The paper analyzes the Diem Distributed Ledger Technology (DLT). First, the paper presents a general overview of the Diem project from a technical point of view. Second, it presents a study that aims to collect and analyze data from the Diem blockchain, in order to verify some properties declared in the technical paper. For instance, a relevant property of the Diem blockchain is its transactions' throughput, i.e. the rate at which valid transactions are committed into a block by the Diem blockchain in a onesecond interval of time (transactions per seconds, TPS) and the interval of time for a transaction to be confirmed. The data were collected over a period of three months (January 1 - March 31, 2022) and made available on a GitHub repository.
During the last decade, many distributed payment systems have emerged as an alternative to
centralized banking. The Diem Distributed Ledger Technology (DLT), initially called “Libra”
and renamed “Diem” in December 2020, was designed and proposed by the Diem Association, a
non-profit organization headquartered in Geneva, Switzerland. When Diem was introduced
by Facebook in 2019, the Diem Association aimed to be a competitor in the field of payment
systems, by introducing the Diem blockchain, i.e. a cryptographic payment system where each
party is clearly identified and every transaction is authenticated, authorized, validated and
(R. Tonelli)
https://www.agile-group.org/category/persone/ (G. A. Pierro); https://www.agile-group.org/roberto-tonelli/
CEUR
Workshop
Proceedings
© 2022 Copyright for this paper by its authors. Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
tracked. Moreover, Libra, the Diem DLT cryptocurrency, would have the ability to maintain a
stable value relative to a particular fiat currency [
Diem was a blockchain payment system based on an account model with users, roles and
rights, where only pre-authorised computers can access and finalize transactions. This set of
pre-authorised computers participate in a consensus mechanism based on the BFT (Byzantine
Fault Tolerance) consensus protocols [
The online payment market economically remains massive, which suggests enormous profit opportunities for early actors on the market. Although the WhatsApp pay attempt did not reach the expected success, Facebook came back in 2019 with Libra, then called Diem, a new project that shares similarities with the previous idea. At the same time, Facebook made it clear that it did not intend to stop at the initial 28 members, which included Paypal, Shopify, Uber, eBay, and Vodafone. They were instead planning to expand the Association to over hundred members in the upcoming years.
Table 1 shows the seven largest blockchain platforms sorted by Market Capitalization and
compared to the Diem DLT. The columns of the table reports some characteristics of the
blockchains, such as the presence of a stable coin and smart contract support. Stable coins are
cryptocurrencies which can maintain a stable price in relation to fiat currency [
Recently, the former Meta employees decided to continue the Diem proposal and they
renamed the project to Aptos [
The first technical paper specified that any interests gained with the investments of the Diem
Association reserve fund, which will be composed mainly of short-term government bonds
will be used to cover the costs of the system, ensure low transaction fees, and pay dividends to
investors who provided capital to jumpstart the ecosystem[
The second version of Diem DLT was introduced with an update on the technical paper in
April 2020 [
Nowadays, there are a large number of blockchain platforms, each with its own characteristics
and design decisions [
This section describes information peculiar to the Diem blockchain such as the Move programming language 2.1 used to write smart contracts, the Proof-of-Authority (PoA) consensus algorithm and the accounting used by the Diem blockchain.
A Smart contract is a piece of executable code that run on the blockchain to facilitate, execute,
and enforce an agreement between untrustworthy parties without the involvement of a trusted
third-party [
The blockchain Ethereum popularized the term by being the first public blockchain to provide
a Turing complete smart contract language [
As well as the Ethereum blockchain, also the blockchain Diem supports smart contracts
written in a diferent programming language which name is Move. Move is a programming
language based on Rust that was created by Facebook for developing customizable transaction
logic and smart contracts for the Libra digital currency. Every transaction submitted to the
Libra blockchain uses a transaction script written in Move to encode its logic [
The key feature of Move is the ability to define customized resource types. This customized resource type supports all the operations generally available to other entities. This means the Move programming language supports passing Resource as arguments to other functions, returning them as the values from other functions, and assigning them to variables or storing them in data structures. For this reaseon Move can be defined as a language where Resources are first-class citizen.
Resources in the blockchain system are important because they provide scarcity protections: they can only ever be moved between program storage locations, never implicitly copied or deleted. The Move type system provides static enforcement of these security measures, but allows programmers to define custom resource types.
