New Generation Cross-chain Bridge: More than Asset Cross-chain Focus on DApp Cross-chain Interaction

After the public chain war, the market has formed a pattern of multi-chain coexistence led by Ethereum. Asset transfer between chains and cross-chain interaction of smart contracts have become daily activities on the chain, as the realization of information exchange between blockchains. The underlying infrastructure, cross-chain tools have also become popular products, not only needed by users, but also favored by capital.

In early March, the cross-chain application Swim Protocol announced the completion of a $4 million seed round; at the end of March, the cross-chain infrastructure LayerZero completed a $135 million A+ round of financing, funded by well-known venture capital institutions FTX Ventures, Sequoia Capital Co-led the investment with a16z, with participation from Coinbase Ventures and PayPal Ventures.

At present, the common cross-chain tools in the market mainly focus on solving asset cross-chain, but in fact, the transmission between blockchains not only includes assets, but also includes contract calls, smart contract data and state interaction, etc.

There are three main ways to cross-chain assets, including centralized exchanges (CEX), decentralized cross-chain bridges and multi-chain aggregators.

It is easy to understand the cross-chain transfer of assets through the centralized exchange (CEX). Users can first recharge the assets of the A chain into CEX, exchange (trade) them for the assets required by the B chain, and then recharge them on the B chain. This is a good choice for novice users, but this method needs to pay special attention to the address format when recharging to avoid the wrong chain format. In addition, CEX also needs to support a certain chain, in addition to the gas fee on the chain. , and there is an additional transaction fee in CEX.

For users who are accustomed to on-chain operations, cross-chain bridges and multi-chain aggregators are the first choice for cross-chain assets.

“Cross-chain bridges” are the most popular tools at the moment. They are chain-to-chain bridges that allow users to transfer crypto assets from one chain to another. When cross-chain, assets are usually realized in the form of “mapped assets”, which need to go through a series of processes such as “locking + minting + redemption + destruction”.

For example, if a user wants to cross-chain the asset AToken on the A chain to the B chain, the process is generally by locking the corresponding AToken on the smart contract of the A chain, and the oracle machine informs the smart contract on the B chain, waiting for the miners to verify. After that, after the number of ATokens locked on the B chain, 1:1 is minted into BTokens; when the assets are returned from the B chain to the A chain, the BTokens on the B chain are destroyed to release the originally locked ATokens for users.

It should be noted that when the A asset in this “1-to-1 cross-chain bridge” mode is crossed from the source chain to the target chain, the obtained asset is not the original A asset, but the mapped packaged asset. The wrapped assets held by users may become worthless in the event of problems with the cross-chain bridge.

In addition to the cross-chain bridge, another asset cross-chain tool is the “multi-chain aggregator”, which aggregates the liquidity of assets on different chains and builds a cross-chain asset trading pool. Users can complete the A-chain in the pool. The process of exchanging X assets on the B chain for X assets on the B chain.

Although there are already good products in the cross-chain field, there are still developers exploring new products, hoping to improve the current problems of cross-chain bridges and simplify the cross-chain operation process. Such as the LayerZero tool, it supports the direct cross-chain of native assets, and supports data transmission, which can realize the combination of DeFi applications between different chains. The newly launched anyCall tool of the cross-chain leader Multichain supports smart contract calls between different chains. This issue of DeFi Honeycomb will take stock of such further innovative cross-chain products.

Asset cross-chain leader Multichain

Introduction

Multichain (MULT), formerly known as AnySwap (ANY), is an infrastructure developed for cross-chain interaction of any information on the chain. It supports users to transfer Token assets, NFT assets and data interaction between any two chains, trying to become Web3. The “multi-chain router” in the era of 0 allows users to freely transfer various tokens between multiple chains.

On July 20, 2020, Multichain was first built in the form of AnySwap to meet the needs of intercommunication between different blockchains.

In the early days, AnySwap was a cross-chain decentralized exchange application (DEX). Later, the development team focused on cross-chain solutions. After removing the DEX function, it was relaunched under the name of Multichain, focusing on building the infrastructure for any cross-chain interaction, and launched a cross-chain bridge to support users to transfer assets on a chain. transfer to the other chain. In June 2021, the Multichain V3 version was launched to support asset transfer between multiple chains. Multichain has also evolved from a “one-to-one single cross-chain bridge” to a “cross-chain router system”, realizing the interconnection of multiple chains.

mechanism

Before the name change, Multichain was mainly used by users in two versions, AnySwap V2 and AnySwap V3.

