Analysis Expert Blog

Doge Is Helping Ethereum Resolve Its Hardest Problem

A cryptocurrency modeled after a dog meme is showing that it’s not just a prank.

Designed on a caprice in 2013, dogecoin isn’t just still around, it’s playing a main role in the ongoing testing of at least one “serious” technology. Actually, on February 5, it noticeably factored into an experiment that successfully showcased one of ethereum’s more initiative projects.

On this day, the most-expected technology truebit successfully sent dogecoin to ethereum’s Rinkeby testnet, where it became a special asset on that blockchain. The first in history, the transaction marked the completion of a years-long project developers see as a big step toward the interoperability of crypto assets more widely.

So-called “dogethereum bridge,” the test also marks the first real release for truebit, the main goal of which is to resolve one of ethereum’s biggest issues: scalability.

In a word, the smart contract platform is not able to support a lot of users right now. Indeed, because of all the data ethereum needs to store in its globally distributed database, it requires more than 3 times as much data as bitcoin, and that’s making it harder for users to run.

Although truebit is less famous than scaling solutions like raiden and sharding, the technology is probably more ambitious because it’s designed to scale any type of ethereum calculation, rather than just transactions. This is key, since ethereum bills itself as more than “just” a financial cryptocurrency.

Eventually, truebit aims to scale video, machine learning or just about any calculation you can think of, and dogethereum is still the first use case.

Truebit co-founder Jю Teutsch:

“We built a first version of that, which we’re calling ‘truebit lite.’ It demonstrates that all the core pieces of truebit work. It’s a big milestone for us.”

$1 million on the line

Backing up, the history of dogethereum is an amusing one.

In the auspicious period of dogecoin (back when its thriving community could pool together $30,000 in donations to fund a bobsled team), Ethereum Foundation UX designer Alex Van de Sande got together with other developers and set a bounty to incentivize someone to come up with a way to remove coins from dogecoin to ethereum and back.

The team locked up the funds in a DAO, a kind of app that runs on ethereum, enabling money to be spent only once specific terms are met. In this case, the funds were set to only be released if 5 of the DAO leaders give their votes to do so by signing approval with their ethereum private keys.

After the price of ethereum ballooned over the years, the smart contract holds ether worth about $1.2 million today. But no one’s received the bounty so far, primarily because running dogethereum in an effective method has proven to be a much bigger issue to resolve than expected, as Van de Sande pointed out in a line of tweets describing the project’s roots.

The focus of the issue is it’s too expensive to validate a coin going from one chain to another – and back again – costing millions of dollars in ether. In order to resolve this issue, it needs to be less expensive to run calculations on the ethereum blockchain.

“This [bounty] kicked off a 2-3-year discussion about how best to realize it,” claimed truebit developer Sina Habibian, adding:

“Dogethereum is representative of a larger problem of how to run big computations.”

Also, dogethereum is the way how truebit was born – the apparently foolish bridge urging Ethereum Foundation developer and truebit co-author C. Reitwiessner’s interest in designing a scalability layer on top of ethereum.

The big test

Truebit creators might be getting close to snatching the dogethereum bounty, though, since some successful tests on the Rinkeby copy of the ethereum blockchain have been realized.

The only other move is doing it live.

Truebit built a dogecoin light customer, a smaller version of the blockchain that slashes most of the historical data, embedding it in the doge relay so it can safely remove coins from chain to chain.

Nevertheless, Truebit’s creators stressed the challenging aspect of what they’ve accomplished, arguing that the dogethereum bridge differs from decentralized exchange via atomic swaps, an idea that’s been gaining ground of late. Rather, it’s more like sidechains, a long-stalled bitcoin technology.

“We want to actually pull coins off of the dogecoin blockchain and put them onto ethereum in the form of ERC-20 tokens,” Teutsch explained. “And be able to move them back.”

“You don’t need a counterparty. You’re doing this completely on your own,” Habibian added.

In order to reach this, there has to be some method of locking coins on dogecoin so that they cannot be spent until they are sent back from ethereum. However, that’s not the hardest part. What is still computationally expensive is proving that the owner of the dogecoin owns the ether coins on the other side.

After this, they executed a transaction on the Rinkeby testnet, sending the dogecoin to ethereum – and back again – using truebit under the hood, so the normally expensive evidence is executed off-chain, in a much cheaper manner.

No estimates

Despite the public debut for the scaling project, though, the group behind truebit still has their work cut out for them.

In the first version of the technology, the incentives are “greatly simplified,” Habibian said.

In the technology they have ready today, some of the participants are behaving “altruistically.” That is, the system’s verifiers are performing expensive calculations just to be good.

And while that isn’t likely to work in practice, truebit’s aim is to one day create a marketplace where participants are paid for doing computational work on their computers and contributing correct results.

“People will come out of their own self-interest to run these computations and make money in return,” Habibian stated.

So, when everything will be ready exactly? Habibian wouldn’t give an estimate for how long it will take to launch for real on ethereum.

“It’s always hard to make estimates like that because one of the rules of software engineering is, ‘However long you think something’s going to take, it’ll take three times as long,” he claimed.

Nevertheless, he revealed truebit plans to release new software programs iterating on this milestone in the coming months now that the startup has teamed up with decentralization startup Aragon and ethereum-based video service LivePeer.

That’s how they think the technology will spread at first, beyond dogethereum, marking a big move for truebit – and potentially ethereum too.

As Habibian told CoinDesk:

“When it’s done and it’s fully built, you’ll be able to run any computation on ethereum.”