By integrating resources at the type level rather than supporting a single type of resource value (eg, Ether), the Move programming language provides programmers with the security measures they need while remaining independent of the blockchain. Any developer can define and use custom resources, without the additional re-implementation process required by ERC20 (Ethereum Request for Comment, Proposition 20) and other libraries. To protect critical resource operations from untrusted code, Move encapsulates the fields of each resource in a corresponding form. Modules are similar to smart contracts: they contain the types and procedures for creating, updating, and destroying the assets they contain. They also provide an abstraction of critical data: fields of a resource type declared within a form are protected by any other form, and operations on that resource must only be performed within its form.
Consensus makes it possible for a decentralized network of computers to agree upon and
share the state of the system [
Nowadays, public blockchains such as Bitcoin or Ethereum, allow anyone to participate in
the consensus process as a miner. Miners compete (or efectively vote) to add new transactions
to the blockchain with computing power by expending a certain amount of Central Processing
Unit (CPU) cycles to solve a mathematical puzzle. This puzzle is intentionally computationally
dificult to solve, yet it is very easy to verify the answer [
To add a block of new transactions to the blockchain, a miner must solve the puzzle. The first miner to solve the puzzle sends (proposes) the block to the rest of the network for agreement. If the network agrees on the solution to the puzzle, the miner is rewarded for creating the block and the block is added to the blockchain (the miner wins this round of competition). Through a combination of game theory and economics (efectively betting CPU cycles, which cost money, to win the reward), Proof of Work (PoW) incentivizes consensus instead of attempting to enforce it. Essentially a miner is rewarded for securing the network.
While public blockchains rely on PoW, enterprise (or permissioned) blockchains [
In a proof of authority consensus model, known participants leverage cryptographical digital
signatures to agree upon a set of transactions and their output to advance the blockchain’s
state [
In the Diem DLT, an account represents a resource on the Blockchain that can send
transactions. Each account is identified by a 16-byte hash value and there are two kinds of accounts,
ParentVASP and ChildVASP accounts. The ParentVASP represents the primary account of a
digital wallet, while the ChildVASP is defined as the child account of a particular ParentVASP.
Multiple ChildVASPs can be created by ParentVASP accounts [
In Diem, a PoA will be requested from the ParentVASP, and these proofs should include all of
their children’s assets as well. Table 2 shows the users roles and permission supported by the
Diem DLT [
Diem uses a variant of role-based access control (RBAC) to restrict access to sensitive on-chain operations. A role is an entity with some authority in the Diem Payment Network (DPN). Every account in the DPN is created with a single, immutable role that is granted at the time the account is created. Creating an account with a particular role is a privileged operation (e.g., only an account with the ParentVASP role can create an account with the ChildVASP role). In some cases, the role is globally unique (e.g., there is only one account with the Diem Root role). In other cases, there may be many accounts with the given role (e.g., ChildVASP).
Stablecoins are cryptocurrencies with the ability to maintain a stable price relative to a particular
ifat currency via a “peg mechanism”. A “peg” is a specified price for the rate of exchange between
two assets. In the context of currencies, a peg allows foreign currencies to be traded for the
chosen base currency at a fixed exchange rate. In the context of cryptocurrency, a peg refers to
the specific price that a token is aiming to stay at [
Today, stablecoins are mostly used for trading, lending and borrowing crypto assets. They
are a crucial component of the decentralized finance (DeFi) – financial services performed by
applications on a permissionless blockchain [
Stable coins first became widely known as a potential means of global retail payments when
Meta (then Facebook) announced its Libra project in 2019. Bitcoin and Ethereum rise and fall
by the day and even hour, in contrast, stable coins promise to maintain their value because
they are pegged to less volatile assets, like the U.S. dollar or Euro. Because of their potential
use as actual currency, U.S. government oficials fear the potential risks stable coins pose for
consumers and financial markets if they remain unregulated. As an example, the value of the
TerraUSD stablecoin (UST) crashed in the cryptocurrency market almost completely at one
point on 9 May 2022 and lost its 1 USD peg to the dollar, tanking to a low of 0.02 USD [
Stablecoins can be split into three groups according to their collateral and price stabilization mechanisms: 1. of-chain collateralized (e.g. Diem) 2. on-chain collateralized (e.g. Dai) 3. uncollateralized, purely algorithmic stablecoins (e.g. Ampleforth).
