With the long-awaited Libra white paper, Facebook is showing off its blockchain smarts, and making a bid for crypto credibility.
Released Tuesday morning, the 29-page paper describes a protocol
designed to evolve as it powers a new global currency. More than a year
in the making, the document opens by trumpeting the new blockchain’s
ambitious goal:
“The Libra Blockchain is a decentralized, programmable
database designed to support a low-volatility cryptocurrency that will
have the ability to serve as an efficient medium of exchange for
billions of people around the world.”
As a first step toward achieving the “decentralized” part, the
protocol has been turned over to a new organization, the Libra
Association, whose members will hold separate tokens allowing them
on-chain voting rights to govern decisions about Libra.
“Over time, it’s designed to transition the node membership from
these founding members who have a stake in the creation of the ecosystem
to people who hold Libra and have a stake in the ecosystem as a whole,”
Ben Maurer, Facebook’s blockchain technical lead, told CoinDesk in an
exclusive interview.
In short, Libra is designed to be a high throughput, global
blockchain, one that’s built with programmable money in mind but limits
how much users can do initially as it evolves from prototype to a robust
ecosystem.
Unlike many other blockchains, Libra seems laser-focused on payments and other financial use cases for consumers.
But the white paper itself seems geared to demonstrate both
Facebook’s proposed advances to the science of distributed consensus and
its appreciation for what has been built so far.
Indeed, over the last several months, many sources told CoinDesk they
had visited Facebook to share their perspective on decentralized
technology. The company has done a lot of homework.
And now it has created a new language for writing commands on its
blockchain, called Move, and opened its software to public inspection.
“To validate the design of the Libra protocol, we have built an
open-source prototype implementation — Libra Core — in anticipation of a
global collaborative effort to advance this new ecosystem,” the white
paper states.
“It’d be sort of presumptuous for us to say we’re creating an open
environment and then say, ‘Well, but we’ve set everything in stone,’”
Maurer told CoinDesk. “It’s a paper that requests feedback.”
Mix and match
Libra’s designers have picked what they see as the best features of
existing blockchains while providing their own updates and refinements.
1. Like bitcoin, there’s no real identity on the blockchain.
From the perspective of the blockchain itself, you don’t exist. Only
public-private key pairs exist. The white paper states: “The Libra
protocol does not link accounts to a real-world identity. A user is free
to create multiple accounts by generating multiple key-pairs. Accounts
controlled by the same user have no inherent link to each other.”
2. Like Hyperledger, it’s permissioned (at least to start).
Initially, the consensus structure for Libra will be dozens of
organizations that will run nodes on the network, validating
transactions. Each time consensus is voted on for a new set of
transactions, a leader will be designated at random to count up the
votes.
Libra opts to rely on familiarity rather than democracy to choose the
right entities to establish consensus in the early days. “Founding
Members are organizations with established reputations, making it
unlikely that they would act maliciously,” the white paper states. These
are entities range from traditional payment networks (Mastercard, Visa)
to internet and gig-economy giants (eBay, Lyft) to blockchain natives
(Xapo) to VCs (Andreessen Horowitz, Thrive Capital).
3. Like tezos, it comes with on-chain governance.
The only entities that can vote at the outset are Founding Members.
These members hold Libra Investment Tokens that give them voting rights
on the network, where they can make decisions about managing the reserve
and letting new validators join the network.
The governance structure is built into the Move software from the
start, and like Tezos it is subject to revision over time. Updates will
be essential as it adds members and evolves from what’s more like a
delegated proof-of-stake (DPoS) system (such as EOS or steem) to a fully
decentralized proof-of-stake ecosystem.
4. Like ethereum, it makes currency programmable.
In a number of ways, the white paper defines interesting ways in
which its users can interact with the core software and data structure.
For example, anyone can make a non-voting replica of the blockchain or
run various read commands associated with objects (such as smart
contracts or a set of wallets) defined on Libra. Crucially, Libra’s
designers seem to agree with ethereum’s that running code should have a
cost, so all operations require payment of Libra as gas in order to run.
