Decoding Blockchain Events: Off-Chain Listening & Processing

Last Updated on: May 9, 2024

Blockchain, a revolutionary ledger system, powers transactions through smart contracts. But how do these contracts trigger events, and what role do these events play in the blockchain ecosystem? Off-chain listening, vital in blockchain, involves monitoring these events externally, enriching their utility. This article delves into blockchain events, their importance, and real-world applications. It also explores efficient event processing methods and the integration of off-chain listening. Understanding this dynamic interaction enhances the grasp of blockchain functionality and its relevance to external systems.

Here’s what you will read about Blockchain Events:

What is Blockchain?

What are Smart Contracts?

What are Blockchain Events?

Use Cases of Blockchain Events

Why Listen to Blockchain Events and How?

Steps to Build a Reusable Smart Contract Event Listener

Limitations of Off-Chain Processing

Let’s get started to learn in detail about blockchain events, off-chain listening and processing.

I. Prerequisites

Before proceeding further, it is assumed that you have a basic understanding of blockchain technology, Ethereum, and Typescript programming.

For those unfamiliar with these concepts, worry not! We will commence with a concise review of blockchain to provide a refresher.

II. What is Blockchain?

Blockchain is a secure, decentralised ledger technology. It records transactions in a tamper-resistant way, linked together in an unchangeable chain. One way to perform transactions on a blockchain is using Smart Contracts. 

We will have a look at this process in some time but first, let’s understand smart contracts.

III. What are Smart Contracts?

Smart contracts are self-executing agreements with terms encoded in code. Running on blockchain, they automate actions when conditions are met. Once deployed, they’re immutable, ensuring security. Widely used in finance, supply chain, and more, smart contracts leverage blockchain for secure, automated processes.

The flow chart below shows a very basic overview of how smart contracts work.

Now, let’s have a look at the process of how to perform transactions on a blockchain through smart contracts.

A transaction here can be any documented exchange between two parties. It can be as simple as a person buying a concert ticket from another person and as complex as a cryptocurrency trade between two institutions. The terms and conditions are dictated by the smart contract which creates this transaction. Every time a transaction happens, all the previous transactions are re-verified to ascertain the integrity of the blockchain.

IV. What are Blockchain Events?

Every time something significant happens on a blockchain, it triggers an event. For example, a transfer of NFT via smart contract will trigger an event. The events are then propagated to every connected node in the blockchain such that all the nodes have a consistent view of the blockchain. Real-time event listening in blockchain is crucial, and this article explores using Node.js for efficient and responsive solutions.

The diagram below shows a very basic overview of how blockchain events work with respect to smart contracts.

V. Use Cases of Blockchain Events

1. Payment Confirmation

Use Case: In a decentralised payment system, a user wants to receive immediate confirmation when a payment is made to their address.

Event: Listening to a payment event triggered by a smart contract when a transaction is successfully processed.

2. Supply Chain Transparency

Use Case: Ensuring transparency in a supply chain by tracking the movement of goods.

Event: Monitoring events related to the creation, shipment, and receipt of products recorded on the blockchain.

These are the 2 vital use cases from the numerous additional use cases that exist. We trust that you now have a clearer understanding of the versatile applications of blockchain events.

VI. Why Listen to Blockchain Events and How?

Applications or systems might want to perform some actions based on activities happening on the blockchain (read smart contracts). So, if something is happening on blockchain, applications/systems would want to be notified of those changes. Listening to events is a way to do that.

How to Listen to a Blockchain Event?

• If you have a requirement to listen to events from blockchain, you would need to write some piece of code to do that. 
• It is best if this is extracted into a separate module which would solely be responsible for this task and this task alone. 
• This would be easier to manage, make changes to and scale without impacting other modules in your architecture. 

This module is called the event listener module. 

VII. Steps to Build a Reusable Smart Contract Event Listener

There are certain things one will have to follow and implement to create an event listener which would listen to events happening on a particular smart contract. But first, let us understand how a typical application would like to consume such events.

The detailed implementation is depicted as follows:

1. Choosing a node provider: You can choose two providers – Alchemy and Infura so that you don’t miss an event.

2. Picking a contract address and fetching its ABI:
   1. For test purposes, you can pick a popular contract from OpenSea.
   2. The ABI can be fetched dynamically using etherscan and should be fetched only once when the application starts.
   3. The etherscan URL and API key can be made configurable.

3. The app can be made configurable to use either web3.js or ethers.js: The choice can be taken as an env variable such that the user can configure it at the startup and the appropriate implementation would be picked up.

4. Event names for the events to listen to can also be made configurable such that users can configure them at the startup.

5. Once the event is received one would want to publish that event to either SQS or the database or simply log into the console, and configure it for reuse.
   1. Our listener should have various implementations of publishers such that the properties required for each publisher are configurable.
   2. Users should also be able to choose the implementation to use, for example, a user might want to use DatabasePublisher and can configure it and the required properties as env variables.

6. To make listeners highly available, one can use multiple providers to listen to the events from. In this case, the downstream systems will have to account for duplicate events or implement dedupe logic.

VIII. Limitations of Off-Chain Processing 

While off-chain processing of blockchain events offers benefits like scalability and faster response times, it’s important to consider its limitations. 

• Off-chain data isn’t secured by the blockchain itself, making it vulnerable to potential manipulation or tampering. 
• Additionally, relying on external systems introduces a single point of failure and increases trust assumptions, as you’re dependent on the continued operation of that external system.
• For scenarios requiring the highest level of security and immutability, on-chain processing remains the preferred approach.

Conclusion

Listening to events is a crucial part of the blockchain ecosystem and applications that are connected to that ecosystem. Almost every project will have a use case to listen to events and do something with them. It becomes important to implement the event listener in such a way that it can be re-used and is highly configurable such that developers should not have to spend much time getting it up and running to serve critical use cases within different projects.