Settlement and Execution Chains

When modular blockchain becomes a mainstream thesis, many expect a blockchain landscape composed of a few settlement chains and thousands, if not millions, of execution chains.

Most Web 3.0 protocols will choose a settlement chain to issue their utility (or governance) tokens while setting up their use cases and liquidity on one or many execution chains. This arrangement provides the developer team and community with the resilience of leveraging execution environments with different advantages in programming language, UX, cost, speed, security, decentralization level, etc.

Execution chains should be viewed as protocol execution engines that can be replaced or adjusted based on the needs of the protocol’s owner—the community. At the same time, the community ensures that its ownership records are well kept on the most secure blockchain, with no known force sufficient to compromise its integrity.

Since tokens are issued on one chain and used on others, requirements exist for cross-chain transfers. The following is a discussion on how to fulfill these requirements in a trustless way. Trust-based options are not discussed in this paper, as they should only exist as workarounds when trustless stacks aren’t mature enough.