Integrating Decentralized Cross-Chain Communication Makes Bridges ‘Substantially Safer’ — Flare Networks CEO

Although they grabbed little media attraction than the illness of centralized organizations, the alleged span exploit incidents successful 2022 again proved that the decentralized concern (defi) ecosystem inactive lacks sufficiently unafraid solutions, Hugo Philion, the co-founder and CEO of Flare Networks, has argued. Philion insists that the deficiency of specified unafraid solutions has constrained the maturation and usage of defi products.

Lack of Communication Between Chains

In written responses sent to Bitcoin.com News, Philion claimed that the large-scale, cross-chain experimentation chiefly seen successful 2020 and 2021 perchance explains wherefore much than $2 cardinal has been mislaid via the alleged span exploits of the past 12 months. However, according to the Flare Network CEO, portion it whitethorn not beryllium imaginable to wholly destruct risks for users, bridges could “be made substantially safer.”

Besides addressing security-related issues, Philion besides offered his thoughts connected galore different issues that scope from the imaginable usage of non-smart declaration integer assets successful defi and Web3, to insuring integer assets erstwhile they are moved crossed chains.

Below are Philion’s responses to the questions sent.

Bitcoin.com News (BCN): Can you explicate wherefore nary 1 has been capable to securely unify the ecosystem yet?

Hugo Philion (HP): Blockchains person historically been designed arsenic distributed ledgers processing autochthonal transactions, i.e. for bitcoin, the question of the autochthonal plus bitcoin from code A to code B. They haven’t been designed to relay accusation betwixt themselves, i.e., the Bitcoin concatenation cannot archer you what happened connected the Ethereum concatenation astatine artifact #1083483. This creates a connection problem: however tin accusation astir antithetic chains beryllium reliably gathered and validated with decentralization analogues to the chains themselves? Furthermore, however tin this beryllium achieved portion accounting for the hazard of concatenation rollback?

To date, sufficiently unafraid and decentralized mechanisms to get and corroborate authorities betwixt disparate blockchains, isolated from rollups, person not been built. A azygous solution apt does not exist. Instead, perchance multiple, antithetic solutions volition suit antithetic usage cases.

BCN: How does the deficiency of businesslike connection mechanisms betwixt chains impact dapp (decentralized app) developers?

HP: Today the biggest usage lawsuit successful the blockchain is decentralized concern (Defi). The deficiency of capable cross-chain connection has constrained the size, participation, and ratio of the Defi market. Not lone person existing designs resulted successful the nonaccomplishment of billions of dollars of capital, but they are besides hard to use, limiting information to much blase users. As a result, marketplace size, liquidity, and returns person been constrained.

Furthermore, usage cases leveraging connection that could thrust adoption person remained undiscovered. A elemental illustration could beryllium assets purchased oregon traded connected a astute declaration concatenation with nonstop outgo successful bitcoin. For blockchain engineers, this could alteration a fig of protocols that could yet revolutionize the integer ticketing market, gaming, oregon outgo gateway technologies, for example. With high-integrity connection betwixt chains, this elemental illustration is conscionable the starting point.

BCN: Do cross-chain activities airs systemic risks to the industry? And if so, how?

HP: Yes. A lawsuit successful constituent is however a cross-chain connection nonaccomplishment tin wreak havoc connected an full downstream blockchain ecosystem. We person seen this precocious with aggregate span exploits. Without sufficiently unafraid and decentralized mechanisms for acquiring and reliably moving information betwixt siloed blockchains, mendacious accusation tin beryllium reported and relied upon to pass the question of assets. If accusation is revealed to beryllium incorrect aft transactions person been validated and assets person subsequently been reallocated to much established chains, the hazard is introduced to the full system.

BCN: What bash you deliberation made cross-chain bridges rather notorious successful 2022 and are determination immoderate innovations that could assistance reconstruct users’ religion successful bridges? Also, tin bridging solutions springiness users a just grade of extortion against the hazard of losing their assets?

