At @lifiprotocol, we often talk about the need for bridges to be "trustless" or trust minimized.

Today, we attempt to define & measure the level of "trust" required by various bridge designs.

And what we found is that, with bridges, trust is a spectrum.

https://blog.li.fi/li-fi-with-bridges-trust-is-a-spectrum-354cd5a1a6d8

1/ What is a Trustless System?

A trustless system is one that does not depend on external actors to facilitate transactions from point A to B.

However, this is a very simple definition.

On a technical level, it is much more nuanced 👇


2/ .@jadler0 and @badcryptobitch say:

“A blockchain system is trustless if and only if its state is (i.e., all its state elements are) both live and safe.”

Let’s dig deeper into this explanation.


3/ Here, we need to know 2 properties:

• Safety — User funds can’t be stolen & they can’t be locked up forever. Only the owner can update the state (ex: move the funds)

• Liveness — As of some bounded time, the owner of the state (ex: funds) will be able to move/transfer it


4/ Thus, a trustless system can preserve both the safety and the liveness of its state.

This means trustless bridges are those where:

1. user funds are never lost (never stolen or locked forever)

2. users (owners of the state) can move/redeem their funds after a fixed period


5/ Also, bridges can be effectively trustless if their security is higher than the two blockchains it’s connecting.

However, this is impractical due to the significant capital required to secure such a system.


6/ Now that we have created a baseline understanding of trustless systems, let’s take a look at why and where trust is introduced into bridge designs.

From there, we will then dive into the trust spectrum of bridges.


7/ The Root of Trust in Bridges

With the help of examples, let’s try to narrow down where trust is introduced in bridge design.

A completely trustless cross-chain transaction would be — Alice on Blockchain A sends $1000 to her wallet address on Blockchain B.

8/ This is ideal, but it is not possible since blockchains cannot communicate between themselves.

Another way to do it is by swapping funds with a user on Blockchain B.

Example — Alice sends $1000 to Bob on Blockchain A. In return, Bob sends $1000 to Alice on Blockchain B.

9/ Theoretically, two users interested in transacting with one another can do so directly.

But in reality, this has many constraints:

1. Alice has to trust that Bob will send the funds
2. What if Alice cannot find someone like Bob who is interested in such a swap every time?


10/ While constraint #1 can be addressed via smart contracts, this method is not scalable because of constraint #2.

To address constraint #2, we introduce bridges between blockchains that act as the ‘man-in-the-middle’

This makes communication between them possible.


11/ To overcome the communication & trust boundaries b/w blockchains, some bridges use off-chain actors or validators.

These validators responsible for verifying the system are the root of trust in bridges.

They introduce new trust assumptions unique to the validator set.

12/ However, and this is hopefully the future of the cross-chain ecosystem, some bridge designs don’t need to add their own validators in the middle.

Instead, they use the blockchains and their respective validator sets to make bridging possible.


13/ For instance, light client bridges like @cosmosibc or liquidity networks like @ConnextNetwork do not add trust assumptions to the system.

Therefore, the root of trust remains on the blockchains associated with the cross-chain transfer.


14/ Trustlessness in bridges does not exist in an absolute form.

If trusted and trustless were two extremes, most bridges would lie somewhere in between.


15/ When it comes to trustlessness in bridges, the main question is: who is verifying the system?

This has been explained in detail by @arjunbhuptani in the interoperability trilemma.

Read more 👇

https://blog.connext.network/the-interoperability-trilemma-657c2cf69f17

16/ By answering this, trust as a spectrum in bridges comes to:

• External validators and federations — Externally Verified
• Optimistic bridges — Optimistically Verified
• Liquidity networks — Locally Verified
• Light clients and relays + ZK Bridges — Natively Verified


17/ Code has no trust assumptions; only humans do.

Here’s a graphic showing where each bridge design falls in the trust spectrum.


