Abstract
This document is a simplified version of the white paper for Broxus Bridge V2. It describes both basic bridge functionality and new features of the product, such as bridge token staking; a relay auction, which allows stackers to become relays; the ability to connect any EVM-compatible1 blockchain; liquidity management on EVM side; bridge management using DAO, with possibility to create cross chain proposals. This document is not technical and does not cover implementation issues, but gives an overview of the capabilities of Broxus Bridge V2.
Introduction
Broxus Bridge V1 is a bridge between Ethereum and Everscale. The bridge is capable of conducting events both in the direction of Ethereum -> Everscale, and in the opposite direction. First of all, the bridge supports token transfer between Ethereum and Everscale. Broxus Bridge V1 has 20 tokens connected, including USDC, DAI, USDT, WBTC, WETH, WEVER2 and so on, and the TVL for all tokens exceeds $30.5 million.
The first version of the bridge was significantly centralized - events were confirmed by a group of three relays. The possibility of adding external relays was intentionally limited, in order to minimize risks in the early days of the project. All administrative functions were in the hands of a multisignature wallet, controlled by Broxus team.
Now, after half a year of stable work, we present a new, greatly expanded version of the bridge - V2.
Technical overview
Bridge basically consists of
- Set of contracts in the Everscale network
- Set of contracts in each connected EVM network
- A specialized software - relay node. This software must be run by special participants - relays. They ensure the functioning of the bridge, just as miners ensure the functioning of PoW networks.
Relay's task is monitoring and confirming a list of events in EVM networks and Everscale3. For example, in case a user deposits DAI into a special smart contract (Vault) on Ethereum side, each relay sends a special transaction to the Everscale network. This transaction confirms the fact of a deposit event in the Ethereum network. As soon as quorum is reached, the DAI token on Everscale side is minted to the user.
1 EVM stands for Ethereum Virtual Machine. Examples of EVM compatible blockchains are Ethereum, Binance Smart Chain, Polygon, Fantom, xDai, and so on.
2 Wrapped EVER is equivalent to the Wrapped Ether token, but for the native token of the Everscale network - EVER Crystal. 3 The list of events, which should be monitored by relays, is stored on-chain on the Everscale side. The DAO can add new events to this list and remove old ones.
In the Everscale -> EVM direction, the bridge works similarly, with one exception. Because of potentially high network fees, relays do not send transactions to EVM networks. Instead, relays sign some EVM-compatible payload with their key, and put the signatures in a special contract in the Everscale network. Each connected
EVM network has a special contract (Bridge), which stores public keys of the relays. Anyone can send a payload and a list of signatures to the Vault and, if the signatures are correct, Vault will release tokens to the user's Ethereum address.
V2 features
Bridge staking
Along with the release of Broxus Bridge V2, the project received a governance token - Bridge. Any token holder can stake it, after which he will start to receive Bridge tokens. These Bridge tokens will come from the sale of tokens earned from liquidity management on the EVM side.
Relays auction
Any staker who has staked over 100,000 Bridge tokens can become a relay. To do this, a staker just needs to start a relay node and propose himself as a candidate at the next election. Elections happen every round, the round lasts one week4.
4 The duration of the round and the size of the minimum stake for becoming a relay can be changed by the DAO
In case the relay behaves maliciously - for example, confirms incorrect events, or does not participate in the validation of events, DAO can slash the relay. In this case, the relay's stake and reward will be distributed among the current stackers.
Connecting EVM compatible blockchains
The first version of the bridge worked only between Ethereum and Everscale. The new protocol allows to connect any EVM compatible blockchain (Polygon, Binance Smart Chain, xDai, Fantom, etc.) to the bridge.
The number of connected blockchains is unlimited. In fact, any EVM blockchains can be connected through the Broxus Bridge V2, without having to develop specialized bridges.
Liquidity management on the EVM side
As mentioned above, the TVL of the first version of the bridge exceeded $30.5 million. In the first version, when a user transfers tokens through the bridge in the Ethereum->Everscale direction, the Ethereum tokens are frozen on a special contract. Tokens could only be withdrawn from this contract if someone transferred the tokens through the bridge in the opposite direction.
