Collaborative Consensus Protocols for Automated Bilateral Settlement
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Solution Overview
Problem
Existing contract settlement and enforcement systems face inefficiencies, risks, and scalability challenges due to manual reconciliation processes and the high costs associated with global consensus mechanisms in decentralized networks, particularly in industries with complex calculations and dynamic data sources.
Innovation Solution
A collaborative consensus protocol utilizing peer-to-peer communication and cryptographic verification enables automated, verifiable agreements between counterparties, maintaining trust and transparency without requiring a centralized authority or global consensus, through serialization, deserialization, and iterative verification of contracts and payments.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If blockchain-based smart contracts are used for automated settlement, then trustless execution and immutable record-keeping are achieved, but scalability is limited and costs increase due to global consensus requirements
Solution Approach 1:
The patent segments the global consensus requirement into local bilateral consensus between counterparty pairs. Each settlement interaction is independently verified by the two parties involved without requiring validation from the entire blockchain network, thereby reducing the scope of consensus from global to local level and improving scalability.
Solution Approach 2:
The patent extracts the consensus mechanism from the global blockchain network context and applies it specifically to bilateral interactions between counterparties. This removes the unnecessary overhead of global consensus validation for each transaction while maintaining the core benefit of decentralized verification.
2Reliability
If blockchain-based smart contracts are used for automated settlement, then trustless execution is achieved, but costs increase due to global consensus mechanisms
Solution Approach 1:
The patent segments the consensus validation scope to only involve the two counterparties directly engaged in the settlement, rather than requiring all network participants to validate each transaction. This segmentation dramatically reduces the computational resources and energy required for consensus achievement.
Solution Approach 2:
The patent applies partial consensus action by having only the necessary parties (the two counterparties) perform verification and agreement, rather than requiring excessive action from the entire blockchain network. This partial involvement achieves the same trustless execution goal with significantly reduced cost.
3Adaptability or versatility
If manual reconciliation processes are used for contract settlement, then flexibility and adaptability are maintained, but efficiency decreases and errors increase
Solution Approach 1:
The patent implements self-service automation where the system automatically performs reconciliation, verification, and settlement between counterparties based on pre-defined contract terms. The automated protocol handles data exchange, calculation verification, and consensus achievement without manual intervention, thereby improving efficiency while maintaining flexibility through programmable contract logic.
Solution Approach 2:
The patent changes the operational parameters from manual human processes to automated computational processes. By transforming the settlement mechanism from human-driven to algorithm-driven, the system achieves both higher efficiency through automation and maintained flexibility through configurable contract parameters and terms.
Data Source
AI summary
A protocol for collaborative consensus that allows for the automatic cross-verification of outputs for a given contract between two parties. This allows for the autonomous reconciliation of bills throughout a billing period, and the automatic exchange of payments for the agreed-upon amounts. This is achieved using independent servers that have agreed upon a contract and its inputs and operations. The contract is serialized and signed by both parties, and then the outputs are cross verified by both parties. If the outputs are within an appropriate tolerance window, then the outputs are agreed upon and the payments are exchanged. If the outputs are not within an appropriate tolerance window, then the outputs are recalculated and exchanged again. This allows for the reduction of manual effort in the billing and payment process, and the reduction of moral hazard in the interaction of partially trusting counterparties.