18/ From the left (trust the human) to the right (trust the code), the systems become more trust minimized.

They remove the need for users to rely on humans and either distribute it across the system or replace it with code.


19/ To learn more about how these different systems function and why one is more/less trust minimized than the other, check out the blog!

Also, read in detail about:

• Trustless systems
• Root of trust in bridges
• Comparison b/w bridge designs

https://blog.li.fi/li-fi-with-bridges-trust-is-a-spectrum-354cd5a1a6d8

Shoutout to our researchers @arjunnchand & @mark_murdock3 for their work!

Huge thanks to @pranaymohan for the insightful feedback 😄


If you liked reading our research, please follow @lifiprotocol and like/RT/QT the first tweet.

Want to keep up with the latest cross-chain news? Join us over on Telegram.

https://t.me/lifinews


You can read the unrolled version of this thread here: https://typefully.com/lifiprotocol/yrLsr85

Last week in the multi-chain ecosystem with the Cross-Chain Insider! 🦎



We bring you the latest:
• Bridge updates
• Multi-chain ecosystem news
• Interesting reads
• Trending narratives on Twitter

https://blog.li.fi/the-cross-chain-insider-li-fis-weekly-cross-chain-newsletter-69b9a3507de3



A mega thread! 🧵

a) Bridge Updates

1) Li.Finance is Now LI.FI 🦎

With this rebranding, LI.FI aims to break down the messaging to the core: simplifying cross-chain strategies for dApps, wallets, and DeFi protocols.

https://twitter.com/lifiprotocol/status/1514551489724928000 

2) Multichain anyCall is Live 👏🏻

anyCall is a generic cross-chain messaging protocol for cross-chain dApps. 

It can send cross-chain messages and call contracts from chain A to chain B. 

Cross-chain @CurveFinance gauges are its first use-case.

https://twitter.com/MultichainOrg/status/1513453321918595079 

3) Ronin Bridge Exploit Update 🧐

The FBI alleged that North Korea-based Lazarus Group is behind the Ronin bridge exploit, leading to a $625M+ of fund loss. 

This does not affect lost user funds which will be reimbursed through the recent fundraising.

https://twitter.com/Ronin_Network/status/1514650523873468423

Learn more about the hack 👇🏻

https://twitter.com/lifiprotocol/status/1510875061774823425

4) Connext Announces Amarok Upgrade 🦊

With Amarok, the Connext team seeks to rearchitect the protocol and fix issues faced by key stakeholders of the network (end users, developers, routers).

https://twitter.com/ConnextNetwork/status/1513543316645847046 

5) @CelerNetwork's cBridge Enables $GEL Transfers b/w Ethereum <> Fantom 🚀 

cBridge now supports Gelato Network’s $GEL transfers between Ethereum and Fantom.

https://twitter.com/gelatonetwork/status/1515064947021127690

b. Multi-Chain Ecosystem Updates

1) Ethereum Merge Postponed 🤔

The Merge, originally planned to go through in Q2 of 2022, has been postponed to have enough time to fix issues and ensure everything is tested. 

https://twitter.com/TimBeiko/status/1514342758663659523 

Learn more about the Merge 👇🏻

https://twitter.com/lifiprotocol/status/1505831327710416898

2) Thorswap V2 Beta is Now Live 🚀

Thorswap is a cross-chain DEX aggregator. 

