LedgerLoops
Protocol / working notes
Trust your neighbors.
Coordinate the loop.
Each ledger records a relationship. LedgerLoops asks how those relationships can cooperate.
Start with a credit graph
People and organizations already owe things to each other. Represent each relationship as a bilateral ledger and you have a credit graph. A cycle in that graph may let participants reduce several obligations together while preserving everyone’s net position.
Finding a cycle is only the beginning. Participants still need to agree on amounts, units of value, and the conditions under which their ledgers change.
Three separate jobs
- Loop detection: find a path through obligations that returns to its starting point.
- Negotiation: decide which changes each participant is willing to make.
- Resolution: coordinate those agreed changes across the participating ledgers.
The project’s 2024 research notes describe these as decentralized loop detection, lift negotiation, and lift resolution. A “credit lift” is a coordinated reduction of debts along a path or loop. See Economic Arrangements for the vocabulary behind this work.
A secret that closes a circle
In the original “challenge and trigger” design, one participant creates a random secret and shares its hash. A promise becomes conditional on revealing a value that matches that hash: a hashlock.
Neighbors pass conditional promises around a loop. When a suitable promise comes back to the initiator, they can reveal the secret. The solution travels back through the participants, allowing each to claim the promise made to them.
The secret coordinates the agreements. It is not a coin, and its reveal does not itself deliver goods or force a person to keep a promise. Trust in direct counterparties remains part of the model.
The Whispering Merchants
Imagine merchants sitting around a tree. Each can talk to—and trust—only their immediate neighbors. Each wants something from one neighbor and has something to offer the other. How can they all trade?
This thought experiment has been part of LedgerLoops since 2016. It walks through trust, money, credit, and finally hashlocked promises.
Read beyond the sketch
- September 2018 whitepaper (PDF) and LaTeX source: the older protocol and its security discussion.
- Decentralized loop detection notes and lift resolution notes: later research directions.
- Decentralized Cycle Detection Internet-Draft: a proposed messaging protocol. An Internet-Draft is a working document, not an adopted IETF standard.