In the AnySwapV2 version, the main product of cross-chain implementation is “one-to-one cross-chain bridge”, which adopts the “casting + destruction” model.

Specifically, on the asset source chain, the user deposits the assets to be cross-chain into the source chain smart contract and locks it, and then casts the source chain assets 1:1 through the smart contract on the target chain to which the cross-chain goes. Encapsulate the asset “AnyToken”, such as AnyUSDC, and send it to the user’s cross-chain target chain wallet. This is similar to the emergence of WBTC, a packaged asset in ERC-20 format, after BTC was cross-chained to Ethereum. When the user redeems the packaged asset from the target chain, the smart contract will destroy the packaged asset AnyToken on the target chain 1:1, and release the native asset locked on the source chain to the user.

In the upgraded version of AnySwapV3, asset cross-chain is completed through the “many-to-many model”, and the product deploys “liquidity pools” on multiple chains to help users complete the direct cross-chain of assets.

Taking USDC as an example, this dollar stablecoin is issued on multiple blockchains such as Ethereum, Binance Smart Chain, Avalanche Protocol, etc. In this case, AnySwap no longer needs to go through the “1:1 minting + destruction” method, and Just use the liquidity pool directly, that is, add USDC tokens to the liquidity pool on each chain deployed by AnySwap. When users need assets across the chain, USDC in these liquidity pools can directly complete the cross-chain transfer.

For example, Asset A is issued on Binance Smart Chain and Ethereum Chain, but the formats are BEP-20 and ERC-20 respectively. Then in the AnySwap V3 version, when a user of A asset holding the BEP-20 version wants to cross-chain it from the Binance Smart Chain to the Ethereum chain, as long as the fund pool of AnySwap V3 deployed on Ethereum has sufficient funds Users can directly exchange the ERC-20 version of the A asset reserve. What users get across the chain are native A assets, not packaged assets.

At present, the AnySwap V2 and V3 versions have been upgraded and merged into one, and evolved into the current Multichain. The product incorporates both the “1-to-1 cross-chain bridge” that encapsulates assets, and the “multi-link routing” tool that aggregates capital pools, which has become the main tool.

New Generation Cross-chain Bridge: More than Asset Cross-chain Focus on DApp Cross-chain Interaction

Multichain product page map

When users use Multichain to cross-chain assets, ideally, each chain has sufficient fund pools of cross-chain assets. No matter how many assets users transfer, the fund pools have enough assets for use. However, when a huge amount of assets cross-chain, the liquidity pool will also be insufficient. At this time, the user will receive a part of the packaged asset “AnyToken”, indicating that there is not enough assets in the target chain’s fund pool to withdraw.

For example, Xiao Ming has 1 million X assets that he wants to cross from chain A to chain B, but at this time Multichain only has 900,000 X in the X fund pool of chain B. At this time, Xiao Ming will be in the wallet of chain B. If you receive 900,000 X assets, you will also receive 100,000 packaging assets AnyX tokens, which represent the amount of X assets that have not been received. Once there are enough X assets on the B chain, AnyX can be directly exchanged for X.

In addition to actively building in the cross-chain field, Multichain has also laid out information transfer tools between blockchains. In April this year, Multichain launched anyCall, a cross-chain messaging application for smart contract application developers. This application can call the contract of chain B on chain A, which means that it can transmit data across chains, including smart contract information. , NFT, Token, data, etc., as long as the on-chain application deploys the anyCall tool, the multi-chain deployment of the protocol and the allocation and management of assets can be realized.

According to Multichain’s official website, as of April 28, the value of its locked encrypted assets (TVL) was US$5.9 billion. TVL is far ahead in the field of cross-chain applications. There are 43 blockchain networks that support cross-chain. There are more than 2,000 kinds of assets on the platform, and it is the cross-chain tool with the most extensive network coverage, the most supported assets and the largest business volume among cross-chain applications.

Native asset cross-chain application Stargate

Introduction

Stargate (STG) is a cross-chain application built on the LayerZero protocol, a cross-chain infrastructure, mainly focusing on the cross-chain of native assets.

