By Dr. Andreas Freund (Co-Chair) on behalf of the EEA Group Initiatives L2 Requirements Working Group
We reside in a multi-chain world, with billions of USD in asset worth locked in 100+ chains. And the homeowners of these blockchain belongings behave similar to they’d with belongings in conventional finance: they’re on the lookout for arbitrage alternatives to earn money. Nevertheless, in distinction to the world of conventional finance the place belongings in a single nation could be utilized in arbitrage performs in a foreign country with out shifting belongings through the use of trusted intermediaries, the identical method didn’t work for blockchains for a very long time for 3 causes:
- blockchains can not speak to 1 one other,
- arbitrage performs on a specific blockchain require that each one concerned belongings are current on that blockchain due to the trustless nature of public blockchains,
- and there was no equal to the trusted middleman as in conventional finance between trustless blockchains.
To unravel the issue of capital inefficiency on blockchains, and earn money within the course of, enterprising people created blockchain bridges that addressed these three challenges and began to hyperlink the blockchain ecosystem collectively – sure, now you can commerce bitcoin on Ethereum. After all, bridges can be utilized for different sorts of performance too; nonetheless, the first perform is to enhance capital effectivity.
At a excessive degree, a blockchain bridge connects two blockchains facilitating safe and verifiable communication between these blockchains by means of the switch of knowledge and/or belongings.
This enables for a large number of alternatives corresponding to
- cross-chain switch of belongings,
- new decentralized purposes (dApps), and platforms that enable customers to entry the strengths of varied blockchains – thus enhancing their capabilities,
- and builders from completely different blockchain ecosystems can collaborate and construct new options.
There are two primary sorts of bridges:
|Trusted Bridges||Trustless Bridges|
|Depend on a central entity or system for his or her operations.||Function utilizing decentralized programs corresponding to sensible contracts with embedded algorithms.|
|Belief assumptions regarding funding custody and bridge safety. Customers principally depend on the bridge operator’s fame.||The safety of the bridge is identical as that of the underlying blockchain.|
|Customers want to surrender management of their crypto belongings.||Allow customers to stay in charge of their funds by means of sensible contracts.|
Inside each units of belief assumptions one can distinguish completely different, frequent sorts of bridge designs:
- Lock, mint, and burn token bridges: On the spot assured finality as minting belongings on the vacation spot blockchain can happen each time required with out the potential for a failed transaction. Customers obtain an artificial, usually referred to as a wrapped asset, on the vacation spot blockchain, not the native asset.
- Liquidity networks with swimming pools of native belongings with unified liquidity: A single asset pool on one blockchain is related with further asset swimming pools on different blockchains with shared entry to 1 one other’s liquidity. This method doesn’t allow immediate, assured finality since transactions can fail if there’s a lack of liquidity within the shared swimming pools.
Nevertheless, all designs, and underneath no matter belief assumptions, have to handle two trilemmas that blockchain bridges face.
Bridging Trilemma as posited by Ryan Zarick, Stargate
Bridging protocols might solely have two of the three properties under:
- On the spot Assured Finality: Assure to obtain belongings on the goal blockchain instantly after transaction execution on the supply blockchain and transaction finality on the goal blockchain.
- Unified Liquidity: Single liquidity pool for all belongings between supply and goal blockchains.
- Native Belongings: Obtain goal blockchain belongings as a substitute of belongings minted by the bridge representing the unique asset on the supply blockchain.
Interoperability Trilemma as posited by Arjun Bhuptani, Connext
Interoperability protocols might solely have two of the three properties under:
- Trustlessness: Identical safety assurances because the underlying blockchain with out new belief assumptions.
- Extensibility: Capacity to attach completely different blockchains.
- Generalizability: Permits for arbitrary knowledge messaging
Moreover the trilemmas which could be addressed with intelligent design, the largest problem for blockchain bridges is safety as the various hacks in 2021 and 2022 have demonstrated; be it the Wormhole, Ronin, Concord, or Nomad incidents. And essentially, a bridge between blockchains is simply as safe because the least safe blockchain used within the (chain of) bridge(s) for an asset. Nevertheless, this latter difficulty shouldn’t be an issue for bridges between Layer 2 platforms which can be anchored on the identical Layer 1 (L1) blockchain as they share the identical safety ensures from their shared L1 blockchain.
