Attacks on bridge technology in 2022 led to the theft of $2.5 billion from decentralized finance (DeFi) protocols, according to a report by Token Terminal. While this could have been a setback for many projects — and, thus, the crypto space — it seems to be fueling infrastructure and security developments.
At the 2023 ETHDenver conference, Web3 protocol Koii Labs and software company Idexo announced a new middleware bridge to advance deployments on-chain with “just a few lines of code,” Cointelegraph exclusively learned from the teams. The solution aims not only to improve security and speed up deployments but also to create a path to replace centralized crypto exchanges with DeFi bridges.
Through bridges, two or more blockchains can share data, such as smart contracts or tokens. Bridges connect different architecture and database networks, but security has been a continuing challenge for projects.
“The core risk associated with bridges is that they require signing wallets to put through transactions on the destination chain. If those wallets were compromised, then they could make arbitrary transactions that don’t correspond to an event on the originating blockchain,” explained Idexo CEO Greg Marlin regarding 2022’s security incidents targeting bridges.
The new middleware bridge, however, forces randomization of the signers (decentralized nodes), with a large number of signers available compared with a threshold number of signers for a destination transaction. The bridge’s staking and reward mechanism ensures that the size of transactions is limited by the stake of the eligible participating nodes, claimed Marlin, adding:
“The big difference […] is the security offered by the high number of nodes, combined by the random ordering mechanism, choosing at random 10 sequential nodes from potentially thousands of nodes.”
Related: Uniswap DAO debate shows devs still struggle to secure cross-chain bridges
Another pain the bridge seeks to address is liquidity across pools and the DeFi ecosystem. “DeFi has operated in silos,” noted Koii Labs CEO Al Morris. According to him, the growth of layer-1 and layer-2 protocols has fragmented liquidity across many chains:
“One of the main reasons that centralized crypto exchanges came to exist is because you need to get from fiat to crypto, and from chain to chain. Cross-chain transfers are a necessity, […] but until now, it has been difficult to accomplish in a decentralized manner.”
Through the bridge, self-custodied tokenholders can choose an origin and destination chain, as well as the amount to be sent across chains, said the companies. Their goal is to provide a decentralized alternative to centralized exchanges and developers seeking to deploy new bridges for native utility tokens.
Technologies planned to be incorporated in the bridge over time include zero-knowledge proofs and a cross-chain messaging protocol, enabling smart contracts on different chains to be synced with one another. The bridge will support a range of Ethereum Virtual Machine-based chains, including Arbitrum, Avalanche, Dogechain, Ethereum, Fantom, OKC and Polygon, among others. Non-EVM chains, such as Solana and Polkadot, will be included in later updates.