It has launched V2’s Open Beta, bringing an improved and user-friendly cross-chain trading and LP experience.

https://twitter.com/THORSwap/status/1514231045754871816

3) Metis Storage Layer is Now Live 🥳

Metis has launched its native storage layer, making transactions on Metis more efficient and significantly less costly.

https://twitter.com/MetisDAO/status/1513893772144349188

4) Anchor 🤝🏻 @AcalaNetwork

This partnership aims to grow the decentralized stablecoin space by establishing liquidity pools of aUSD (Acala native stablecoin) and increasing the use of UST across the Polkadot and Kusama ecosystem.

https://twitter.com/anchor_protocol/status/1514283736409509892

5) Cosmsos Completes Theta Upgrade ✅

With this upgrade, Interchain Accounts, which allow ecosystem chains to securely control accounts on other ecosystem chains instead of simply transferring tokens from one chain to another, now become available.

https://twitter.com/cosmos/status/1513975258520473604 

Learn more about the Theta Upgrade 👇🏻

https://twitter.com/lifiprotocol/status/1515017996191748096

6) Arweave is now Live on Avalanche 🎉

Arweave, an information storage network, is now natively live on Avalanche. Users can now buy permanent storage using $AVAX tokens on Avalanche.

https://twitter.com/ArweaveTeam/status/1514644912632913926

7) Uniswap Launches Swap Widget 🦄
 
Uniswap has launched Swap Widget, allowing users to swap tokens anywhere across the web seamlessly. 

The Swap Widget is already available on websites like OpenSea marketplace, FWB homepage, and Oasis app.

https://twitter.com/Uniswap/status/1514603576093335553

8) 1inch is Now Live on Fantom 👏🏻

1inch has deployed its DEX Aggregation Protocol and the Limit Order Protocol on Fantom, extending support to another L1.

https://twitter.com/1inch/status/1514620785968791560 

c. What’s Popping On Twitter?

Learn more about the Merge: What it is and why the delay

https://twitter.com/lifiprotocol/status/1515955047527444484

d. Interesting reads

1) Bridging Mega-Issue 🌉

https://twitter.com/OurNetwork__/status/1515015975686397960 

2) State of Crypto Bridges Today by @aya_kantor

https://twitter.com/aya_kantor/status/1514648263374393344 


3) Walkthrough of Harmony’s Horizon bridge

https://twitter.com/harmonyprotocol/status/1515053369182031872

4) How Cross-Chain Increases Capital Efficiency on Layer-2

https://twitter.com/thezkcross/status/1514294653247700992

Additionally, here are some podcasts you must check out!

• Optimistic Cross-Chain Bridging with @pranaymohan of @nomadxyz_

https://twitter.com/seb3point0/status/1514602289750704138

• $1B in Bridge Hacks…Is the Future Still Multi-Chain? ft. @dberenzon

https://twitter.com/mrjasonchoi/status/1514280782545637380

If you liked what you read, please follow @lifiprotocol for more!  


Want to keep up with the latest cross-chain news? Join us over on Telegram.

https://t.me/lifinews

The Cross-Chain Insider

Why we’re bullish on @biconomy’s Hyphen! 

Learn more about Hyphen, Biconomy's cross-chain bridge, and how $BICO plays a key role in the ecosystem. 

A Deep Dive 🧵

https://blog.li.finance/biconomys-hyphen-a-deep-dive-40c13a6bb869

1/ Biconomy is a suite of protocols that help dApps provide a great UX to their users. It consists:

• Hyphen — for cross-chain transactions
• Mexa — for gasless transactions
• Forward — for ERC20 payments

These protocols power the Bicosystem!


2/ Today, we’ll focus on Biconomy’s cross-chain bridge, Hyphen. 

Here’s what’s special Hyphen:

• Enables cross-chain transactions
• Executes low fees and high-speed tx's (sometimes in less than 30s)
• Soon will support cross-chain contract calls


https://vimeo.com/585321200

3/ Here’s how transfers via Hyphen work:


1️⃣ Funds & destination chain ID are sent to the smart contract

2️⃣ Watch Towers send a deposit signal to the Executor nodes

3️⃣ Executor nodes initiate transfers on the destination chain

4/ Biconomy also rolled out Hyphen 2.0 recently. Let’s take a closer look at some of the features 👇🏻

https://twitter.com/biconomy/status/1504076567877615618


5/ 1️⃣ Anyone can become a liquidity provider

Hyphen 2.0 is permissionless and allows anyone to add liquidity up to $10,000 in open pools and facilitate cross-chain transfers.

