The Phonon Network is a scalable, off-chain protocol for transacting with digital assets. Unlike payment-channel-based layer 2 solutions (e.g. Lightning, Raiden), the Phonon network uses packetized payments called “phonons” which can be transacted directly with any network participants (without the need for an intermediary). Unlike blockchain networks, the Phonon Network does not require interaction beyond that of the two transaction participants. In this way, it is designed to function like true digital cash. Phonon depends on hardware-enforced consensus rules and is built on the same technology which underlies smart/credit cards. The Phonon network is designed to be blockchain agnostic, but will initially support Ethereum and Bitcoin.
The Phonon Network is a layer 2 scaling solution for public blockchain networks. The Phonon network allows participants to privately transfer assets that exist on-chain, called phonons, using smart cards and an off-chain protocol. Phonon transactions are completely validated between participants of a transaction. Transaction data is only shared with users who are directly participating in a Phonon transaction. This yields significant benefits to both scalability and privacy relative to public permission-less blockchains.
To achieve this, Phonon uses hardware-enforced security to prevent double spend attacks, specifically via smart cards that cannot be re-programmed, tampered, or copied. Although the Phonon Network is theoretically card-agnostic, it is designed to be used initially with GridPlus produced SafeCards.
The blockchain consensus rules, namely double spend rules, are enforced by the smart cards. Assurance of rule enforcement is achieved by:
The card’s identity, which is linked to an internal physically unclonable function (PUF). A PUF is a digital fingerprint derived from uncontrollable process variables during the manufacturing of the smart card chip. The PUF guarantees that copies of cards cannot be produced.
A certificate from the card manufacturer attesting to both the physical characteristics of the card as well as the validity of the software on each card produced. The certificate is an ECDSA signature of the card’s identity public key linked to the PUF.
The network is built upon smart card technology, which is found in most credit and SIM cards. Assets may be passed between the cards because they have an extremely limited interface giving users a high-level of assurance that cards are performing correctly.
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