LayerZero is a cross-chain communication protocol that supports users to send or transfer information between different blockchains or smart contracts. It is essentially an information transmission channel, which can be simply understood as a communication tool between blockchains. With LayerZero, developers and users can not only realize information transfer between different block networks, but also realize information transfer between DApps in different block networks.

With LayerZero, the data and asset interaction information of DeFi applications on chain A can be passed to DeFi applications on chain B. Through this tool, the cross-chain combination of DeFi applications can be realized, including the realization of cross-chain financial activities between assets.

mechanism

As the first product on LayerZero, Stargate believes that the current cross-chain bridge also has an “impossible triangle”, that is, “immediate arrival of assets across chains”, “unity of cross-chain liquidity pools”, “cross-chain” The three elements of “nativeness of assets after transfer” can only satisfy one or two in the current cross-chain facility.

For example, although the current cross-chain bridges under the “locked assets + casting and packaging” model have achieved instant arrival, the assets transferred across the chains are not native assets, but packaged assets, which often need to be transferred on the target chain. It can be better used when the packaged assets are exchanged for native assets. For another example, the aggregated cross-chain tools of the “liquidity pool” type are often deployed in different blockchain networks, so the liquidity cannot be unified, resulting in the number of assets in the liquidity pool on each chain. It is limited and cannot meet the needs of users for large-amount cross-chain transfers. There are also some cross-chain bridges in the Layer 2 expansion network, which simply cannot guarantee the immediacy of the account.

Stargate claims to be able to solve this “impossible triangle” – real-time transaction confirmation, that is, to ensure that user assets can be crossed to the target chain when the transaction is confirmed; unified liquidity pool, that is, for the same asset deployed in A, B, C, etc. When different chains are used, one liquidity can be shared; all assets that interact across chains are native assets.

New Generation Cross-chain Bridge: More than Asset Cross-chain Focus on DApp Cross-chain Interaction

Stargate supports direct conversion of USDC on Ethereum to BUSD on BSC

In the realization of transaction immediacy, LayerZero adopts ultra-light client technology, that is, a client application is implanted on both the A chain and the B chain. Through the oracle and the repeater (verification data), A can be transmitted and verified in real time. The authenticity of the information transmitted between the B chain and the B chain can ensure the timeliness and correctness of the transaction without any middleware.

In terms of ensuring the unity of native assets and liquidity, Stargate solves the problem by establishing a native capital pool on each blockchain, and allows the same asset to share the liquidity of different chains, so as to ensure that assets are cross-chain. Liquidity depth. However, this will also encounter risks, such as whether there will be a redemption crisis when multiple chains withdraw assets from the liquidity pool at the same time, or a large withdrawal of a chain will cause liquidity to dry up. To this end, Stargate adopts the Delta resource allocation balance algorithm to ensure the balance of the native asset pool, that is, to supplement liquidity through borrowing or arbitrage, or increase the fees of the extractor to limit large withdrawals.

At present, Stargate currently mainly supports users to deposit USD stablecoins in various block networks such as USDC, USDT, BUSD, DAI, etc., to provide liquidity for cross-chain liquidity pools, and to reward liquidity providers with STG token, which is Stargate Issued platform token. According to Stargate’s official website, as of April 28, the value of stablecoin assets locked in the app was $1.6 billion.

It should be noted that Stargate has not been online for a long time, and the risk of contract loopholes cannot be ruled out. Although the official has revised some loopholes in time, users still need to pay attention to safety.

Extensible Bridge Router Protocol

Introduction

Router Protocol is a cross-chain communication infrastructure dedicated to providing bridging facilities between numerous Layer 1 and Layer 2 blockchain networks, enabling users to instantly trade and exchange assets from different blockchain networks. Currently supports asset transfer between BSC, Avalanche, polygon, Fantom, Arbitrum and other block networks.

Router is not only a cross-chain tool, but also a “wireless scalable bridge” that provides a cross-chain communication network platform, that is, all blockchains can be linked to each other by connecting to Router network nodes, and any new chain will It can be inserted into the Router network through configuration to achieve interoperability with other block networks.

Router can be compared to a shared central server with countless link sockets (nodes). Each block network is like a computer. It can be inserted into this shared central server socket through a network cable to realize the information exchange of each computer. The new computer can be plugged and used, so as to achieve unlimited expansion.

