According to a report by Token Terminal, attacks on bridging technologies in 2022 will lead to the theft of $2.5 billion from decentralized finance (DeFi) protocols. While this may be a setback for many projects and thus the crypto space it appears to be driving infrastructure and security forward.
At the ETHDenver 2023 conference, Web3 protocol Koii Labs and software firm Idexo announced a new middleware bridge to facilitate on-chain deployment “with just a few lines of code,” Cointelegraph learned exclusively from the team. The solution not only aims to improve security and speed up deployment, but also to create a path to replace centralized cryptocurrency exchanges with DeFi bridges.
Through a bridge, two or more blockchains can share data, such as smart contracts or tokens. Bridges connect disparate architectures and database networks, but security has been an ongoing challenge for the project.
“The core risk associated with bridges is that they require signed wallets to transact on the target chain. If these wallets are compromised, then they could make arbitrary transactions that do not correspond to events on the original blockchain,” said Idexo CEO Officer Greg Marlin explained about the 2022 security incidents targeting bridges. However, the new middleware bridge enforces randomization of signers (decentralized nodes), with a large number of signers available compared to the target transaction's signer threshold. Marlin claims that the bridge’s staking and rewards mechanism ensures transaction sizes are limited by staking by eligible participating nodes, 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.”
Another piece of the puzzle that the bridge is trying to solve is liquidity across pools and the DeFi ecosystem. “DeFi has always operated in silos,” noted Koii Labs CEO Al Morris. According to him, the growth of Layer 1 and Layer 2 protocols has spread 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-custodial token holders can choose an origin and destination chain, as well as the amount to send across chains, the companies said. Their goal is to provide a decentralized alternative to centralized exchanges and developers looking to deploy new bridges for native utility tokens.
Technologies planned to be incorporated into the bridge over time include zero-knowledge proofs and a cross-chain messaging protocol to enable smart contracts on different chains to synchronize with each other. 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 like Solana and Polkadot will be included in future updates.