https://twitter.com/biconomy/status/1504096590499237888


6/ 2️⃣ Dynamic Fees

The dynamic fee model allows liquidity pools to be balanced by incentivizing transfers in favor of source chains with less liquidity than those with abundant liquidity.

https://twitter.com/schin_tomar/status/1506893110957457409


7/ 3️⃣ Increased Capital Efficiency

The Biconomy team believes that capital efficiency is very imp. for a bridge. The dynamic fee model makes Hyphen’s architecture more capital efficient.

https://twitter.com/biconomy/status/1499269897267777537


8/ Let’s look at some other key features of Hyphen’s architecture:

➨ Security

• Hyphen is crypto-economically secure.
• Smart contracts have been audited
• Meta transactions on Biconomy enhance security
• Biconomy chain has a decentralized group of relayers


9/ ➨ Statefulness

• Biconomy’s overall protocol is highly stateful
• Relayer network watches all events the smart contracts interact with
• Biconomy is not limited in the information it can share between chains about transactions


10/ ➨ Connectivity

• Hyphen’s connectivity is limited to a few chains
• It only supports ETH, BICO, USDC, and USDT

With Hyphen 2.0, it is believed that support for new chains and assets will be added more frequently.


11/ Is Hyphen’s design trustless?

Hyphen’s design is crypto-economically secure and decentralized, but it is not trustless. This is because:

• It relies on off-chain servers known as Executor nodes
• Only Executors have the right to transfer funds from the smart contract


12/ However, high security is maintained as nodes need to stake collateral higher in value than the amount the funds they can transfer.

This disincentivizes the Executors nodes to act maliciously.


13/ Here’s how we can evaluate Hyphen based on these metrics:


14/ How’s $BICO imp. to Biconomy? It has utility:

• Users can delegate $BICO to nodes and earn rewards
• LPs earn $BICO rewards on Hyphen
• Relayers are incentivized with $BICO
• All $BICO owners have governance powers

Learn more here: https://www.biconomy.io/bico

15/ To summarise, here’s why Hyphen is one of the best bridges:

• Over 17,000 new customers have used Hyphen since its launch
• It has done over $110M in total volume
• Highly capital efficient
• One of the fastest (avg. transfer time < 1 min.)

https://twitter.com/biconomy/status/1501068814410137606


Biconomy is going places, and we’re very excited to integrate Hyphen into LI.FI

We look forward to hosting the degens from the Bicosystem!


If you want to learn in more detail about Hyphen, please check out the deep dive curated by our research team.

Please don’t forget to like/RT/QT this thread and help us educate the ecosystem!

https://blog.li.finance/biconomys-hyphen-a-deep-dive-40c13a6bb869


Want to keep up with the latest cross-chain news? Join us over on Telegram! 🦎

https://t.me/lifinews


Last week in the multi-chain ecosystem with the Cross-Chain Insider! 🦎

https://blog.li.finance/the-cross-chain-insider-li-fis-weekly-cross-chain-newsletter-5929b64c4501

This week's newsletter features: 


a. Bridge Updates

1) LI.FI Smart Contract Vulnerability 🛠️

• Exploited on March 20th, 2022
• $600k across 29 wallets stolen
• 25/29 wallets reimbursed + in touch with rest
• Bug has been fixed

https://blog.li.finance/20th-march-the-exploit-e9e1c5c03eb9

2) @LayerZero_Labs is Now Live 👏🏻

• Live on Ethereum, Avalanche, Polygon, BNB Chain, Fantom, Arbitrum, and Optimism
• Stargate bridge launched 
• Conducted a token sale for their $STG token

https://medium.com/layerzero-official/the-omnichain-future-is-here-74389f6d70c3

3) @lifiprotocol Launches Destination Swaps 🦎

• Destination swaps powered by @ConnextNetwork Bridge
• Users now don’t need to switch networks on Metamask
• Available on Avalanche, Polygon, Fantom, Ethereum, Arbitrum, Gnosis Chain, and BNB Chain.