New Generation Cross-chain Bridge: More than Asset Cross-chain Focus on DApp Cross-chain Interaction

Router Protocol platform architecture, with Router network nodes in the middle

mechanism

Router will deploy a bridge contract on the supported blockchain. On the source chain, the bridge contract can lock the user’s assets; on the target chain, the bridge contract unlocks or mints the assets on the target chain to cross-chain users.

The assets that the Router can bridge can be roughly divided into two categories, one is “stable currency assets” and the other is “non-stable currency assets”.

When the “stablecoin asset” is cross-chain, the user’s stablecoin will be locked on the source chain and unlocked on the target chain. If there is not enough asset liquidity on the target chain, the user will receive a packaged version of the stablecoin, such as USDC packaged as RUSDC.

There are two ways for “non-stable currency assets” to cross-chain. One is to lock cross-chain assets on the source chain, and unlock the same amount of assets on the target chain. The second is to convert non-stable currency assets into stable currency assets and lock them on the source chain, unlock the same amount of stable currency on the target chain, and use the stable currency to purchase non-stable currency assets on the target chain and send them to the user’s wallet.

For example, when the non-stable asset MATIC crosses from the source chain A to the target chain B, the transaction can be completed in the following two ways. Path 1: MATIC will be locked on source chain A, and an equal amount of MATIC will be unlocked on destination chain B. Path 2: MATIC is converted into a stable currency, such as USDC, USDC is locked on the source chain A, and the same amount of USDC is unlocked on the target chain B, and then the USDC is converted into MATIC in the DEX on the B chain, and then sent to the user’s wallet middle.

New Generation Cross-chain Bridge: More than Asset Cross-chain Focus on DApp Cross-chain Interaction

Router converts AAVE on Ethereum to MATIC on Polygon

Additionally, the Router can connect to the liquidity pool of any DEX on the chain it supports. When exchanging non-stable coin assets across chains, the Router first uses the DEX fund pool on the source chain to convert the non-stable coin assets submitted by users into stable coin assets, and then converts the stable coin assets on the target chain to what the user wants. of cross-chain assets. To this end, Router has also developed the “Pathfinder Algorithm” to find the best exchange path for moving assets from the source chain to the target chain, so as to complete the exchange of non-stable currency assets for cross-chain users at the optimal price and minimum slippage.

Automated Market Maker (AMM) cross-chain bridge Swim Protocol

Introduction

Swim Protocol is a native asset cross-chain trading tool within the Solana ecosystem. It adopts a multi-chain automatic market maker (AMM) model to support cross-chain transfer of native assets, eliminating the method of “encapsulating assets”.

In the design of AMM, Swim Protocol draws on Curve’s stable currency exchange idea to a certain extent, and applies this idea to cross-chain. When Swim Protocol selects the types of cross-chain assets to support, it prioritizes the exchange between stablecoins on different chains, and plans to gradually expand to support cross-chain of all native assets.

New Generation Cross-chain Bridge: More than Asset Cross-chain Focus on DApp Cross-chain Interaction

Swim Protocol supports direct exchange of USDC on Solana to BUSD on BSC

The bridging technology used by Swim Protocol is Wormhole.

Wormhole is a cross-chain bridge launched by Solana ecology, and it is also the first two-way cross-chain bridge between Solana and Ethereum. It realizes asset cross-chain by encapsulating assets. When an asset on Ethereum wants to cross-chain to Solana, Wormhole will first lock the ERC-20 format asset in the Ethereum smart contract, and mint the corresponding asset in SPL format on Solana. After the cross-chain, Wormhole will be generated. Brings encapsulated assets, not native assets.

By combining the multi-chain AMM exchange mechanism with Wormhole bridging technology, Swim Protocol does not use the process of encapsulating assets, but instead builds a capital flow pool to support users to directly exchange native assets on one chain for native assets on other chains.

Currently, users can obtain a share of transaction fees by providing liquidity to the Swim Protocol stablecoin exchange pool. It should be noted that currently Swim Protocol does not issue any platform tokens.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/new-generation-cross-chain-bridge-more-than-asset-cross-chain-focus-on-dapp-cross-chain-interaction/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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