Decentralization has not only established the possibility of improving the efficiency of existing systems but also introduced new benchmarks for defining the future of technology. The Sidetree protocol is the best example of the outcomes of innovation in the domain of blockchain. Blockchain technology introduced the promise of decentralization, and many networks achieved the value of decentralization successfully. 

However, majority of the existing examples of blockchain networks experience prominent issues in performance. Sidetree has emerged as a plausible solution to these problems. The following discussion outlines a technical guide on Sidetree and helps you understand the common functions and their network elements.

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What is Sidetree?

The foremost highlight in any outline of Sidetree protocol explained in detail would focus on its definition. Decentralized blockchain networks, especially Bitcoin, offered the first answer for issues pertaining to chronological oracles. As a result, blockchain technology set the foundation for creating efficient decentralized identifier networks. 

On the other hand, many of the existing blockchain implementations use event anchoring methods for creating decentralized identifier networks, thereby leading to multiple issues. The most common issues are evident in the drops in transaction volumes, increasing costs, and higher throughput. 

Sidetree has been designed as an open protocol by the Decentralized Identity Foundation, backed by Microsoft, for creating decentralized identifiers which can work on any blockchain network. From a technical perspective, you can define it as a Layer 2 protocol that enables completely open, permissionless, and public decentralized identifier implementations compliant with W3C guidelines. 

Sidetree can achieve scalable decentralized identifier or DID implementations without the need for secondary consensus mechanisms, trustworthy intermediaries, unique protocol tokens, and centralized authorities. At the same time, Sidetree also safeguards the immutability and decentralization of underlying blockchain networks.  

Working of Sidetree

The working of DIF Sidetree protocol is clearly evident in its architectural design featuring overlay networks where independent Sidetree nodes interact with the underlying decentralized blockchain system. The Sidetree nodes work on the functions of writing, observing, and processing the replicated DID PKI state operations by leveraging deterministic protocol conditions. Ultimately, it helps in creating a persistent status of every decentralized identifier in the network. 

The Sidetree protocol also provides the definition for a core collection of DID PKI state change operations. Interestingly, the protocol defines them in the structure of delta-based Conflict-Free Replicated Data Types such as Create, Recover, Update or Deactivate (CRUD). The new data types structure can help in mutating the DID Document state of the decentralized identifier.

One of the important elements in the functioning of Sidetree, i.e., Sidetree nodes can engage in tasks for writing into the overlay network by anchoring the Content-Addressable Storage references to the batched operations for an underlying blockchain network. The blockchain would work as the chronological oracle with a sequence, and the protocol can use for ordering DID PKI activities within an immutable history. 

Every node observing the transactions could replay and verify them. The DIF Sidetree protocol can also process the events by using a general collection of deterministic protocol rules. As a result, Sidetree nodes can develop a consistent outline of DIDs alongside the relevant DID Document states, all without additional consensus mechanisms. 

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What Is Special about Sidetree?

The problem of scalability has been holding back many blockchain networks from achieving their true potential. Sidetree is more than just a Layer 2 scaling solution as it provides relief from many technical issues in existing blockchain implementations. It introduces an open and decentralized protocol that helps in batching the JSON operations together to lower operational costs. 

At the same time, the Sidetree protocol can also guarantee improved scalability and throughput. Users can create, control and manage unique identifiers through their public key infrastructure with Sidetree. All these highlights for a “scalability” solution showcase how effective the protocol can be in the long run.       

Default Parameters of Sidetree

The discussions on Sidetree protocol explained in detail would also draw attention to the default parameters associated with the protocol. All versions of the open DIF protocol would provide a definition for a specific set of protocol rules alongside default parameters. Users can choose the default values of the parameters or select different values according to their needs. Some of the notable default parameters associated with Sidetree include the following,

  • Hash algorithm for creating the hashes of protocol-related values.
  • Hash protocol helps in creating hash representations in Sidetree implementations by using the hash algorithm.
  • The data encoding scheme helps in defining the encoding approach for different types of data in an implementation. 
  • The JSON Canonicalization scheme helps in relative JSON structures used across the specification. 
  • Key algorithm, which is the asymmetric public key algorithm suited for signing DID operations. 

Other important parameters in the Decentralized Identity Foundation Sidetree include the CAS protocol, signature algorithm, genesis time, and CAS URI algorithm.

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General Functional Procedures

The overview of Sidetree must also include an outline of the commonly used functional procedures in the protocol. Here are the common functional procedures used throughout the protocol. 

Hashing Process

The amount of data hashed in the boundaries of the Sidetree protocol relies on similar procedural steps alongside yielding a constantly encoded output. Based on a specific data value, you can generate the hashed output with the following steps.

  • Produce the hash for the concerned data value by leveraging the hash protocol alongside the hash algorithm.
  • Use the data encoding scheme parameter for encoding the resultant output.
  • Return the value of the encoded output of the hashing value.

Commitment Schemes

The commitment schemes in Sidetree protocol are essential tools for safeguarding the reliability and safety of different operations alongside supporting recovery. You can define a commitment scheme to create a specific public key commitment by leveraging a public key by using the following steps. 

  • Begin by encoding the public key in the shape of a verified JWK.
  • Use the JSON canonicalization scheme parameter of the implementation for relating the JWK encoded public key. 
  • Leverage the hash protocol parameter of the implementation for hashing the canonical public key. You can find the reveal value parameter, and then you have to use the hash protocol once again for hashing the resultant hash value. 