Unlike ethereum, Libra makes two important changes in its smart
contracts. First, it limits how much users can do on the protocol at
first (the full breadth of Move’s features are not yet open). Second, it
breaks data out from software, so one smart contract (what Move refers
to as a “module”) can be directed at any pool of assets, which Move
calls “resources.” So one set of code can be used on any number of
wallets or collections of assets.
5. Also like ethereum, it thinks proof-of-stake is the future, but it is also not ready yet.
“Over time, membership eligibility will shift to become completely
open and based only on the member’s holdings of Libra,” the white paper
promises, describing a path to real permissionless-ness.
Meanwhile, the paper dismisses the approach of the blockchains with
the longest track record (namely bitcoin), stating, “We did not consider
proof-of-work based protocols due to their poor performance and high
energy (and environmental) costs.”
6. Like Binance’s coin, it does a lot of burning.
Blockchains that build in purposeful burning of tokens became very influential last year. Binance, the world’s leading exchange, created the BNB token,
with which users could pay trading fees at a discount. Binance led the
way to token bonfires, regularly burning a significant portion of its
profits paid in BNB.
Libra won’t use burning to enhance the value of its coin. Rather (as
with collateralized stablecoins such as tether), tokens will be issued
and burned constantly, as the association responds to demand shifts for
its reserve, with no supply maximum or minimum supply.
7. Like coda, users don’t need to hold onto the whole transaction history.
A lesser-known protocol, Coda, was one of the first to make its ledger disposable.
Users only need to hold a proof of the last block, which they can
easily check on a smartphone to be sure they are interacting with a
valid ledger.
Similarly, on Libra, “historical data may grow beyond the amount that
can be handled by an individual server. Validators are free to discard
historical data not needed to process new transactions.”
8. Like EOS, it hasn’t worked everything out yet.
EOS launched without its approach to governance
well defined, which yielded complications down the road. Similarly,
Libra promises to decentralize, but there’s nothing that inherently
forces its members to do so.
Work in progress
Other matters are left undecided as well. For example, the storage of data.
“We anticipate that as the system is used, eventually storage growth
associated with accounts may become a problem,” the white paper says.
The document anticipates but does not define a system of rent for data
storage.
It cites a number of examples of other open questions, such as how
best to maintain security as more validators join the network, how often
the pool of validators can change and how modules can be updated
safely.
As the paper admits:
“This paper is the first step toward building a technical
infrastructure to support the Libra ecosystem. We are publishing this
early report to seek feedback from the community on the initial design,
the plans for evolving the system, and the currently unresolved research
challenges discussed in the proposal.”
Dream team
The Libra white paper is signed by 53 people. Though senior Facebook
executives such as CEO Mark Zuckerberg and blockchain lead David Marcus
are notably absent from the author list, the team that wrote the
document looks to be one of the most-heavy hitting in blockchain
history.
The signatories hail from nearly every continent and include Ph.D. students from Stanford, computer science professors, and artificial intelligence (AI) developers.
They include:
- Christian Catalini:
The MIT professor was one of the first to study the economics of
cryptocurrency alongside crowdfunding and tokenization. Catalini has
written extensively for the Harvard Business Review and other publications. - Ben Maurer: Facebook’s infrastructure engineer graduated from Carnegie Mellon University
with a degree in computer science. He and CMU assistant professor Luis
von Ahn built the reCAPTCHA service that Google bought in 2009. He is
leading the team that built the Move programming language. - George Danezis:
A privacy engineer at University College London, Danezis was one of the
creators of Chainspace and the Coconut protocol upon which Libra is
based. He is currently a researcher at Facebook after the company bought his startup in February 2019. - François Garillot: A machine-learning and AI expert who worked at Swisscom and Skymind.ai, Garillot focuses on distributed AI.
- Ramnik Arora:
Arora spent time as an analyst at Goldman Sachs Investment Strategy
Group as well as at IV Capital as a quant. His background is in finance
and he has a master’s in computer science from Stanford and an
undergraduate degree in the mathematics of finance.
Zack Seward and John Biggs contributed reporting.
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