AC releases a new cross-chain concept and will launch cross-chain products in the next few weeks
Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc), by Kyle, published with permission.
Editor's Note: This article comes from
Babbitt Information (ID: bitcoin8btc)
Babbitt Information (ID: bitcoin8btc)
, by Kyle, published with permission.
For those of you who follow me on twitter you'll notice that I've released some cross-chain products and today we hit a pretty big product milestone that we'll be rolling out over the next few weeks so I think Pause at the end and take a moment to explain what these things actually are.
Let's start with Wrapped BTC (wBTC). wBTC is cross-chain BTC. You deposit BTC on the Bitcoin blockchain into a wBTC custodian, and once the wBTC custodian receives your funds, they can mint wBTC and send it to you. So simple. Send the BTC on the Bitcoin chain to Party A. Party A mints wBTC on Ethereum. This can be seen as a centralized custodian solution, but it is still cross-chain.
Let's look at the key points above:
The BTC is transferred to a designated wallet on the Bitcoin chain.
Party A has some mechanism to know about previous transactions and some mechanism to confirm that this transaction is valid. Typically, this involves querying Bitcoin full nodes.
After confirming Step 2, Party A mints wBTC on Ethereum.
What happens if party A is breached? An attacker could mint wBTC infinitely on Ethereum, or could drain all deposited BTC. A straightforward solution is to put these bitcoins into a multisig wallet, assuming there are 5 multisig holders in total, and at least 3 are required for the minting transaction to be valid. The process is still exactly the same, you send BTC on the Bitcoin chain to this multisig address. When 3/5 multisig holders agree to receive BTC, they will mint wBTC.
With the above design, this multi-signature address still acts like a honeypot because it holds a lot of BTC.
Therefore, LPs can provide liquidity in the form of ETH (on the Ethereum chain) and FTM (on the Fantom chain). The token pairs on the Ethereum chain hold ETH, no FTM, but know how much FTM is held on the Fantom chain. Token pairs on the Fantom chain hold FTM, no ETH, but know how much ETH is held on the Ethereum chain.
Summarize:
How does a token pair on Fantom know how much ETH is on Ethereum? Essentially, this is an oracle problem. Suffice it to say, any oracle can solve this problem, whether it is an existing oracle solution or a new one. The problem statement here is: How does chain B know that an event occurred on chain A. In an ideal world, chain A and chain B would speak the same "language" or p2p protocol, while I do think this will become more standardized and we'll see more light clients between chains, currently this is usually Through certain third-party networks.
The simplest solution currently is to have multiple nodes/servers/participants all listen to contract events on Ethereum/Fantom/BSC, etc. When a majority of nodes/servers/participants agree that they have seen the event, they can trigger the next event in the sequence. The key thing to note here is that how consensus is reached is not actually important to the execution of the agreement. This can be proof of authority, proof of stake, custody, multisig, etc. Essentially, this is a consensus problem (which is a problem below the oracle problem).
secondary title
