Retrofitting a two-way peg between blockchains

TL;DR

This paper presents a trustless, efficient method for establishing a cross-chain bridge between Dogecoin and Ethereum, enabling secure value transfer and smart contract access without requiring blockchain forks.

Contribution

It introduces a retrofitting protocol that uses economic collateral, bulletproofs, and Truebit to facilitate trustless cross-chain communication without modifications to the underlying blockchains.

Findings

Enables secure, trustless cross-chain value transfer.

Allows Ethereum smart contracts to access Dogecoin data.

Supports similar techniques for Bitcoin-Ethereum integration.

Abstract

In December 2015, a bounty emerged to establish both reliable communication and secure transfer of value between the Dogecoin and Ethereum blockchains. This prized "Dogethereum bridge" would allow parties to "lock" a DOGE coin on Dogecoin and in exchange receive a newly minted WOW token in Ethereum. Any subsequent owner of the WOW token could burn it and, in exchange, earn the right to "unlock" a DOGE on Dogecoin. We describe an efficient, trustless, and retrofitting Dogethereum construction which requires no fork but rather employs economic collateral to achieve a "lock" operation in Dogecoin. The protocol relies on bulletproofs, Truebit, and parametrized tokens to efficiently and trustlessly relay events from the "true" Dogecoin blockchain into Ethereum. The present construction not only enables cross-platform exchange but also allows Ethereum smart contracts to trustlessly access Dogecoin. A similar technique adds Ethereum-based smart contracts to Bitcoin and Bitcoin data to Ethereum smart contracts.