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1. Problems/Challenges it aims to solve

Cross-Chain Interoperability: The primary challenge UPC aims to address is cross-chain interoperability, which is the ability for different digital currencies, built on different tech stacks and protocols, to communicate and interact with each other in a wider network of value.

Complexity of Multiple Digital Currencies: With the increasing interest in Central Bank Digital Currencies (CBDCs) and the likelihood of different entities using different digital currencies, there is a complexity arising from the multiplicity of networks and currency types. UPC aims to simplify this by serving as a hub that facilitates transactions across various digital currencies.

Transaction Speed: Modern payment networks can handle tens of thousands of transactions per second, a capacity much higher than most existing blockchain networks. UPC intends to enhance transaction speeds in digital currencies by establishing specialized payment channels off the blockchain, which communicate back with various blockchain networks through smart contracts, thereby delivering high transaction throughput securely and reliably.

2. Solutions

Universal Payment Channels (UPC) Hub: The UPC Hub aims at interconnecting multiple blockchain networks and allowing for secure transfer of digital currencies. Think of it as a “universal adapter” among blockchains, allowing central banks, businesses, and consumers to seamlessly exchange value, no matter the form factor of the currency.

3. Target Customers

Central Banks: The UPC Hub aims to facilitate the seamless exchange of CBDCs, helping central banks to select tech stacks and design protocols that suit their specific needs and priorities.

Businesses: The UPC Hub is designed to allow businesses to seamlessly exchange value across different digital currencies and blockchain networks. It facilitates connections not just between different CBDC networks, but also between CBDC and private stablecoin networks.

Merchants: Merchants are a crucial part of the digital currency ecosystem. The UPC Hub aims to foster widespread merchant acceptance of digital currencies, ensuring that they can transact smoothly across different digital currency networks.

Consumers: Consumers are at the heart of the UPC Hub's objective to enhance the digital currency experience. The hub aims to make digital currencies a part of daily financial life, allowing consumers to make and receive payments regardless of the currency, channel, or form factor involved.

4. Key Points

The UPC protocol facilitates payments through an entity, called the UPC hub.

UPC hub acts as a gateway to receive and route payments between registered clients
Operation is fully transparent - any entity can monitor hub activity on the ledgers
Protocol requires hub to authorize every payment off-ledger between parties. This allows the hub to check validity of each payment
Can have multiple hubs connecting to the same ledger
Clients can register and transact through any hub they choose
Clients register with a UPC hub to route transactions to other clients
Routing requires zero trust to be placed on the UPC hub (it does not act as a trusted intermediary)
UPC protocol uses timelocks and hashlocks to minimize counterparty risks
Enables scaling to millions/billions of users and transactions
Hub uses a prefunded model to reduce liability and fees
When connecting two ledgers, they must support the same hash function
This allows smart contracts on each ledger to lock/unlock funds using the same hash value
Ledgers do not need to use the same digital signature scheme
Client-hub pairs must agree on the same signature scheme to authenticate each other's messages