Exploring the cross-chain realization of mainstream coins
On the cross-chain problems of mainstream coins:
As we know, most of the mainstream coins are already issued tokens, such as USDT. Let’s take USDT as an example. If we want to realize the multi-chain bridge of USDT through Chainswap, we must consider the following issues (the situation with other mainstream coins is similar, so here we take USDT as an example to open up discussion and facilitate everyone’s understanding).
1. Where does the mainstream coin liquidity on the bridge come from
So the first question is, where does the USDT on each chain come from? If user A wants to cross the USDT from the ETH chain to the BSC chain, then the user is holding the USDT from the ETH chain, and not the USDT from the BSC chain. So how can the user extract the USDT from the BSC chain through the bridge? We would obviously think of reserve fund schemes (also known as added liquidity) to store some reserves on the chain that supports the USDT cross-chain for the user to complete the bridging. But it’s still open to discussion what amount of reserves should be required, and who it should be provided by.
2.The purpose and incentive for Chainswap’s users to complete mainstream coin cross-chain
What is the motivation for users to use Chainswap to complete the cross-chain of mainstream coins? We think it can be roughly divided into two types: users with pure cross-bridge needs and arbitrage opportunities (where users can make profits). We will discuss the differences for users between the two types of situations in using the brigde.
3. Security issues concerning the cross-chain of mainstream coins
As we know, so far, there have been many stablecoin cross-chain projects where hackers steal assets, as if cross-chain bridge has become the backup channel for hackers to do their job. Therefore, we attach great importance to the security issue of cross-chain bridging of mainstream coins. Preventing these problems and recovering assets can present a difficulty.
Discussion on the feasibility:
- We plan to use the method of liquidity mining to encourage users to add the liquidity of mainstream coins to our bridge, and give users certain rewards, drive them to use idle mainstream coins, and ensure that the rewards for liquidity mining is relatively stable. At the same time, we will also add a certain amount of liquidity ourselves, so that users can normally use the mainstream coin cross-chain in the initial stage.
As for where the liquidity mining rewards come from, there are two possible ways. One is to use the commission fee received by the platform, the other is to use the platform’s TOKEN for the reward, or a combination of the two. To do this we will have the function to add liquidity, cross-chain and remove liquidity; the function to show the user’s current liquidity gain; current APY, and the function of withdrawal.
2. Essentially, the second category of users is created to better serve the first category. We introduce the concept of bridge balance. When the fluidity on both sides of the bridge is the same, we can consider the bridge to be in balance; when the fluidity on both sides of the bridge is not the same, we can consider the bridge to be unbalanced.
To balance it out, we have designed an incentive mechanism that encourages users to move assets from the less liquid side of the bridge to the more liquid side by letting them pay a reduced fee and even be rewarded. This is an arbitrage opportunity that we offer to our user, and this design makes the bridge more stable and robust. Users will be able to access current arbitrage opportunities from the front page of the platform.
3. Cybersecurity is an eternal topic. It’s very difficult to achieve absolute network security, so we will try our best to develop a plan and actively improve and update it. We are planning to prevent “black” assets escaping through the bridge by setting a quota and a large cross-chain delay (we will publish specific parameters after simulating calculations).
Some ideas for the future:
We are currently exploring the simultaneous exchange of coins cross-chain, which will make it more convenient for users to control the coins. Later, we will introduce the cross-chain information of mainstream coins in more details.