https://twitter.com/lifiprotocol/status/1504391836999290885 


4) @ConnextNetwork Integrates @cloverfnance Wallet 🎉

• Clover wallet has over 80k+ users
• Users can now access Connext bridge via their clover wallet

https://twitter.com/clover_finance/status/1503227291538583556 

5) @biconomy Announces Hyphen 2.0 🚀

Hyphen 2.0 offers:

• Increased capital efficiency
• Lower cross-chain transfer fees

The team plans to add support for many new chains and tokens soon.

https://twitter.com/biconomy/status/1504076567877615618 


6) @ConnextNetwork Partners with Kava Network 🤝🏻

• Kava is an L1 blockchain that is a cross between Cosmos & Ethereum
• Connext will bring $37M+ in cross-chain liquidity to Kava with its trustless bridge.

https://twitter.com/kava_platform/status/1503430904206790660 

7) Multichain Partners with @Conflux_Network  👏🏻

• Working closely to build co-mint architecture
• The framework will allow bridges to mint/burn in the same asset contract
• This will help avoid naming collision and liquidity fragmentation

https://twitter.com/MultichainOrg/status/1504827466778558472 

b. Multi-Chain Ecosystem Updates

1) Kiln Testnet is Now Live 👏🏻

• Kiln is the next iteration of Ethereum merge
• The testnet is now live

It's looking increasingly likely that we’re going to see the Merge in June.

https://twitter.com/TimBeiko/status/1503403676043423745 

2) QiDAO Launches MAI Finance on @arbitrum 🥳 

• QiDAO is a cross-chain stable protocol
• Launched MAI Finance on Arbitrum
• Users can now mint $MAI at 0% interest against $ETH

https://twitter.com/QiDaoProtocol/status/1503387421899210752 


3) @gnosischain Exploits 🛠️

• @Agave_lending and @HundredFinance were exploited on March 15, 2022

https://twitter.com/mudit__gupta/status/1503783633877827586 


4) @AlchemixFi V2 is Now Live 🔥

• Alchemix is a yield lending protocol
• V2 brings more features and composability
• Users can now access more collateral types and yield strategies

https://twitter.com/scupytrooples/status/1503751703019110410 


5) Alpha Homora v2 is Now Live on @FantomFDN 🚀 

• Alpha Homora is a leveraged yield farming product 
• With v2, users can now earn yields from five available pools

https://twitter.com/AlphaFinanceLab/status/1503712335424196610 


6) Aave V3 is Now Live 🤩

• Aave has launched V3 on seven chains
• V3 features mainly focus on cross-chain operations and making Aave more efficient

https://twitter.com/AaveAave/status/1504137636105043971 


You can learn more about Aave V3's main feature, Portals, here!

https://twitter.com/lifiprotocol/status/1498964406494924802

7) Sushi Trident is Now Live on @0xPolygon 👏🏻

• Sushi has launched the beta of Trident
• Trident is a production framework for building and deploying AMMs
• It will allow easy integration of any future AMM 

https://twitter.com/SushiSwap/status/1503985351861456896 


8) @anchor_protocol  is Now Live on @avalancheavax 🚀

• Launched on Avalanche as xAnchor
• Brings Anchor’s functionalities to other non-Terra blockchains
• Expansion to major chains like Ethereum, Solana, Polygon, soon.

https://twitter.com/ryanology045/status/1504311692339343365 


c. What’s Popping On Twitter?