Broxus Bridge V2 introduces liquidity management procedure. So locked tokens on the EVM side can be deposited into any yield farming programs. The gain will be sent to the Everscale network through the bridge, where it will be converted into Bridge token and distributed to the stakers and relays5. Part of the gain will be distributed to all stackers (including relays), and the rest of gain will be distributed exclusively to the relays.
5 At first, tokens will be distributed between stakers and relays in a ratio of 50% and 50%. This parameter can be changed by DAO
Using Yearn Vaults V2
An important feature of the new version is the use of Vaults from the Yearn project. Now any transfer of tokens in the direction of EVM -> Everscale is a token deposit to the corresponding Broxus Bridge Vault. Our contracts are fully compatible with Yearn's strategies - thus locked tokens on the side of Ethereum and other connected EVM blockchains can be easily deposited to any protocols supported by Yearn.
It is important to note that not all funds frozen in Vaults will be given to strategy management, since it is necessary to give users the opportunity to withdraw their liquidity from Everscale at any time.
Role model
Basically, all decisions related to liquidity management are made by the DAO. But, because there is a long delay between the creation of a proposal and its execution, there are roles in Vaults with limited privileges. None of these roles can directly withdraw tokens from Vaults.
Management
This role is responsible for strategies performance and can adjust some Vault parameters. For example, management can change the deposit and withdrawal fees.
Guardian
This role has the ability to disable deposits and withdrawals from Vaults, as well as disable specific strategies.
DAO
In the new version of the bridge, a DAO appears, managed by the Bridge token stakers. The DAO makes all decisions related to bridge configuration, slashing relays, adding new tokens, adding new networks, managing locked liquidity, and so on. The DAO of the bridge is designed according to the best practices of popular DeFi protocols such as Compound and AAVE.
Any user who has staked 100,000 Bridge tokens can create a proposal. 48 hours after the creation, the voting phase begins and lasts 72 hours. To activate the proposal, you need to collect at least 500 000 votes. If a sufficient number of “yes” votes are received, then the proposer enters the timelock phase, which lasts 48 hours. After that, the chant can be performed.
Cross chains proposals
Despite the fact that the creation of proposals and voting for them takes place in the Everscale network, actions in any EVM connected networks can be specified in the proposal. Moreover, one proposal can contain a set of actions in several networks at once - for example, in Everscale, in Ethereum and in xDai. This is possible due to the fact that the DAO is integrated with the bridge itself and the proposal actions can be transferred to any connected network. Thus, Broxus Bridge launches the first cross-chain DAO, with the ability to manage any EVM compliant networks at once.
Arbitrary events support
As mentioned earlier, the main function of Broxus Bridge V1 was the transfer of tokens between Everscale and Ethereum. In the new version, we have added support for arbitrary events. This means that the bridge can be used as a central hub for building cross-chain dapps of any type. In simple terms, the event configuration looks like “(network, target event) -> (network, action)”. For example, for token transfers, the event configuration looks like this:
- (Everscale, withdraw Dai to Ethereum) -> (Ethereum, release Dai)
- (Ethereum, deposit Dai to the Vault) -> (Everscale, mint Dai)
The bridge has no restrictions on the types and number of connected event configurations. For example, the target event could be an update of the Chainlink rate, and the action would be a swap on a decentralized exchange in the Everscale network. Adding a custom event occurs through a special DAO proposal and does not require updating the relay node.
Disclaimer
This paper is for general information purposes only. It does not constitute investment advice or a recommendation or solicitation to buy or sell any investment and should not be used in the evaluation of the merits of making any investment decision. It should not be relied upon for accounting, legal or tax advice or investment recommendations. This paper reflects current opinions of the authors and is not made on behalf of Broxus or its affiliates and does not necessarily reflect the opinions of Broxus, its affiliates or individuals associated with Broxus. The opinions reflected herein are subject to change without being updated.