The Next Evolution of Crypto Bridges. The Future Is Now.
In yesterday's post we talked, among other things, about crypto bridges. As far as I am aware, most if not all crypto bridges use wrapped tokens, custodial bridges, or centralized intermediaries. And all of them are points of failure or of choking the free transfer of funds.
The Bitcoin-HIVE bridge that is being built by VSC may be a little different because bridge nodes will need to be over-collateralized for the swaps they'll perform, and if something goes wrong, they'll lose the collateral. Or at least that's what I understood.
However, someone seems to have resolved all the vulnerability points of existing bridges. At least that's how it looks at a quick read, because unfortunately, that's all I have time for these days... quick everything.
As I was going through my crypto holdings for my monthly overview, I noticed a link on ThorSwap to a piece of news. I don't often follow these links when I am focused on a task, but this time I did, and I don't regret it. It was a link to a Medium article entitled "Cross-Chain Made Easy: THORSwap Integrates Chainflip Liquidity Network". I didn't have time to read it then, but I saved it for later, and I read through it when I finished.
Here's a paragraph that is very interesting to our crypto bridges discussion:
Chainflip brings to the table an innovative approach to cross-chain liquidity that eliminates the need for wrapped tokens, custodial bridges, or centralized intermediaries. This ground-breaking technology allows for direct swaps between different blockchain assets, preserving the ethos of decentralization and security inherent to DeFi.
Now, we could say this is marketing and we've seen well-written whitepapers before and nothing in reality to back them up. But the ThorSwap team decided to integrate ChainFlip and make it "the first new cross-chain protocol supported on THORSwap since inception". It also allows, indirectly, the addition of another L1 blockchain, Polkadot, to ThorSwap.
The article linked above describes with enough detail how ChainFlip technology works, so if you are interested, give it a read, this part isn't long.
In my opinion, it was inevitable that the existing bridges needed an alternative solution that was more aligned with the decentralization principles and values.
I liked this key takeaway for ChainFlip:
- Support for non-EVM chains: native support for Bitcoin, Ethereum and Polkadot (new!) with more application specific chains to come.
The parts I like are:
- support for non-EVM chains
- more application-specific chains to come; Hive can be thought of as application-specific, right? Of course, this is wishful thinking...
What do you think about their tech? Is it the future we want and need for crypto bridges, or it has major drawbacks too?
Want to check out my collection of posts?
It's a good way to pick what interests you.
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Very limited on time myself this morning @gadrian, I will simply let you know I read your post. And agree there is a great deal of activity going on around the "weakest link" in facilitating cross-chain activity - bridges.
One option that has my support was written about here ... Which resulted in the selling of my THOR stake, in favor of it, for what has the power to make it obsolete (in the eyes of some ...) and which currently has a TGE launch date of April 2nd ...
As with all the myriad of things going on all around us, all the time, we'll see ...
Thanks for pointing me toward that development, @roleerob! Appreciate it, will look into it.
I'd like to know how these swaps are conducted on a more technical level, because the non-EVM bridges really is an interesting concept. There's potential for HIVE to be connected to that 'island' as you put it.
They describe this in the article, but maybe not deeply enough to clear up questions of someone from a technical standpoint.
the most obvious route I could think of is through a DEX or an automatic market maker for the chain's token you are bridging to. Wonder if they got their own novel way.
Well, they do... Because they don't use wrapped tokens on various blockchains. They transfer native tokens.
I think the bridge is really beneficial because it will actually helps to settle a lot of things that needs to be settled gradually
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I’m lost here
Haha
Well, I learnt a bit though cos I’m a novice
It's fine to be lost every once in a while. Nobody is an expert in everything, or they are an expert in nothing.
these bridges are the backbone of transferring your money from one chain to another.
Besides CEXes, they are at least the widest-used method of transferring crypto between ecosystems.
This is correct.
Thanks for confirming!
I'm sure we will soon have the kind of connectivity that will make for the flow of market experiences among crypto world. Such could lead to the strong coins strengthening the weak ones
Hmm, that rarely happens. Except for the situation where people involved with the "weak ones" use the strong ones as leverage to catapult their own coins. This actually happens frequently. That's why we see a flow of capital from bitcoin to alts, when bitcoin is done growing.
This sounds great. Crypto and swaps have been around for a long time already, so I am surprised that this didn't happen earlier. I guess people were satisfied and fine with centralized options like Binance. I hope they are able to make this a success, so we have more options.
... and later with centralized bridges. Evolution takes time.
I think it's good to see more bridges and I think it's a good idea to include non-EVM bridges. I don't think many people are really working on that right now.
There are other non-EVM bridges, but the most popular ones are for EVMs because it's easy to make one and port it to all EVM blockchains. Apparently, there is quite a lot of development on bridging ecosystems together. I am not aware of all of it.
Thanks for the useful piece of info. I didn't quite get some of the terms you used but I'm sure the bridging would be beneficial in several ways to the hive platform. Have a nice day.
