is assessed as illegitimate, it can be cancelled, which means that it is no longer executable after the challenge period has elapsed. Cancellations should come from actors belonging to different classes (multi-provers), which we have identified as Sentinels and Guardians.

Any entity, known as Relayer, can suggest a transfer execution on the destination chain after the challenge period. This differs from pNetwork v2 where transactions were exclusively processed by bridges run by select permissioned nodes.

Being a fully decentralised protocol, pNetwork v3 will naturally fall out of the scope of MICA regulation and therefore it won’t be required for any KYC, AML or other requirements that can bring friction and rise barriers at the user experience level.

Despite the protocol should maintain its decentralisation, pNetwork is actively seeking ways to prevent malicious individuals from using the protocol for unlawful purposes and/or illicit funds.
Further details are expected to be released in the upcoming months to illustrate this new concept.

Fortify v3 security

pNetwork v3's security is ensured through the collaboration of multiple actors tasked to intercept fraudulent cross-chain transactions. These include:

  • Sentinels, registered entities that emit fraud-proof supported by a TEE attestation

  • Guardians, DAO elected actors that can independently file dismissal requests

  • pNetwork DAO, involved only when conflicts emerge from specific situations

The multi-provers approach challenges user proposals, and if any of these three elements are triggered, a Relayer's request can be dismissed.

In specific (and rare) situations where conflicts arise and Sentinels and Guardians fail to reach a consensus on a Relayer proposal, the intervention of the pNetwork DAO becomes necessary. This intervention serves as a mechanism to address and resolve disagreements. When such conflicts occur, a new vote will be automatically initiated, providing an opportunity for the DAO to express its stance by voting either in favour or against the disputed transaction.

The security of the pNetwork DAO should not be confused with the security of the pNetwork protocol as a whole.
To put it simply: taking over the DAO doesn't mean taking over the pNetwork v3 protocol. Let’s find out why.
While the DAO plays an important role in governance and decision-making, it does not have the authority to change the fundamental behaviour of the pNetwork protocol. Rather, the DAO's security functions are limited to those of one actor among many, and its actions are designed to support and enhance the functionality of the protocol, as it operates in the service of the protocol.
What's more, the DAO Treasury is not part of the protocol itself, and its eventual exploitation will in no way affect pNetwork's cross-chain operations.

The framework of pNetwork v3 can be designed as follow:

pNetwork v3 framework
pNetwork v3 framework

Optimistic vs MPC approach

The decision to use the optimistic approach with multi-provers validators over Multi-Party Computation (MPC) is primarily due to two reasons:

  1. More Decentralisation: In some MPC implementations, a limited number of parties are involved in the computation, which can lead to centralization concerns. If a majority of the parties collude, they can potentially compromise the system.

  2. Less Complexity: MPC protocols can be computationally intensive and require significant communication overhead, which can impact the performance and scalability of the system.
    In addition, MPC protocols can be very complex, and it’s very difficult to understand the inner workings of their mathematical principles or the caveats of the code of the libraries they rely on. Complexity can often lead to mistakes, which can lead to security breaches.

Although the challenge period of the optimistic approach could potentially extend processing times, we believe that this trade-off is acceptable. The emphasis on complete decentralisation, superior scalability and un-compromised security outweighs the need for speed. This balance is a strategic decision to ensure the integrity and resilience of the system in the long term.

Additionally, the potential delay caused by the challenge period isn't inevitable. It can be mitigated by adopting supplementary solutions designed by pNetwork or by integrating suitable third-party protocols that will provide the user with a faster experience.

What’s next

pNetwork v3 embodies the pNetwork Community Association’s vision of future DeFi cross-chain solution: pure and comprehensive decentralisation while providing reliable, secure and inclusive cross-chain experience, to reduce fragmentations and barriers among liquidity in different ecosystems.

With this goal in mind, the development of pNetwork v3 is proceeding fast and steadily; since its conception, the pNetwork Community Association has already released the white paper and the MVP.

As we look to the horizon, we aim to achieve the following objectives:

  • No centralisation shortcuts: Despite potential obstacles, the pNetwork is determined to navigate through them without compromising on full decentralisation. The commitment to this principle remains firm and unwavering.

  • Strengthening old partnerships and forming new ones: By leveraging the new architecture and strengths of pNetwork v3, the project aims to solidify existing relationships and create new partnerships. These collaborations are essential to the continued growth and success of pNetwork.

  • More community involvement: pNetwork's ambition to become a community-led project, with the DAO at its core, reflects a commitment to actively involve the community in the decision-making process. The intention is not just to inform, but to empower the community as the project evolves.

Just as pNetwork anticipated the huge demand for cross-chain solutions in 2019, today pNetwork is ready to take another pioneering step in DeFi.

The pNetwork Community Association is a Swiss association led by community members who are long-term supporters of pNetwork as a technology, token and protocol. It aims to contribute to the development, growth and education of anything pNetwork related.

pNetwork is a protocol that enables cross-chain operations, such as transferring assets from one blockchain to another. It is designed to provide interoperability between different blockchain networks, allowing users to take advantage of the unique features and capabilities of each network while still being able to access and use their assets on other networks.

Subscribe to pNetwork Community Association
Receive the latest updates directly to your inbox.
Mint this entry as an NFT to add it to your collection.
This entry has been permanently stored onchain and signed by its creator.