Till this level, we’ve not particularly talked about L2 platforms which can be designed to scale L1 blockchains whereas inheriting the L1 safety ensures, since L2s are strictly talking a specific sort of bridge: a local bridge. There are, nonetheless, a number of idiosyncrasies of L2 platforms when making a bridge between L2s e.g. optimistic rollups vs. zk-rollups vs Validium rollups vs Volition rollups. These variations make them particular due to the distinction in belief assumptions and finality for L2s versus L1s and between completely different L2s.
The rationale why bridges between L2s are necessary is identical as for L1s: L2 belongings are on the lookout for capital effectivity on different L2s, in addition to portability and different functionalities.
The distinction in native belief assumptions on L2 platforms could be overcome if bridged L2s are, as remarked already, anchored on the identical L1. And that the bridge doesn’t require further belief assumptions. Nevertheless, variations in L2 transaction finality on the anchor L1 make it difficult to bridge belongings between L2s in a trust-minimized method.
Digging a bit deeper into L2 bridges, we see that L2-to-L2 bridges ideally ought to fulfill the next standards:
- Purchasers should be abstracted away from every L2 protocol they interface with by means of an abstraction layer – loose-coupling paradigm.
- Purchasers should be capable to confirm that the information returned from the abstraction layer is legitimate, ideally with out altering the belief mannequin past the one utilized by the focused L2 protocol.
- No structural/protocol adjustments are required from the interfacing L2 protocol.
- Third events should be capable to independently construct an interface to a focused L2 protocol – ideally a standardized interface.
When wanting on the present panorama, one sees most L2 bridges are treating L2s similar to one other blockchain. Observe that fraud proofs as utilized in Optimistic rollups, and validity proofs as utilized in zk-rollups options, take the place of block headers and Merkle proofs as utilized in “regular” L1-to-L1 bridges.
Beneath we summarize the present and really different panorama of L2 bridges with a reputation, transient abstract, and bridge design sort:
|Bridge Title||Description||Sort of Design|
|Hop Alternate||Rollup-to-rollup common token bridge. It permits customers to ship tokens from one rollup to a different nearly instantly with out having to attend for the rollup’s problem interval. https://hop.alternate/whitepaper.pdf||Liquidity Community (utilizing an Automated Market Maker)|
|Stargate||Composable native asset bridge, and dApp constructed on LayerZero. DeFi customers can swap native belongings cross-chain on Stargate inside a single transaction. Functions compose Stargate to create native cross-chain transactions on the software degree. These cross-chain swaps are supported by the community-owned Stargate unified liquidity swimming pools. https://www.dropbox.com/s/gf3606jedromp61/Delta-Fixing.The.Bridging-Trilemma.pdf?dl=0||Liquidity Community|
|Synapse Protocol||A token bridge leveraging a validator between chains and liquidity swimming pools to carry out cross-chain and same-chain swaps.||Hybrid (Token Bridge/Liquidity Community)|
|Throughout||A cross-chain optimistic bridge that makes use of actors referred to as Relayers to satisfy consumer switch requests on the vacation spot chain. Relayers are later reimbursed by offering proof of their motion to an Optimistic Oracle on Ethereum. The structure leverages a single liquidity pool on Ethereum and separate deposit/reimburse swimming pools on vacation spot chains which can be rebalanced utilizing canonical bridges.||Liquidity Community|
|Beamer||Allows customers to maneuver tokens from one rollup to a different. The consumer requests a switch by offering tokens on the supply rollup. Liquidity suppliers then fill the request and instantly ship tokens to the consumer on the goal rollup. The core focus of the protocol is to be as straightforward to make use of as attainable for the top consumer. That is achieved by separating two completely different issues: the service supplied to the top consumer, and the reclaiming of funds by the liquidity supplier. The service is supplied optimistically as quickly because the request arrives. Being refunded on the supply roll-up is secured by its personal mechanism and decoupled from the precise service.||Liquidity Community|
|Biconomy Hyphen||Multi-chain relayer community using sensible contract-based wallets for customers to work together with liquidity suppliers to switch tokens between completely different (optimistic) L2 networks.||Liquidity Community|
|Bungee||The bridge is constructed on the Socket infrastructure and SDK with the Socket Liquidity Layer (SLL) as its most important element. The SLL aggregates liquidity throughout a number of bridges and DEXs and in addition permits for P2P settlements. That is completely different from a Liquidity Pool community since this single meta-bridge permits dynamical choice and routing of funds through one of the best bridge as per a consumer’s preferences corresponding to value, latency, or safety.||Liquidity Pool Aggregator|
