Talon Network White Paper
We are committed to providing users with the best asset trading experience and providing infrastructure services for Ethereum ecological development.

1. Background

With the advent of DeFi applications, the Ethereum network has been unable to fully support high-frequency asset trading needs. The Ethernet Square Foundation currently supports some projects on Rollup and Optimistic Rollup. For Ethereum ecology development, an efficient application expansion protocol was needed. So we designed an innovative Layer-2 expansion scheme to build an efficient decentralized trading platform.

2. Vision

We are committed to providing users with the best asset trading experience and infrastructure services to help develop Ethereum ecology.

3. Technical Design

3.1 Talon Network

Talon Network uses a mainchain+sidechain Fusion protocol framework to build the Ethereum Talon Network application expansion protocol. The Talon Network protocol on the chain integrates the design model of the sidechain and state channel, establishes the Layer-2 network on Ethereum, and implements the protocol in the bottom layer of the sidechain's blockchain. Talon Network protocol on the chain opens up a new world for Ethereum.
Talon Network's sidechain network consensus algorithm uses a Byzantine mechanism to confirm each transaction. Each block time is 2S, the block is confirmed in time, and the transaction will not roll back after confirmation. TPS performance can reach 2000+ in the actual use environment.

3.2 Asset Management

Talon realizes asset management based on Ethereum multi-sign smart contract. This dynamically distributes asset management authority to multiple rights-management accounts through multi-sign to ensure the safety of assets. The multi-signature account election method is based on Layer-2's consensus algorithm, asset-pledge mechanism, and a network node composition mechanism to ensure decentralization, security, and fairness. Smart contracts will need to pass code reviews by well-known security audit agencies to avoid technical security vulnerabilities.

3.3 Asset Transfer Process

Layer-2 protocol architecture is designed as follows:
Talon Network supports the Ethereum network and connects to the shared sidechain access of other blockchain networks, including BTC, Polkadot, etc.
The sidechain nodes are responsible for creating and managing the asset lock (smart contract) of Layer-1. The sidechain nodes are set to perform the in-and-out verification and out-and-out operation of the network assets.
In the case of ETH assets entering Layer-2, the interaction process is as follows:

Layer-1 to Layer-2

The user transfers ETH into the Layer-1 smart contract governed by the sidechain nodes and initiates a signature message in the transfer. The transaction is broadcast, collects 66% of the sidechain nodes' signatures, packages the transaction into blocks, and updates the account book.
At this time, the user's assets are transferred from Layer-1 to Layer-2. The original assets in the governance contract of the sidechain nodes are locked, and the assets' safety is ensured.

Layer-2 to Layer-1

  • The user assembles the transfer-out transaction, signs, and broadcasts the transaction.
  • The consensus nodes receive the transaction, verify the transaction signature, and pack the transaction into the block after the transaction has passed.
After the block is confirmed,
  • Each node assembles the multi-signature transaction, verifies, and confirms the transaction in the network of Layer-2.
  • The sidechain nodes sign the smart contract of Layer-1.
  • The Layer-1 assets locked in the contract are transferred to the user's account.
In actual use, users only need to click authorization to switch assets between Layer-1 and Layer-2.

3.4 TalonSwap

Unlike other decentralized swap designs, Talon is not based on smart contract implementation. Instead, it is based on higher-performance underlying code implementation. This provides fast transaction confirmation speeds and ensures the security of assets.
TalonSwap consists of the following three systems to achieve a complete AMM algorithm of the decentralized trading platform.

3.5 Price Predictor

TalonSwap dynamically adjusts the price of any given asset pair by calculating and recording the price before the first transaction of each block (that is, the last price of the previous block). This price is more difficult to manipulate than the price within a block. If the attacker submits a transaction to try to manipulate the price at the end of the block, other arbitrageurs can submit another transaction to immediately reverse the transaction.
Specifically, we use a range of tn to tn+x. This is the average price accumulated over a period of time of duration x used to obtain the expected price.
Β· tn: time
Β· An/m: number of tokens available in the liquidity pool during time tn
Β· Pn: the price at the time
From the moment tn starts after the time after x, the price of the asset is calculated as:
If we need to calculate the price of unused accumulative rights (instantaneous price), the calculation method is as follows:
At this time, the price after calculating the transaction at this point in time becomes:
(n: the number of transaction assets, a)

4. Liquidity pool

The liquidity provider adds tokens to the pool, and traders can exchange any asset on the chain. For any asset in chain a, b, the initial cast share of the TalonSwap decentralized exchange is equal to the geometric average of the number of tokens deposited:
This formula ensures that the value of liquidity pool shares at any time and is independent of the initial deposit ratio. For example, suppose the current price of one ABC is 100-XYZ. If the initial deposit is 2-ABC and 200-XYZ (ratio 1:100), the depositor will receive the share. These shares should now still be worth 2-ABC and 200-XYZ, plus the accumulated handling fee.
If the initial deposit is 2-ABC and 800-XYZ (1:400 ratio), the depositor will receive a share of the pool.
The above formula ensures that the liquidity pool will not be less than the geometric average of the reserve amount in the pool. TalonSwap destroys the first cast share of the 1e-15 pool and sends it to the black hole address instead of the founder. This will not affect the actual business of the transaction pair.

