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CIP-0086: ERC-20 Middleware for Canton Network

This document describes how the Canton Middleware implements CIP-0086: ERC-20 Middleware and Distributed Indexer for Canton Network.

Current Implementation Status

Component Status Description
API Server ✅ Complete Ethereum JSON-RPC facade at /eth
User Registration ✅ Complete EIP-191 signature + whitelist
DEMO Token ✅ Complete Native Canton CIP-56 token
PROMPT Token ✅ Complete Bridged ERC-20 from Ethereum
Relayer (Deposits) ✅ Complete Ethereum → Canton minting
Relayer (Withdrawals) ✅ Complete Canton → Ethereum releases
Balance Reconciliation ✅ Complete Periodic sync from Canton
External Party Model ✅ Complete All users allocated as external parties via Interactive Submission API
Native User Support ✅ Complete Canton external party registration with EVM keypair
Splice Registry API ✅ Complete TransferFactory discovery for Canton Loop / external wallets
Canton Loop Integration 🔜 Planned Connect to global synchronizer

Architecture Overview

┌─────────────────┐          ┌─────────────────┐
│   MetaMask      │          │  Native Canton  │
│   (EVM Wallet)  │          │  User / CLI     │
└────────┬────────┘          └────────┬────────┘
         │                            │
         │ eth_sendRawTransaction     │ Direct gRPC
         │ eth_call                   │
         ▼                            ▼
┌─────────────────────────────────────────────────┐
│              API SERVER (Port 8081)              │
│                                                  │
│  • /eth - Ethereum JSON-RPC (MetaMask compat)   │
│  • /register - User registration (EIP-191)      │
│  • Custodial Canton key management              │
│  • Balance caching in PostgreSQL                │
└─────────────────────────────────────────────────┘
         │                            │
         │                            │
         ▼                            ▼
┌─────────────────────────────────────────────────┐
│           CANTON LEDGER (Source of Truth)        │
│                                                  │
│  CIP-56 DAML Contracts:                         │
│  • FingerprintMapping - EVM ↔ Canton identity   │
│  • CIP56Holding - Token balances                │
│  • TokenMeta - Token configuration              │
└─────────────────────────────────────────────────┘

The ERC-20 API Server

A standard Ethereum JSON-RPC interface that exposes Canton holdings with ERC-20 semantics. Users interact using MetaMask—no Canton tooling required.

Supported Operations

Operation Method Description
Query balance eth_call → balanceOf(address) Returns CIP-56 holding balance
Transfer tokens eth_sendRawTransaction → transfer(to, amount) Executes CIP-56 transfer
Token metadata eth_call → name(), symbol(), decimals() Returns token info
Total supply eth_call → totalSupply() Aggregated from holdings
User registration POST /register Links EVM address to Canton party

Token Addresses

Token Type Address
DEMO Native Canton 0xDE30000000000000000000000000000000000001
PROMPT Bridged ERC-20 Deployment-specific

The Canton-EVM Bridge (Relayer)

A bi-directional relay between Ethereum and Canton for the PROMPT token.

Deposit Flow (Ethereum → Canton)

1. User calls depositToCanton() on Bridge Contract
2. Relayer detects DepositToCanton event
3. Relayer resolves recipient via fingerprint mapping
4. Relayer mints CIP-56 tokens on Canton
5. User sees PROMPT balance in MetaMask

Withdrawal Flow (Canton → Ethereum)

1. User initiates withdrawal via API
2. Canton creates WithdrawalEvent contract
3. Relayer detects withdrawal event
4. Relayer burns CIP-56 tokens on Canton
5. Relayer releases ERC-20 from Bridge Contract
6. User receives PROMPT on Ethereum

CIP-0086 Compliance

ERC-20 Middleware ✅

  • Standard Ethereum JSON-RPC interface compatible with MetaMask and Web3 tooling
  • EVM wallet authentication via EIP-191 signatures
  • Abstracts DAML contracts behind familiar ERC-20 method selectors

Distributed Indexer ✅

  • PostgreSQL stores cached balances for fast queries
  • Real-time sync via relayer event processing
  • Periodic reconciliation ensures consistency with Canton ledger

Cross-Chain Interoperability ✅

  • Bi-directional bridge between Ethereum and Canton
  • Fingerprint-based identity linking (keccak256(evmAddress))
  • Atomic deposit/withdrawal flows

Custodial Model with User-Owned Holdings

The bridge uses a custodial model for key management while maintaining user-owned holdings on Canton.

Key Characteristics

Aspect Description
Holdings Ownership Each CIP56Holding belongs to the user's Canton party
Party Type All users are external parties (no ~200 internal party limit)
Key Management API server custodially holds secp256k1 Canton signing keys (AES-256-GCM encrypted)
Signing Transactions use the Interactive Submission API (PrepareSubmission/ExecuteSubmission)

Visibility

Party Can See
Bridge Operator Mappings, events, transfers they facilitate
User Parties Their own holdings and transfers
Other Canton Participants Nothing

Privacy Guarantees

  1. No global visibility - Balances aren't broadcast network-wide
  2. User-owned assets - Holdings belong to user parties, not the operator
  3. User isolation - Users can't see each other's holdings
  4. Custodial convenience - Users interact via MetaMask without managing Canton keys

Multi-Token Support

A single deployment can bridge multiple EVM tokens, with users holding assets in their own Canton parties.

┌─────────────────────────────────────────────────────────┐
│                   Participant Node                      │
│                                                         │
│  EVM Bridges          User Holdings (per party)         │
│  ───────────          ─────────────────────────         │
│  PROMPT Bridge  ←──→  Alice::... owns CIP56Holding     │
│  USDC Bridge    ←──→  Bob::... owns CIP56Holding       │
│  WETH Bridge    ←──→  Carol::... owns CIP56Holding     │
│                                                         │
│  API Server (custodial keys) + Relayer                 │
│  handles all tokens                                     │
└─────────────────────────────────────────────────────────┘

Capabilities

Capability Description
Multi-asset portfolios Hold multiple tokens simultaneously
Unified identity One registration covers all bridged assets
Single API One endpoint for all tokens

Use Cases

Operator Type Value Proposition
Exchange Canton custody with ERC-20 compatibility
Asset Manager Private multi-token portfolios
Payment Processor Multi-stablecoin settlements
DeFi Protocol Canton privacy with EVM tooling

References