The Diem DLT was planned to be an of-chain collateralized project, i.e. it should have used use traditional reserve assets to stabilize Libra value, the Diem cryptocurrency. The Deim reserve assets should have been fiat-currency bank deposits and short-term debt, with the US dollar being the most prominent reference currency. As the reserves are not on the blockchain, a custodian is required. In order to maintain price stability, all outstanding stablecoins must be backed by reserve assets. Currently of-chain collateralized stablecoins are Tether, Binance USD and USD Coin.
Unlike the Diem DLT, on-chain collateralized projects back their stablecoins with other crypto
assets. They are typically issued by DeFi applications as collateralized debt positions, i.e. a user
locks in collateral and in return receives coins created by the application. Thus, the collateral is
held directly in the application on the blockchain and no external custodian is needed. Currently
an collateralized stable coin system is Dai [
Finally, uncollateralized stable coin systems try to keep prices constant by algorithmically
adjusting the outstanding number of tokens according to demand. If prices are above the peg,
the algorithm will distribute new coins to users, thereby eventually reducing the price. If prices
fall below the peg, the system will sell a sort of bond to users in exchange for stable coins.
The stable coins received will then be destroyed, leading to a price increase. If prices then
move above the peg again, bondholders will be prioritized in the distribution of new coins. In
theory, this system incentivizes users to buy bonds if prices fall below the peg and rewards them
afterwards as prices exceed the peg again. Currently an uncollateralized stable coin system is
Ampleforth [
Table 3 shows the blockchains that support stable coins grouped by the stabilization mechanism.
The main aim of the study was to better understand the Diem blockchain performance, in terms of number of transactions per second and waiting times. The study presupposes that a blockchain has a better performance than another when the former has a higher number of transactions per second and shorter waiting times when compared to the latter.
Thus, the study was designed to address the following research questions (RQ): • RQ1: Can the Diem blockchain have a better performance in terms of number of transactions per second when compared to other blockchains, such as Bitcoin and Ethereum? • RQ2: What are the waiting times to confirm the transactions in the Diem blockchain? To answer the research questions, the methodology of the study consists of three research phases: a) Data Collection, b) Data Modelling, and c) Data Analysis and Results. The following subsections describe each research phase.
The Diem DLT provides an application program interface (API) to interact with the blockchain. We developed a script that performs a POST request to the API endpoint (https://testnet.diem.com/v1), to collect the data from the Diem blockchain. The script queries the Diem API at regular intervals of 100 milliseconds and it downloads 1000 transaction payloads for each request. A timeout of 100 milliseconds is required to avoid sending too many requests in a given interval of time and receiving the “Too Many Requests” server error. Within the rate-limit of 100 milliseconds, we collected 3.500.000 transactions, which were submitted by Diem users and available on the Diem test network. The same data can also be downloaded from a block explorer, but the collection takes much more time because each request can download just the data of a single transaction. The two block explorers available to download the data transactions are the “InDiem Blockchain Explorer” (https://indiem.info/explorer) and the “Diem Blockchain Explorer” (https://diemexplorer.com/testnet).
Table 4 shows the summary of the transactions data-set.
The mean, the median, minimum (min), the 25th, 50th, and 75th percentiles and maximum
(max) are calculated for each variable shown in the table. Some of these data are the size of
the script used to execute the transaction computed in bytes, the gas units used to execute
the transaction (gas_used), and the number of transactions added to the Diem blockchain in a
one-second interval of time (TPS) [
The data were collected as distinct files in JSON format. Listing 1 shows an example of JSON-RPC request used to query the Diem block data. For instance, the second value of the “params” list is an integer value (max=1000) that can be used to limit the number of transactions returned. Listing 2 shows an example of JSON-RPC response used to store the Diem transaction data. The request 1 returns the transactions’ information about a confirmed block in the Diem DLT.
Table 5 describes the structure and the elements of the data related to the user transaction on the Diem test network.
Listing 1 shows an example of JSON-RPC request used to query the Diem block data. For instance, the second value of the “params” list is an integer value that can be used to limit the number of transactions returned; the max value is 1000.