The Ethereum Merge is only 3 months away. Learn more about why the event is so significant!

https://twitter.com/lifiprotocol/status/1505831327710416898

d. Interesting reads

1) LI.FI Review

https://twitter.com/fommes1/status/1502814467758854149

2) Avalanche Alpha

https://twitter.com/milesdeutscher/status/1503341956943986690

3) Polygon Overview by @Crypto_Clarke

https://medium.com/momentum6/polygon-overview-layer-2-or-sidechain-a888104f5ffc

4) The 4 Misconceptions About Bridging by @pranaymohan

https://twitter.com/nomadxyz_/status/1505591137733529600 

5) Deep Dive — @BreederDodo DEX by LI.FI

https://blog.li.finance/dodo-a-deep-dive-6ded3423716f

Want to keep up with the latest cross-chain news? Join us over on Telegram as well!

https://t.me/lifinews

Why @BreederDodo is one of the best DEXs in the crypto ecosystem! 🔥

https://blog.li.finance/dodo-a-deep-dive-6ded3423716f

1/ DODO's DEX can address the issues generally associated with DEXs. Here’s how:

a) Lack of Liquidity — it is a meta aggregator, which aggregates liquidity sources across multiple DEXs and its own liquidity pools.


2/ b. Slippage — It is built on capital-efficient liquidity pools optimized to reduce impermanent loss and slippage.

c) Lack of Arbitrageurs — The Proactive Market Maker algorithm iterates on the AMM paradigm to adjust their liquidity pools to the needs of market makers.


3/ Let’s learn more about how it works!

DODO’s product suite includes the SmartTrade swap aggregator, Crowdpooling, a custom pool management interface, the Proactive Market Maker, and various forms of mining.


4/ Let’s look at these products in more detail:

a) SmartTrade — Enables them to offer decentralized liquidity aggregation with smart routing.

b) Crowdpooling — It is a unique liquidity-offering protocol


5/ c) Pool Management Tools — It has two tools for creating and managing liquidity pools: DODO Vending Machine and DODO Private Pool.

d) Combiner Harvest Mining — To incentivize projects to integrate with the DODO ecosystem and encourage LPs.


6/ e) Proactive Market Maker — DODO’s Proactive Market Maker algorithm is their proprietary iteration on the Automated Market Maker model. It is at the heart of their most innovative functionality.

To learn how their algorithm works, check out our deep dive!


7/ Those who stand to gain the most from using DODO’s protocol are as follows:

a) Investors — Investors on all sides of the asset-swapping equation will find using DODO highly beneficial.

b) LPs — They are incentivized to contribute to its pools thanks to the rewards.


8/ c) Market Makers — Market makers seeking to launch a new asset will find DODO’s tools invaluable.

d) Swappers — They get guaranteed liquidity and Oracle-based price adjustments that minimize slippage and keep markets highly liquid.


9/ e) Developers — Devs who want to enable cross-chain swaps via DODO can also pass these benefits on to their users.

There’s no easier way to enable DODO DEX in any dApp than with the LI.FI SDK.

https://docs.li.finance/official-documentation/


10/ Are there any risks of using DODO?

The liquidity pools can be controlled manually. Thus, there’s an element of centralization wrt to the market-making process. Be aware that the creators of the pools can withdraw value arbitrarily at any time.

https://dodoex.github.io/docs/docs/pmm/#use-case3


11/ DODO has grown tremendously since its launch, garnering a TVL of $358 million. Moreover, many dApps have shown tremendous interest in partnering with the protocol.

https://defillama.com/protocol/dodo


Partnering with DODO to bring the power of their algorithms to our userbase was a no-brainer for us, and we think that, once you use LI.FI to initiate swaps powered by DODO, you’ll agree with us.


Developers looking to take advantage of DODO’s growing reach without developing a custom integration with the protocol will find immense value in integrating our SDK.

If you liked the thread, don’t forget to like, RT, QT, and follow us for more.

Want to keep up with the latest cross-chain news? Join us over on Telegram as well!

https://t.me/lifinews


Why DODO is one of the best DEXs in the crypto ecosystem! 🔥