HP: [The years] 2021 and 2022 person witnessed large-scale cross-chain experimentation. As a result, cross-chain bridges received their archetypal existent accent tests. Ultimately, galore performed abysmally with much than $2 cardinal of funds exploited successful the past 12 months. The wide inability to safely determination assets crossed chains has apt hampered improvement successful the space.

I judge that by integrating suitably decentralized cross-chain connection akin to the underlying blockchain statement mechanisms themselves, bridges could beryllium made substantially safer. Furthermore, if assets are insured astatine the protocol level arsenic they determination crossed chains, further hazard tin beryllium mitigated.

Protection is frankincense a two-step process. First, hazard indispensable beryllium minimized astatine the protocol level. Second, wherever possible, usage should beryllium insured. In immoderate analyzable fiscal system, hazard volition apt ne'er beryllium zero, but users indispensable beryllium protected wherever possible.

BCN: How tin the non-smart declaration chains beryllium connected with 1 different and is it imaginable to upgrade oregon to marque crypto assets similar bitcoin compatible with the defi world?

HP: Blockchains are siloed nationalist databases that cannot natively work oregon study outer transactions. At Flare, we are moving connected 2 wide models to upgrade non-smart declaration chains: outgo triggers and bridging.

A outgo trigger involves a astute declaration relation being triggered connected 1 concatenation by a transaction connected different chain. This delivers elemental and utile functionality, specified arsenic paying for a collectable connected a smart-contract level with bitcoin oregon immoderate different token. To bash this well, a sufficiently decentralized information acquisition protocol requiring a fig of participating validators to beryllium a transaction connected a circumstantial concatenation is required. At this point, information tin beryllium queried, acquired and securely reported to different chain. Then, different blockchain events tin beryllium triggered. Such a mechanics tin beryllium implemented for aggregate non-smart declaration chains truthful they tin beryllium referenced and connected.

In contrast, bridging brings afloat smart-contract features to a token specified arsenic bitcoin. With unafraid information acquisition and natively-available on-chain decentralized prices, it past becomes imaginable to make synthetic versions of these assets connected a smart-contract chain. Crucially, successful Flare’s projected model, dissimilar erstwhile synthetic models, the idiosyncratic is lone required to supply the underlying token itself, specified arsenic bitcoin. This removes the over-collateralization requirements and eliminates the nonstop marketplace hazard from the user, meaning that they bash not request to actively negociate the position. These 1:1 representations of assets similar bitcoin tin past beryllium deployed successful Defi and different decentralized applications.

BCN: So what caller opportunities and usage cases bash you foresee if non-smart declaration assets tin beryllium utilized for defi and Web3 activities?

HP: Approximately 70% of the full marketplace capitalization of integer assets is composed of bitcoin, XRP, and dogecoin. Wide-scale usage of non-smart declaration assets successful Defi would mean greater liquidity for the marketplace and reduced reliance connected centralized services for users.

For creators, determination would beryllium a larger disposable marketplace and for token holders, decentralized entree to this market. Additionally, on-ramping non-smart declaration tokens onto a scalable concatenation besides enables an alternate outgo obstruction beyond efforts similar Lightning. We besides judge that Web3 needs greater scope, inferior and user entreaty done sufficiently decentralized and reliable connection protocols betwixt blockchains and non-blockchain networks. We privation to alteration tokens similar bitcoin to beryllium utilized with these applications.

BCN: In precise elemental terms, tin you explicate what autochthonal interoperability protocols are each about?

HP: Flare has 2 unsocial protocols built natively into the network: the State Connector and the Flare Time Series Oracle. They are autochthonal due to the fact that they are built straight into the blockchain utilizing the FLR token to incentivize information provision, and they usage the web itself to unafraid close information provision.

In simpler terms, for an existent five-year-old, these protocols are Flare’s sensors, allowing it to reliably “see” what is taking spot crossed different blockchains, marque a enactment of it for aboriginal reference, and basal decisions upon it. This is akin to however our senses let america to spot what’s going connected astir america and interact with the world.

What are your thoughts astir this interview? Let america cognize what you deliberation successful the comments conception below.

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