Retrofitting a two-way peg between blockchains
This solves the problem of interoperability between different blockchains for users and developers, enabling cross-chain transactions and smart contract functionality, though it is incremental as it builds on existing techniques like bulletproofs and Truebit.
The paper tackled the problem of establishing secure and trustless communication and value transfer between Dogecoin and Ethereum blockchains, resulting in an efficient retrofitting protocol that enables cross-platform exchange and allows Ethereum smart contracts to access Dogecoin without requiring forks.
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.