|Celer cBridge||A decentralized and non-custodial asset bridge that helps 110+ tokens throughout 30+ blockchains and layer-2 rollups. It’s constructed on prime of the Celer Inter-chain Message Framework which is constructed on the Celer State Guardian Community (SGN). The SGN is a Proof-of-Stake (PoS) blockchain constructed on Tendermint that serves because the message router between completely different blockchains.||Liquidity Community|
|Connext||Dispatches and handles messages associated to sending funds throughout chains. Custodies funds for canonical belongings, quick liquidity, and steady swaps. The Connext contract makes use of the Diamond sample so it includes a set of Aspects that act as logical boundaries for teams of features. Aspects share contract storage and could be upgraded individually.||Hybrid (Token Bridge/Liquidity Community)|
|Elk Finance||Makes use of ElkNet with options corresponding to ||Hybrid (Token Bridge/Liquidity Community)|
|LI.FI||A bridge and DEX aggregator that routes any asset on any chain to the specified asset on the specified chain made accessible on the API/Contract degree by means of an SDK, or as an embeddable widget in a dApp||Liquidity Pool Aggregator|
|LayerSwap||Bridge for tokens from a centralized alternate account on to a Layer 2 community (each optimistic and zk- rollups) with low charges.||Liquidity Community (utilizing an Automated Market Maker)|
|Meson||An atomic swap software utilizing Hash Time Lock Contracts (HTLC) utilizing safe communications between customers mixed with a liquidity supplier relayer community for the supported tokens.||Liquidity Community|
|O3 Swap||The O3 cross-chain mechanisms of Swap and Bridge aggregating a number of liquidity swimming pools throughout chains enable for easy one-time affirmation transactions with a deliberate Gasoline Station fixing the fuel charge demand on every chain.||Liquidity Pool Aggregator|
|Orbiter||A decentralized cross-rollup bridge for transferring Ethereum-native belongings. The system has two roles: Sender and Maker. The ‘Maker’ is required to deposit extra margin to Orbiter’s contract earlier than they will qualify to be a cross-rollup service supplier to the ‘Sender’. Within the typical course of, the ‘Sender’ sends belongings to the ‘Maker’ on the ‘Supply Community’, and the ‘Maker’ sends them again to the ‘Sender’ on the ‘Vacation spot Community’.||Liquidity Community|
|Poly Community||Permits customers to switch belongings between completely different blockchains utilizing a Lock-Mint swap. It makes use of a PolyNetwork chain to confirm and coordinate message passing between Relayers on supported chains. Every chain has a set of Relayers, whereas the PolyNetwork chain has a set of Keepers that signal cross-chain messages. Chains built-in with Poly Bridge must help mild consumer verification since validation of cross-chain messages contains verifying block headers and transactions through Merkle proofs. Among the sensible contracts utilized by the bridge infrastructure are usually not verified on Etherscan.||Token Bridge|
|Voyager (Router Protocol)||The Router Protocol makes use of a pathfinder algorithm to seek out essentially the most optimum route to maneuver belongings from the supply chain to the vacation spot chain using the Router community which has similarities to Cosmos’ IBC.||Liquidity Community|
|Umbria Community||Umbria has three main protocols working collectively:|
Each protocols work in tandem to supply asset migration between cryptocurrency networks
|Liquidity Community (utilizing an Automated Market Maker)|
|Through Protocol||The protocol is an aggregator of chains, DEXs, and bridges to optimize asset switch routes. This enables asset bridging in 3 ways:||Hybrid (Token Bridge/Liquidity Community)|
|Multichain||Multichain is an externally validated bridge. It makes use of a community of nodes operating SMPC (Safe Multi-Social gathering Computation) protocol. It helps dozens of blockchains and hundreds of tokens with each Token Bridge and Liquidity Community.||Hybrid (Token Bridge/Liquidity Community|
|Orbit Bridge||Orbit Bridge is a part of the Orbit Chain undertaking. It’s a cross-chain bridge that enables customers to switch tokens between supported blockchains. Tokens are deposited on the supply chain and “illustration tokens” are minted on the vacation spot chain. Deposited tokens are usually not exactly locked and can be utilized in DeFi protocols by Orbit Farm. Accrued curiosity shouldn’t be handed on to token depositors. Bridge contract implementation and farm contract supply code are usually not verified on Etherscan.||Token Bridge|
|Portal (Wormhole)||Portal Token Bridge is constructed on prime of Wormhole, which is a message-passing protocol that leverages a specialised community of nodes to carry out cross-chain communication.||Token Bridge|
|Satellite tv for pc (Axelar)||Satellite tv for pc is a token bridge powered by the Axelar community||Liquidity Community|
The L2Beat undertaking maintains an energetic checklist of bridges related to L2s with the Whole-Worth-Locked (TVL) within the bridge in addition to an outline and transient threat evaluation, if accessible.
