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Background

A state channel operates as an autonomous network that converges with Hypergraph's Global L0. A state channel is an L0 subnet with its own business logic, technical infrastructure, and consensus model. Together, state channels form a distributed network that can accommodate big data in many real world contexts. You can think of a state channel as a microservice or a smarter smart contract.

The Hypergraph network is based on a generative economic system where all participants in the network benefit from the success of each individual node and state channel โ€” the sum is greater than its parts in terms of security, throughput, and the economic growth of the network.

State Channels vs Smart Contracts

State ChannelsSmart Contracts
Free to define their own business logic, rewards, and metricsBound into an economic relationship with their blockchain (e.g. Ethereum)
They define their own custom parameters and can execute complex logicExecute logic in a limited context based on pre-set conditions
They solve the oracle problem by validating data itself directly from real-world sourcesThey require an oracle to validate information from the real world
Able to process arbitrary data from multiple blockchains or any data sourcesLimited to specific blockchains from which they emanate
Allows validation of multiple data types simultaneously due to HGTPโ€™s horizontal data architectureSlow and bottlenecked because of their built-in limitation on blockchain networks

Interoperability

  • Ability to accept, process and validate third party data from real world data sources. For example, state channels can accept data from sources such as cars, consumer electronics devices, temperature sensors, advertising exchanges, financial exchanges, or other blockchains and act upon triggers from these sources.
  • Developers are able to integrate state channels directly into existing applications whether legacy or current, allowing for direct E2E security and frictionless deployment. Interoperability creates a seamless bridge for centralized systems to transition or incorporate elements of decentralization within their business model.
  • Ability to accept, process and validate data from other blockchains. For example, state channels can accept data from other blockchains such as Ethereum.

Infinite Scalability and Speed

Hypergraph enables infinite horizontal scalability of the network, which enables state channels to use the bandwidth to run complex operations of huge sets of data in order to implement business logic. This also enables state channels to provide very fast and cost-efficient transactions ensuring that users do not have to wait for long periods of time or pay high gas fees in order to complete their transactions.

Custom Consensus Mechanisms

One of the most powerful features that Hypergraph provides state channels is the ability to define custom consensus mechanisms. This enables them to validate real-world data and implement complex business logic in a secure context. This is impossible on any other blockchain solution currently available on the market.

L0 Token Standard

  • A state channel can mint their own L0 token on the network which can be used to assign value to data and create their own tokenomics which can be used to transact within the specific ecosystem, define specific business logic and reward node operators and users.
  • A cell implementing the L0 standard interface has the ability to connect with existing L1 protocols and share meta-state for use cases such as swaps.

The Oracle Problem

A data oracle is a bridge between the blockchain and the real world. They provide on-chain APIs that send real world data to and from a smart contract. These oracles depend on off-chain data sources which feed in the data to the blockchain. These data sources are centralized components and are susceptible to problems with the integrity, validity and security of associated data. They are also susceptible to attacks by hackers who can change the behavior of the smart contract by controlling the data that drives these contracts. This is referred to as the the Oracle Problem.

The Hypergraph network makes it possible for any state channel to interoperate and exchange data with each other while orchestrating complex validation logic through each step of the consensus process, from its point of origin to its destination. This solves the Oracle Problem and enables the state of external off-chain data to be validated at its source and then incorporated on-chain.