Octopus Network: An Interoperable Substrate Hub Built with NEAR Smart Contracts

Octopus Network developed a novel method of connecting Substrate-based blockchains to NEAR Protocol smart contracts

Though cross-chain bridging solutions have become more of a necessity, most bridges only offer a two-way peg solution. Two protocols are a unique exception in this regard: Interchain’s Cosmos and Parity's Polkadot. 

Cosmos and Polkadot were developed with interoperability at the forefront. Cosmos uses the Inter-Blockchain Communication (IBC) Protocol, while Polkadot relies on cross-chain messaging through a relay called XCMP. Both projects provide software development kits (SDK) for web3 developers to build application-specific blockchains using Cosmos SDK and Parity’s Substrate, respectively.

Innovating with Interoperability Solutions

Parity's Substrate is a framework of runtimes for blockchains, frequently including Polkadot's standard modules or pallets. Most Substrate projects seek to join the main Polkadot network as a parachain or develop an independent product, both of which are extremely capital intensive and require adherence to those [parachain, parathread] modules.

Octopus Network is a third multichain, interoperable network that leverages both the customizability of Parity's Substrate and the interoperability of Cosmos’ IBC. This solution provides developers with streamlined and cost-effective access to build their own decentralized applications without committing to a single blockchain ecosystem.

Octopus Network is designed to launch and run these application-specific blockchains — aka appchains exclusively through smart contracts on NEAR Protocol. Octopus Network chose NEAR because it proved to be the most scalable economic and technology solution among those available in devnet testing. 

The heart of the Octopus Network, the Octopus Relay, is a set of smart contracts running on NEAR itself. They act as a relay hub for connecting NEAR directly to Substrate-based appchains to synchronize state and consensus. Uniquely, this is done through a tandem MMR process to affirm the connection between both chains every minute — The Merkle mountain range provides an even, predictable table of rotating hashes to maintain the trustless bridge, anchoring appchains to their service provider on NEAR, Octopus Network.

Octopus Network's Smart Contracts

Octopus Network's central infrastructure consists of the Octopus Relay and the Octopus Bridge. The Relay is a set of smart contracts on NEAR Protocol that enables the consensus validation algorithm between Appchains and NEAR — syncing NEAR and Substrate across two second and six second block times. 

There are two primary smart contracts, each with different uses:

1. Anchor acts as the main connection between the Substrate-based appchains’ Octopus pallets and NEAR.
2. Registry maintains metadata for each appchain in the Anchor contract.

The Anchor Contract

NEAR smart contracts can all be executed via RPC calls to the network. The appchain anchor is where Octopus Network's core logic resides on NEAR — acting as the “anchor” of communication with each appchains’ validators’ octopus pallets.

For the appchains themselves, Octopus Network has created a Substrate template called the Barnacle, providing each Substrate blockchain with its own prerequisites for connecting to the Octopus Relay. 

Validators' and delegators’ rewards are locked and distributed from the smart contracts on NEAR Protocol through the integration that each validator maintains automatically via their mandatory pallets/modules. This anchors OCT governance to each individual node operator.

Appchain validators use Substrate’s off-chain workers to pull event data from the Octopus Relay and vote on this data to affirm their ongoing consensus. An off-chain worker function posts to the NEAR chain if blocks are errored or if requiring affirmation of an event like an asset exchange. 

In these types of events, observations (a series of directly verified proofs combined with the account of the observer) are the affirmation process that ensures each side of the Octopus Relay is directly integrated with the bridge and regular staking operations. Each appchains’ validators report observations daily, and their results are finalized on the Anchor smart contract to calculate each stakers’ ratio of rewards. 

Each event is observed and settled as acknowledged by both NEAR and the appchain. All validators of the appchain affirm consensus about the event's existence from the previous blocks — Their voting weight is proportional to the amount of $OCT staked [on NEAR] with their node. 

Appchain messages form the backbone of the Octopus Bridge system. Cross-chain messaging from the Octopus Relay involves RPC calls between the smart contract and off-chain workers, fundamentally behaving like a trustless oracle between each appchain and its anchor smart contract. 

The Appchain Registry

The registry contract is an accompanying smart contract to the appchain anchor, functioning as the metadata record for all appchains and tokens. You can think of it as the "view-only" smart contract used to query finalized appchain-related data for the next block on the appchain and main chain [NEAR]. 

The registry smart contract, as the single source of truth for appchain metadata, manually records any updates for that metadata. The anchor contract will regularly call the registry contract to check for updates and to synchronize appchain states with the registry contract. 

From Bottleneck to Scalability

The blockchain industry is famous for rapid-fire claims to establish base layer protocols —  Each solution at Octopus Network seems designed to fit into the larger vision of modular blockchain startups growing from an initial Substrate blockchain. These two major smart contracts and their appchain counterparts are unique examples of increasing functionality without increasing demands on scalability. 

Octopus Network continues to build on this novel method of connecting blockchains to smart contracts and synchronizing state with consensus (or at least it looks promising if you see their Github repos.) In addition to published interoperability tools for Ethereum and NEAR, Octopus Network’s Substrate-based appchains will also be interoperable with Cosmos SDK, Polkadot, and other IBC-enabled blockchains. 

Leveraging NEAR's developer-friendly, infinitely scalable, sharded infrastructure, Octopus Network’s architecture can offer Web3 teams the ability to develop an interoperable, easy-to-scale, application-specific blockchain. 

As Octopus seems to forgo the intensive labor and capital requirements of its technical partners, it aims to position its best value for startups. It will be interesting to watch this project develop more interop tools and governance as a hybrid ecosystem structure, living both on a layer 1 blockchain and in modules on individual, smaller chains.  

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