I'm not sure if it'll be beneficial to Hive. It's a bridge unrelated to Hive at this point, but we'll see what the future holds. If you have questions, feel free to ask. Have a great day!
Gradually this bridges are setting the standard for the future or for tomorrow
Hello @gadrian. I went to look up wrapped tokens and VSC in Google to see what they meant. There is so much to learn.
"Wrapped Token - Wrapped crypto tokens are cryptocurrencies pegged to the value of another original crypto or assets like gold, stocks, shares, and real estate and put to work on the DeFi platforms.
The original asset is ‘wrapped’ into a digital vault, and a newly minted token is created to transact on other platforms."
"VSC - VSC is the native utility token that is used for: - Fees for processing transactions and storing data. - Running validator nodes on the network via staking VSC tokens."
I'm trying to understand the article better. It is very interesting and I will post links to where I got my definitions in a reply to this comment. Barb #ctp
Links to definitions of Wrapped Token and VSC in orange below. Click the orange text of each.
Wrapped Token
VSC
Wrapped tokens are what you found but also native tokens of one blockchain on another blockchain. Like SWAP.BTC (bitcoin) is on Hive-Engine, for example. Or bHIVE on Binance Smart Chain.
By VSC I meant VSC Network (@vsc.network) which is being built as a sidechain of Hive for smart contracts.
OK thank you @gadrian 😊
Here are more words I had to look up the meaning of @gadrian, in order to wrap my head around the article.
Ethos
"the characteristic spirit of a culture, era, or community as manifested in its beliefs and aspirations.
"a challenge to the ethos of the 1960s"
EVM
"EVM Chains are the bread and butter of the crypto space. In select cryptocurrency camps, the Ethereum Virtual Machine (EVM) is considered a non-negotiable feature that emerging blockchains need to support to stay relevant and attract users."
Application-specific blockchain
"Application-specific blockchain or Appchain is a specialized blockchain built solely for a specific application. Unlike public blockchains that support many applications, these are optimized for singular use cases — ensuring efficient performance tailored to that application's needs. Cosmos and Polkadot brought up this concept of appchain back in 2016."
I will put this links under this comment as required by inleo.
I think that Thorswap is doing an awesome job to integrate the Chainflip Liquidity Network to prevent the wrapped tokens that you say causes high fees and they don't sound secure. Wrapped tokens sound like they are more easily hacked, correct?
Thank you @gadrian and this is very fascinating stuff to learn on bridges!
Barb !BBH !CTP #ctp
Here are this links to the definitions above that I posted for Ethos, EVM, and Application-specific blockchain.
Ethos
EVM
Application-specific blockchain
The definition you found for EVM is for marketing purposes. EVM is like an engine that powers different similar machines. They all speak the same language and can easily intercommunicate, exchange users, capital, and apps being built on one can be easily moved on another as well.
You can think of Hive as application-specific because it has blogging with reward pools added to the base chain.
High fees for wrapped tokens can happen, depending on the chain where they are wrapped. If they are wrapped on Ethereum, then you have high fees. If they are wrapped on Polygon, then you have low fees.
They are less secure than native tokens, generally, but, depending on the blockchain where they are wrapped and who is the owner of the token smart contract and the smart contract itself, they can be more secure than the bridge moving them from one place to another.
If the code is vulnerable or the owner malicious, then we can have either hacks or rug pulls.
Ok, @gadrian. Thanks for all the info on wrapped tokens! What is a rug pull? Oh right it's the bridges that make the wrapped tokens more vulnerable to hacking. !BBG !CTP
A rug pull happens when an owner or insider steals funds from a project.
OK thank you @gadrian !BBH !CTP
@gadrian! Your Content Is Awesome so I just sent 1 $BBH (Bitcoin Backed Hive) to your account on behalf of @adcreatordesign. (1/1)
Thank you @bbhbot
I love the thought of being able to acces other blockchains, or crosschain access so long as the chains (and their bridges) are truly decentralized. Meaning they do NOT have any type of corporation (Labs... etc) behind them.
Normally, I'd have the same opinion. But the way things are now in the crypto space and the direction they are moving toward, if we only connect to other decentralized ecosystems, we would be very isolated.
Maybe you can help me better understand this part of blockchain. How are they run being that they are not really decentralized. I have read about some having nodes that are run by the users. Does such a capability truly exist and how does that help in decentralization.
I am hesitant to get into anything outside of hive claiming to be blockchain.
It is possible. At one point in the beginning, bitcoin was run only by users with laptops and small computers.
But for most blockchains, users aren't forced to be validators (node operators) too. It's a choice.
Regarding centralized blockchains, there are various ways in which they are centralized. For example, all nodes are in a way controlled by an entity (as it happens on Binance Smart Chain). Or only a few stakeholders control what happens on the chain on a Proof-of-Stake blockchain like Ethereum. Or there is a big centralized entity dispensing funds discretionary on the blockchain, especially for development (many blockchains are in this category).
To be honest, I don't think there is a perfectly decentralized blockchain. There are various degrees of decentralization.