4.1 Pledge Incentive Service

TalonSwap has designed an incentive service that supports user-defined parameters, allowing users to define:
  • any asset as a pledged asset
  • the type of incentive asset
  • total number of incentives (A)
  • total duration (T)
  • duration of the incentive cycle (t)
  • percentage reduction in output per period (Rr)
  • the production reduction cycle (Rc)
  • the number of incentives of the initial cycle (A0).
The system generates the asset pool by setting these user parameters.
Pledged assets back any assets in the chain or LP assets that are minted to add liquidity. The incentive assets created can also be any on-chain asset type.
If:
  • deposit: quantity of pledged assets
  • i: current cycle index
The formula for calculating the return per period for a user's pledged assets is:
Fixed duration model:
Production reduction model:
The pledge incentive service provides generic API access, allowing more developers to design incentive models in combination with their own business scenarios, further enriching Defi application scenarios.

5 Product Design

5.1 TalonSwap

Asset transaction

Trading users can select any asset in TalonSwap to exchange, and the system will automatically choose the optimal path with the lowest slippage.β€Œ

Slippage setting

Users can set the maximum sliding point range to avoid losses caused by the exchange.β€Œ

Liquidity pool

TalonSwap assets are locked in the sidechain network that supports the Talon Network protocol.β€Œ

Wallet authorization

TalonSwap will support the mainstream browser plug-in wallets and wallet-connect protocols so that users can use their favorite private key management tools.β€Œ

Incentive pool

Users can participate in any asset pledge incentive service, including common chain asset pledges and liquidity credential pledges. Users can withdraw pledged assets at any time.

5.2 TalonSwap Info Browser

Asset information

Display all asset information that supports automated trading.

Liquidity ranking

Display all the liquidity pool information and rank the display according to the asset value.

Transaction details

Data presentation of all Swap related transactions.

Price K line

The price change of each asset is convenient for users to analyze the price trend of the asset.

6 Economic model

The TAL Token is an ERC20 asset issued by Ethereum, which can communicate with multiple blockchain networks via the Talon Network protocol.
  • Institutional investment: 19%
  • Mining output: 53%
  • Development Fund:23%
  • Avaliable for Sale:5%
TalonSwap trades at a rate of 0.3%, resulting in a transaction fee of 0.2% allocated to the corresponding liquidity provider. Next 0.05% is allocated to the development/maintenance team, and 0.05% is converted into a TAL Token for destruction.

7 Talon Network Features

1. The ultimate trading experience
Swap based on higher performance Talon Network can ensure the transaction confirmation speed and the security of user assets.
2. Gas fees
With Gas handling zero fees, users do not pay high gas costs, significantly lowering the use threshold.
3. Super TPS
Based on Talon Network, TPS can be increased by several orders of magnitude in the transaction process.
4. Multi-Chain Asset Support
Talon can not only support Ethereum networks but also connect to the shared sidechains of other blockchain networks.

8 Future Outlook

Uniswap founder Hayden Adams said on Twitter that Uniswap's total historical transaction volume recently exceeded 50 billion USD. The number of trading pairs on Uniswap has exceeded 26,000. If Uniswap keeps trading with transaction counts over ten billion per month as it has recently, Adams estimates the platform's total trading volume could hit one trillion in eight years.
In the current Ethereum network, arbitrage robots have occupied much of the network resources. This is bound to be challenging to support at such a vast market scale. Layer-2 is the best solution in the current form.

References

2. Uniswap v2 Github: https://github.com/Uniswap/uniswap-v2-core​
Last modified 1yr ago
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On this page
1. Background
2. Vision
3. Technical Design
3.1 Talon Network
3.2 Asset Management
3.3 Asset Transfer Process
3.4 TalonSwap
3.5 Price Predictor
4. Liquidity pool
4.1 Pledge Incentive Service
5 Product Design
5.1 TalonSwap
5.2 TalonSwap Info Browser
6 Economic model
7 Talon Network Features
8 Future Outlook
References