Chemical reactions are a prominent feature of molecular communication systems, with no direct parallels in wireless communications. While chemical reactions may be used inside the transmitter nodes, receiver nodes, or the communication medium, we focus on its utility in the medium in this paper. Such chemical reactions can be used to perform computation over the medium as molecules diffuse and react with each other (physical-layer computation). We propose the use of chemical reactions for the following purposes: 1) to reduce signal-dependent observation noise of receivers by reducing the signal density; 2) to realize molecular physical-layer network coding (PNC) by performing the natural XOR operation inside the medium; and 3) to reduce the inter-symbol interference (ISI) of other transmitters by canceling out the remaining molecules from previous transmissions. To make the ideas formal, we consider an explicit two-way relaying example with a transparent receiver (which has a signal-dependent noise). The proposed ideas are used to define a modulation scheme (which we call the PNC scheme). We compare the PNC with a previously proposed scheme for this problem, where the XOR operation is performed at the relay node (using a molecular logic gate). We call the latter, the straightforward network coding (SNC). It is observed that in addition to the simplicity of the proposed PNC scheme, it outperforms the SNC scheme especially when we consider ISI.
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