Listing 1: JSON-RPC request to query the Diem DLT { } / / Re que st : f e t c h e s 10 t r a n s a c t i o n s c u r l −X POST −H ” Content −Type : ␣ a p p l i c a t i o n / json ” \ −− data ’ { ” j so n rp c ” : ” 2 . 0 ” , ” method ” : ” g e t _ t r a n s a c t i o n s ” , ␣ ” params ” : [ ␣ 100000 , ␣ 10 , ␣ f a l s e ␣ ] , ” id ” : 1 } ’ \ h t t p s : / / t e s t n e t . diem . com / v1 ] , ” code ” : ” a11ceb0b0 . . . ” , ” c u r r e n c y ” : ”XUS” , ” metadata ” : ” ” , ” m e t a d a t a _ s i g n a t u r e ” : ” ” , ” r e c e i v e r ” : ” 34 f c a 4 4 c 5 7 1 b 2 9 c c 0 a . . . ” , ” type ” : ” p e e r _ t o _ p e e r _ w i t h _ m e t a d a t a ” } , ” v e r s i o n ” : 1 1 6 5 0 0 0 , ” vm_status ” : { ” type ” : ” e x e c u t e d ” }
The collected data were not suitable to perform data analysis, because reading these files takes too much time. We organized the data into three .CSV files based on their transaction type. Indeed, in the Diem DLT there are three types of transactions that can be sent by diferent types of accounts: • Transactions that send payments to other accounts. • Transactions that are sent to create accounts, mint and burn Diem Coins. • Transactions that help account recovery, key rotation, by adding currencies and other account administration tasks.
An account can send a payment to another account by submitting a transaction. If an account A wishes to send a payment to another account B, it can do so by executing a “peer_to_peer_with_metadata” transaction script. If an account A (the ParentVASP account) wishes to create another account B (a ChildVASP account), it can do so by executing a “create_child_vasp_account” transaction script with a single ParentVASP account, a user can create up to 256 ChildVASP accounts. The transaction script allows you to specify: Which currency the new account should hold, or if it should hold all known currencies. If the user wants to initialize the ChildVASP account with a specified amount of coins in a given currency. An individual can have at most one root account per Regulated VASP. Diem Networks was suppose to create a ParentVASP account via the personal authentication key abd via the “create_parent_vasp_account” transaction script. Table 6 shows the number of transactions type found in the collected dataset.
The section presents the analysis of the transactions data as modelled in the previous section.
The data sets are stored in a tabular format where the rows (around one million) represent the
diferent transactions and the columns (nine) represent their characteristics. The total size of
the database is 58,1 Mega-Byte and is publicly available via Zenodo [
For blockchain-based applications, scalability has been extensively studied since the
introduction of Bitcoin [
A previous study [
Another study [
Table 7 below shows the TPS and average transaction confirmation time of Diem DTL vs. other blockchains. The data about the Bitcoin and Ethereum blockchains have been taken from diferent academic works.
As depicted in table 7, Ethereum has a transaction speed of 15.6 transactions per second.
The rate at which valid transactions are confirmed per second in the Ethereum blockchain is higher when compared to Bitcoin. However, the TPS of Ethereum is low compared to the TPS of Diem DLT, which has over 60 transactions executed per second. Figure 2a shows the number of transactions that the Diem test network can process each second (TPS).
Figure 2c shows the power complementary cumulative distribution (CCDF) as a function of the
transaction waiting times in the memory pool before being confirmed in the Diem Blockchain.
104
210
scdno
se 00
1
08
(a)
(b)
(c)
The empirical CCDF seems to be well fitted by Poisson’s law shown as the continuous thin
orange line curving downward. Other academic studies on other blockchain suggest that the
waiting time for transactions in the memory pool has a trend that follows Poisson’s law [
Blockchain technology is rapidly evolving. Understanding the core components of the
technology and how they work together is crucial to make it available also to a larger audience [
According to some academic sources [
The data collection and analysis of the Diem transactions, even though performed on the test network, show that the transaction throughput, expressed as a number of transactions per second, is better when compared to other popular blockchains. This is very important to achieve large-scale adoption of this technology, as it can support a larger number of transactions Another important characteristic of Diem blockchain, that has already been taken as a model by other blockchains, is the use of traditional reserve assets, such as government bonds, and stable fiat currencies, like the USD, to make the cryptocurrency value stable.
Finally, the programming language Move allows for defining custom resource types. This feature helps smart contract developers write business logic for wrapping assets and enforce access control policies without using external libraries. For all these reasons, the study can provide useful insights for any blockchain developers to choose the right components for a successful blockchain adoption at a larger scale.
This research was supported by “Fondazione di Sardegna” through the project “Analysis of innovative Blockchain technologies: Libra, Bitcoin and Ethereum” (CUP: F72F20000190007).