L2 Bridges Danger Profiles
Lastly, when customers make the most of L2 Bridges, actually, any bridge, care must be taken, and the next dangers have to be evaluated for a given bridge:
Lack of Funds
- Oracles, relayers, or validators collude to submit fraudulent proofs (e,g, block hash, block header, Merkle proof, Fraud proof, Validity proof) and/or relay fraudulent transfers that aren’t mitigated
- Validator/Relayer personal keys are compromised
- Validators maliciously mint new tokens
- False claims are usually not disputed in time (optimistic messaging protocols)
- A vacation spot blockchain reorganization happens after optimistic oracle/relayer dispute time passes (optimistic messaging protocols).
- Supply code of unverified contracts concerned in or utilized by a protocol accommodates malicious code or performance that may be abused by a contract proprietor/administrator
- Token Bridge homeowners behave maliciously, or provoke time-sensitive emergency actions that impression consumer funds, and don’t correctly talk to the consumer base
- Protocol contract(s) paused (if performance exists)
- Protocol contract(s) obtain a malicious code replace
Freezing of Funds
- Relayers/Liquidity Suppliers don’t act on consumer transactions (messages)
- Protocol contract(s) paused (if performance exists)
- Protocol contract(s) obtain a malicious code replace
- Inadequate liquidity within the goal token on the bridge
- Oracles or relayers on both vacation spot or goal L2s or each fail to facilitate a switch (message)
- Protocol contract(s) paused (if performance exists)
Whereas this checklist shouldn’t be exhaustive, it provides overview of the present dangers related in utilizing bridges.
There are new developments underway utilizing zero-knowledge-proof (zkp) applied sciences designed to mitigate a few of the above threat components and tackle the 2 bridge trilemmas. Specifically, the usage of zkps permits for the next bridge design traits:
- Trustless and Safe as a result of the correctness of block headers on the supply and goal blockchains could be confirmed by zk-SNARKs that are verifiable on EVM-compatible blockchains. Therefore, no exterior belief assumptions are required, assuming the supply and goal blockchains and the utilized light-client protocols are safe and we’ve 1-of-N trustworthy nodes within the relay community.
- Permissionless and Decentralized as a result of anybody can be a part of the bridges’ relay community, and PoS-style or comparable validation schemes are usually not wanted
- Extensible as a result of purposes can retrieve zkp-verified block headers, and execute application-specific verification and performance
- Environment friendly due to new, optimized proof schemes with quick proof era and quick proof verification occasions
Albeit early, a majority of these developments promise to speed up the maturation and safety of the bridge ecosystem.
We are able to summarize the above dialogue and overview of L2 Bridges as follows:
- L2 Bridges are an necessary glue of the L2 ecosystem to additional L2 interoperability and environment friendly use of belongings and purposes throughout the ecosystem.
- L2 bridges used on L2s anchored on the identical L1, corresponding to Ethereum Mainnet, are safer than bridges between L1s – assuming the supply code is protected, which is commonly a giant if.
- As with all distributed system architectures, there are vital tradeoffs to be made, as expressed within the two posited Trilemmas – Bridging Trilemma and Interoperability Trilemma.
- L2 Bridges have very completely different belief assumptions, e.g., trusted vs. trustless bridges, and really completely different design decisions, e.g., lock-mint-burn vs. liquidity networks.
- The L2 Bridges ecosystem continues to be nascent and in a state of flux.
- Customers are suggested to do their due diligence to evaluate which L2 bridges provide one of the best risk-reward profile for his or her wants.
- There are new developments underway utilizing latest zkp-technologies which can be successfully addressing the 2 bridge trilemmas, and assist to extend the safety of bridges general.
Whereas nonetheless early within the journey in direction of a standardized L2 interoperability framework, these are necessary developments, and have to be taken critically as any a kind of tasks may develop into “THE” bridge framework – it’s not but VHS vs Betamax, however we’re getting there.
The L2 WG want to gratefully acknowledge Tas Dienes (Enterprise Basis), Daniel Goldman (Offchain Labs), Bartek Kiepuszewski (L2Beat) for a cautious studying of the manuscript and invaluable content material strategies.