Google posted an update about their plans for Google Wave open source code and federation protocol. "This project willn't have full functionality of Wave. We'll expand upon 200K lines of code already open sourced to flesh out existing example Wave server and web client into a more complete app or "Wave in a Box."," informs Google.
Project will include:
- an app bundle including a server and web client supporting real-time collaboration using same structured conversations as Wave system
- fast and fully-featured wave panel in web client with complete support for threaded conversations
- persistent wave store and search implementation for server (building on contributed patches to implement a MongoDB store)
- refinements to client-server protocols
- gadget, robot and data API support
- support for importing wave data from wave.google.com
- ability to federate across other Wave in a Box instances, with some additional configuration
[Source]

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