Michel Rauchs presented a framework for conceptualizing distributed ledger technology (DLT) systems. The framework establishes three layers - the protocol layer governing the system rules, the network layer implementing the peer-to-peer network, and the data layer recording transactions. It also identifies key components and processes within each layer. The framework provides a standardized structure for comparing different DLT systems based on their technical configurations and tradeoffs across layers, as well as their positioning on open versus closed networks. The goal is to establish unified terminology and a multidimensional analytical tool for evaluating and comparing DLT systems.

1. Cambridge Judge Business School
CONCEPTUALISING DLT
SYSTEMS
Michel Rauchs
Blockchain Live
26 September 2018

2. Presenter
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018
Michel Rauchs
Lead, Cryptocurrency and Blockchain
Cambridge Centre for Alternative Finance
April 2017
September 2017
August 2018

3. Problem I: Fuzzy terminology and concepts
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018
Data structure
Common data
standard
Multi-party
consensus system
Buzzword

4. Each DLT system is unique:
• Use case requirements
• Design configurations
• Governance model
• …
Problem II: Comparing apples to oranges
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018
Different system properties
Did you know Bitcoin
only processes 4-5
TPS? Our blockchain
2.0 can process at
least 1000 TPS!
That’s nice, but we can
actually scale to 1
million TPS, with
instant settlement and
0 transaction fees as
well!
Our blockchain 4.0 is
quantum-resistant and
can scale indefinitely.
And it’s also fully
private!
Hey fellas,
it’s all about
trade-offs!

5. What are DLT systems?
Mechanism for keeping individual
instances of a database
(“journals”) synchronised –
without relying on a central
authority
The journals should converge
towards a unified ledger
(shared state)

6. From unconfirmed transactions to finalised ledger entries
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018

7. Key characteristics of DLT systems
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018

8. Introducing the framework
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018
Structure:
1. Layers
2. Components
3. Processes

9. 1) Protocol Layer: Ruleset governing the system
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018

10. 2) Network Layer: P2P network implementing the ruleset
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018

11. 3) Data Layer: Records produced by the system
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018

12. Example: Network Access Process
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018
• A process can be analysed
through multiple ”lenses”
• Multiple design
configurations available for
each lense
• Fully customisable: new
configurations can be
added if desired

13. Beware the layer hierarchy
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018
Protocol > Network > Data

14. Back to trade-offs (and interdependencies)…
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018

15. … which result in different system properties
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018

16. Record references: “What’s in the blocks”?

17. A system’s perspective
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018

18. Case studies: Are these ‘real’ DLT systems?
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018

19. Example: Comparing the protocol layer

20. Example: Codebase Creation Process
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018

21. Determining “decentralisation”: A multi-dimensional approach
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018

22. The DLT systems landscape map
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018
Open networks
• Secured through economic
incentives: require a native asset
• Major differences in terms of
transaction processing centralisation
Closed networks
• Secured through contractual agreements:
no native asset required
• Currently mostly centralised transaction
processing and focus on exogenous
references

23. Study Objectives
1. Unified terminology
2. Multi-dimensional tool for DLT system analysis and comparison
Let’s wrap it up
© Michel Rauchs | Conceptualising DLT Systems | Blockchain Live, London: 26 September 2018
What’s next?
Share! Experiment! Improve!

24. m.rauchs@jbs.cam.ac.uk
+44 (0) 1223 339103
@mrauchs