The DIF Sidetree protocol also provides the facility for a JWK Nonce, which enables implementers to outline the definition for nonce property. Users can present the definition in the public key JWK payload. Nonce property can help in reusing public keys throughout commitments without the reuse of public key JWK payloads. When the implementer has to define nonce property, the DID owner could choose to fill the nonce parameter in the public key JWK payload. 

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Network Architecture

The best way to understand how Sidetree protocol works is through a detailed understanding of the network topology. What are the primary components in the Sidetree overlay network? Here are the three important parts of the Sidetree overlay network.

  • A Blockchain network works as the system for linear sequencing and anchoring functionalities for DID operations. 
  • Sidetree nodes work through interactions with the underlying blockchain network for anchoring operations. In addition, they also work on fetching and replicating references from the CAS network alongside processing operations according to the deterministic rules. 
  • The integrated Content-Addressable Storage network layer is a critical component in the DIF Sidetree protocol for its functionality. Sidetree nodes utilize the CAS network layer for distributing and replicating DID operation files seamlessly.

File Structures in Sidetree Protocol

The overview of Sidetree scalability protocol would also point toward the distinct file structures. The file structures are important tools for housing DID operation data alongside supporting key functionalities. For example, file structures support the reduction of permanently retained data alongside enabling light node configurations. In addition, file structures also ensure performance resolution of DIDs. The three distinct file structures include Core Index File, Core Proof File, and Provisional Index File. Here is an overview of the functionalities of each file structure in Sidetree protocol explained in detail.

  • The Core Index File features the core indexing data alongside the CAS references to the provisional and proof files.
  • Core Proof File includes the cryptographic proofs required for determining the lineage of core DID operations. 
  • Provisional Index File features the update operation index alongside CAS links to the different Chunk files. The Provisional Index File also includes references to the Provisional Proof File, which features the cryptographic proof required for determining the history of update operations for a DID. The Chunk files basically include the detailed DID operation data for the DIDs associated with the anchored batch. 

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Proof of Fee    

Another interesting highlight in the discussion on Sidetree protocol is Proof of Fee mechanism. It is a protective mechanism tailored for strengthening a Sidetree network against the risks of low-cost malicious operations. The protective mechanisms are basically useful for open and permissionless deployments which use public blockchains featuring native crypto tokens and economic systems. Here are the important components in the Proof of Fee mechanism, which helps in reducing cost with Sidetree network. 

Base Fee Variable

The Base Fee Variable is one of the foundational elements in almost all mechanisms of Sidetree. The Decentralized Identity Foundation has developed the variable as an integral highlight of the Proof of Fee mechanism. Base Fee Variable finds applications in two distinct applications, such as setting the minimum required native transaction fee or establishing the fee basis for additional economic protections. Every implementation can define deterministic algorithms for calculating the Base Fee Variable. The deterministic algorithm can remain static or showcase dynamic changes in the form of logical calculations applied by all nodes

Per-Operation Fee

The per-operation fee is an important requirement that is optional for specific implementations. Per-operation fee ensures that the baseline fee by a user on the blockchain system could not game unrealistic low-fee periods for flooding the blockchain system with Sidetree-based transactions. Here is the outline of the steps for establishing and evaluating the per-operation fee for every Sidetree-bearing transaction. 

  • Find out the Base Fee Variable for the concerned block or transaction interval under assessment.
  • Determine the total batch operation fee by multiplying the Base Fee Variable with the Operation Count integer. 
  • Verify that the transaction anchored with the blockchain system has incurred a minimum expense of the sum of total batch operation fees. 
  • Upon verification of the expense of required fee, you can move ahead with processing the anchored batch of DID transactions. On the other hand, you can classify the transaction as invalid when the transaction does not meet the expense requirement. 

Value Locking

The final and most important component in the Proof of Fee mechanism in Sidetree protocol refers to value locking. A specific Sidetree implementation can feature a value locking scheme for locking the native digital assets of a blockchain system under certain conditions. As a result, the locking entity could gain access to better transaction volumes. 

Value locking is basically the same principle as that of collateral which can restrict the consumption of resources in the network to certain limits. Sidetree implementations could develop value locking mechanisms through different methods, such as through using the Base Fee Variable or the asset locking capabilities of the underlying blockchain system. 

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Bottom Line

The overview of Sidetree overlay network shows a lot of technical details about the protocol. The protocol by Decentralized Identity Foundation is an innovative push in the direction of scalability for blockchain networks. It can help in transforming the notion of scalability by enhancing the performance of a layer 2 scalability solution. Sidetree works by batching transactions together and anchoring them to an underlying blockchain network for resolving the concerns with throughput and scalability. 

The network topology of Sidetree protocol also works to its advantage as it offers a simple design with three components. However, the protocol also makes some important assumptions pertaining to its design, such as late publishing of data through deterministic rules. In addition, it also features innovative functionalities for deploying Proof of Fee mechanisms to reduce costs. 

At the same time, the Proof of Fee mechanisms such as value locking can help in preventing low-cost malicious operation requests on Sidetree implementations. The discussion around Sidetree would gradually become public as it matures and finds adoption on different blockchain implementations

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!