The Marlowe model

Marlowe is designed to support the execution of financial contracts on blockchain, and specifically to work on Cardano. Contracts are built by putting together a small number of constructs that can be combined to describe many different kinds of financial contract.

Before we describe those constructs, we need to look at our general approach to modelling contracts in Marlowe, and the context in which Marlowe contracts are executed, the Cardano blockchain. In doing this we also introduce some of the terminology that we will use, indicating definitions by italics.

Contracts

Contracts in Marlowe run on a blockchain, but need to interact with the off-chain world. The parties to the contract, whom we also call the participants, can engage in various actions: they can be asked to deposit money, or to make a choice between various alternatives. A notification of an external value (also called an oracle value), such as the current price of a particular commodity, is the other possible form of input. 1

Running a contract will also produce external effects, by making payments to parties in the contract.

Participants and roles

We should separate the notions of participants and roles in a Marlowe contract. The roles in a contract are fixed and immutable, and could be named party, counterparty etc. On the other hand, the participants that are bound to the contract roles can change during the execution of the particular contract instance. This allows roles in running contracts to be traded between participants, through a mechanism of tokenisation. This will be available in the on-chain implementation of Marlowe but the simulation in the Marlowe Playground simply presents contract roles.

Accounts

The Marlowe model allows for a contract to store assets. All parties that participate in the contract implicitly own an account with their name. All assets stored in the contract must be in the account of one of the parties; this way, when the contract is closed, all assets that remain in the contract belong to someone, and so can be refunded to their respective owners. These accounts are local: they only exist for the duration of the execution of the contract, and during that time they are only accessible from within the contract.

Steps and states

Marlowe contracts describe a series of steps, typically by describing the first step, together with another (sub-) contract that describes what to do next. For example, the contract Pay a p t v cont says “make a payment of value v of token t to the party p from the account a, and then follow the contract cont”. We call cont the continuation of the contract.

In executing a contract we need to keep track of the current contract: after making a step in the example above, the current contract is the continuation, cont. We also have to keep track of some other information, such as how much is held in each account: we call this information the state: this potentially changes at each step too. A step can also see an action taking place, such as money being deposited, or an effect being produced, e.g. a payment.

Blockchain

While Marlowe is designed to work with blockchains in general, 2 some details of how it interacts with the blockchain are relevant when describing the semantics and implementation of Marlowe.

A UTxO-based blockchain is a chain of blocks, each of which contains a collection of transactions. Each transaction has a set of inputs and outputs, and the blockchain is built by linking unspent transaction outputs (UTxO) to the inputs of a new transaction. At most one block can be generated in each slot, which are 1 second long.

The mechanisms by which these blocks are generated, and by whom, are not relevant here, but contracts will be expressed in terms of slot numbers, counting from the starting (“genesis”) block of the blockchain. Currently, we use slot numbers in the Marlowe Playground simulation, but on chain we will use time, adopting the Posix time standard.

UTxO, wallets and the Marlowe Run app

Value on the blockchain resides in the UTxO, which are protected cryptographically by a private key held by the owner. These keys can be used to redeem the output, and so to use them as inputs to new transactions, which can be seen as spending the value in the inputs. Users typically keep track of their private keys, and the values attached to them, in a cryptographically-secure wallet.

To interact with a contract running on the blockchain, users will need to use the Marlowe Run client application. This, in turn, will interact with users’ wallets to authenticate transactions that spend crypto-assets, since deposits are made from users’ wallets, and payments received by them. Note, however, that these are definitely off-chain actions that need to be initiated by code running off chain, typically this will be in the Marlowe Run application: they cannot be made to happen by the contract running on chain itself.

Omniscient simulation

The Marlowe Playground supports contract simulation. This is an omniscient simulation, in which the user is able to perform any action for any role, and thus can observe the execution from the perspective of all the users simultaneously. This contrasts with the experience of running a contract in Marlowe Run, in which each participant sees the contract from their own point of view. In particular, participants are only able to interact with a running contract that is waiting for input from them; if that’s not the case, then they will see that the contract execution is waiting from someone else’s participation.

Values and tokens

In previous examples, whenever a Value was required, we have exclusively used Ada. This makes a lot of sense, as Ada is the fundamental currency supported by Cardano.

Marlowe offers a more general concept of value, though, supporting custom, native tokens, which can be fungible, non-fungible, or indeed mixed. 3 What is a Value in Marlowe?

newtype Value = Value
    {getValue :: Map CurrencySymbol (Map TokenName Integer)}

The types CurrencySymbol and TokenName are both simple wrappers around ByteString.

This notion of value encompasses Ada, fungible tokens (think currencies), non-fungible tokens or NFTs (custom tokens that are not interchangeable with other tokens), and more exotic mixed cases:

  • Ada has the empty bytestring as CurrencySymbol and TokenName.

  • A fungible token is represented by a CurrencySymbol for which there is exactly one TokenName which can have an arbitrary non-negative integer quantity (of which Ada is a special case).

  • A class of non-fungible tokens is a CurrencySymbol with several TokenNames, each of which has a quantity of one. Each of these names corresponds to one unique non-fungible token.

  • Mixed tokens are those with several TokenNames and quantities greater than one.

Cardano provides a simple way to introduce a new currency by minting it using minting policy scripts. This effectively embeds Ethereum ERC-20/ERC-721 standards as primitive values in Cardano. In Marlowe we use custom tokens to represent the participants in each contract executing on chain.

Executing a Marlowe contract

Executing a Marlowe contract on Cardano blockchain means constraining user-generated transactions according to the contract’s logic. If, at a particular point of execution, a contract expects a deposit of 100 Ada from Alice, only such a transaction will succeed, anything else will be rejected.

A transaction contains an ordered list of inputs or actions. The Marlowe interpreter is executed during transaction validation. First, it evaluates the contract step by step until it cannot be changed any further without processing any input, a condition that is called quiescent. At this stage we progress through any When with timeouts that have passed, and all If, Let, Pay, and Close constructs without consuming any inputs.

The first input is then processed, and then the contract is single stepped again until quiescence, and this process is repeated until all the inputs are processed. At each step the current contact and the state will change, some input may be processed, and payments made.

Such a transaction, as shown in the diagram below, is added to the blockchain. What we do next is to describe in detail what Marlowe contracts look like, and how they are evaluated step by step.

We have shown, 4 that the behaviour of a Marlowe is independent of how inputs are collected into transactions, and so when we simulate the action of a contract we don’t need to group inputs into transactions explicitly. For concreteness we can think of each transaction having at most one input. While the semantics of a contract is independent of how inputs are grouped into transactions, the costs of execution may be lower if multiple inputs can be grouped into a single transaction.

In the omniscient simulation available in the Marlowe playground we can safely abstract away from transaction grouping, since the grouping does not affect the contract’s behaviour.

Building a transaction

transaction
1

We can think of oracles as another kind of party to the contract; under this view notifications become the choices made by that party.

2

Indeed, Marlowe could be modified to run off blockchain, or to work on a permissioned blockchain, too.

3

This reflects the value model for Plutus.

4

In our paper Marlowe: implementing and analysing financial contracts on blockchain