Overledger Vs Ripple Interledger Protocol

According to the Coinmarketcap.com data from May 2019, there are 861 cryptocurrencies that run on independent blockchains. And close to 8,500 projects are leveraging these blockchains coded in different languages. Additionally, they are using different consensus mechanism, having different protocols and privacy measures.

Undoubtedly, every single blockchain such as Ripple has its own merits. However, this is not working for the advantage of the blockchain sphere as a whole. Sadly enough, there is a state of disarray in this space that is increasing every passing day.

Most importantly, there is no universal standard of communication. So, this effectively creates the challenge of blockchains interconnectivity. And as a result, this is making mass adoption an almost impossible task. All in all, for the technology to reach its full potential, all these utterly different blockchains need to communicate with each other.

Is there absolutely no communication between blockchains?

Blockchains have been in and around for over a decade now. We cannot say the interoperability issue has not been thought through to date. In fact, there are a couple of projects that have been developing solutions to break the silos. So, how do they try to solve it?

  • Projects are adding a brand new blockchain on top of existing ones to help them communicate.
  • Some solutions need to have custom connectors to make the blockchains communicate.
  • There are also instances of blockchains forking to enable interoperability.

Here is the catch. Currently, these solutions add to the complexity and overhead. Moreover, they expand the technical risk.

Competing or complimenting

In this blog, we will compare the two most talked blockchain interoperability projects. One happens to be Ripple’s Interledger Protocol and the other is Quant’s Overledger.

What is Interledger protocol?

Ripple introduced the Interledger protocol (ILP) in 2015. The intent was to support efficient payments across payment networks. Since then it has connected with over 200 banks to transfer value by selling and buying its token, XRP.

Ripple’s ILP now acts as an arbiter for different types of ledgers that exist in the blockchain space. From a deeper perspective, ILP is not a ledger. However, it acts as a top-layer cryptographic escrow system. Effectively, it facilitates fund movement between different ledgers using the connectors.

An important feature of the Interledger is that it has no native tokens. So, the two ledgers looking for connection have to support Interledger. And only in this way the transfer of value becomes possible.

Notably, the existing Ripple ILP features the Atomic mode using a selected group of notaries that approve transfers.

How does ILP work?

At the core of ILP are the connectors. Additionally, they function like intermediaries or market makers for the transfer of value.

The ledger provides an escrow guarantee to the sender ensuring fund transfer to the connector once there is proof of payment to the recipient. So, the escrow serves as an assurance to the connector that he will receive the sender’s funds. But this can only take place after completion of the agreement.

Now, it is an interesting point that Ripple tweaks the Interledger module infrastructure to suit its needs. In the case of Ripple ILP, the module calls a local ledger module. Additionally, this local ledger module creates a Ripple transaction adding an Interledger packet to it. This complete packet is then transmitted to Ripple Consensus Ledger.


Simple Payment Setup Protocol

The local ledger interface helps derive the Ripple address from the Interledger address. However, this Ripple address is basically an account in the Ripple network, which, in turn, is linked to other ledgers via connectors.

What is Overledger?

Overledger from Quant is an enterprise operating system for both permissioned and permissionless blockchains. Due to its design of running on top of blockchains and legacy setups, it does not break anything. In fact, it acts like a plug and play setup.

Quant Overledger protocol

Undoubtedly, Overledger is capable of providing interoperability across the range of distributed ledger technologies (DLTs). These range from enterprise permissioned blockchains like Corda, Hyperledger, Quorum to permissioned DLTs like Ethereum and Ripple (XRPL). Moreover, Overledger brings interoperability to public permissionless blockchains like Bitcoin, EOS, Stellar, Ethereum, and IOTA.

Note: XRPL is different from Ripple’s ILP.

However, Overledger has another interesting feature. It is also capable of connecting legacy centralized systems. To state an example, it can connect to an Amazon S3 bucket using smart contracts. Additionally, it uses Oracles to connect existing networks that are working off-chain. And all this can take place with minimalistic disruption and by implementing close to 3 lines of code.

How does Overledger work?

Unlike any other interoperability platforms, Overledger works by isolating the layers. Moreover, each layer only handles the data at the individual level. Effectively, this setup future-proofs Overledger from becoming redundant. And its independence from the consensus methods used or the transactions per second (TPS) further supports this claim.

Let us now take a look at the layers:

Protocol layer – This is basically the multiple blockchain layer.

Transaction layers – This layer stores the transactions. And these are ultimately appended, stored or queued on the ledgers. Effectively, this layer has many different isolated ledgers.

Messaging layer – From every single ledger, an extraction of the transactional information and messages takes place. And these are mixed in the messaging layer.

Filtering and ordering layer – The mixture of messages and transactions are sorted in this layer.

Application layer – The application layer holds multi-chain applications or MAPPs. These define the rules of how the layers operate and how they interact with the blockchains.

Overledger Layers

Overledger over Ripple ILP

Undoubtedly, there are lots of differences between Overledger and Ripple ILP, both from the logical and the infrastructural standpoint. Moreover, this translates into different ways both the protocols are used.

Parameter Overledger Ripple Interledger Protocol
Transfer  Both Data and Value i.e. it can support the transfer of BTC to ETH as well as events tickets, air miles, art, intellectual property, and energy can be tokenized and transferred. Transfers only value as it acts as a bridge asset protocol.
Interoperability Between permissioned, permissionless blockchains as well as legacy systems. It acts as a bridge between cryptocurrency and fiat as well as between two different cryptos.
Level of interoperability Capable of talking to centralized systems like Amazon S3 bucket. Limited to atomic swaps where only value can be transferred.
Security of transfer Use digital signatures to secure the transaction. Ledger provides a cryptographic escrow guarantee.
Easy of implementation MApps can run across any DLT and can be used as a simple plug and play set up. Requires only 3 lines of code to get started. Requires a custom connector to bridge two DLTs.
Token Uses Quant token to pay the transaction and network fees. XRP is an independent virtual currency that can power Ripple’s network.
Developers interactions Developers can build multiple MAPPs in the application layer. Development on top of ILP is not possible.
Partnerships Quant partnered with SIA that covers the interoperability infrastructure of 570 banks. It took Ripple 5 years to partner with 200+ banks as it took a one-by-one approach.
Who wins?

The crypto community has been calling Overledger a Ripple Killer. Whether that happens or not, it is evident from the comparison that Overledger has a much wider scope than ILP. While ILP is still limited to atomic swaps, Overledger is using smart contracts and oracles to make interoperability possible throughout blockchain space and beyond.

Previously we covered a story on Stellar (XLM) and Ripple (XRP) with their points of similarity and other features distinguishing one from the other.

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