Why EVM Chains Pay Attention to IBC

https://blog.cosmos.network/why-evm-chains-pay-attention-to-ibc-0a73c74d30a4?source=rss----6c5d35b77e13---4

Inter-Blockchain Communication (IBC) originated as a trustless method for connecting Tendermint-based blockchains. Since its inception, the scope of IBC has broadened to encompass a wider range of blockchains, notably EVM-compatible ones such as Ethereum, BNB Smart Chain, Polkadot, and Avalanche. This expansion includes networks both within and outside the Cosmos ecosystem.

In this article, we’ll highlight the initiatives that are broadening the IBC ecosystem and delve into three key features to explain why IBC is essential to make the multi-chain worlds secure and open.

We are sure that IBC is the only standard that has all of the important natures described in this post, which are indispensable for the internet of blockchains.

Special thanks to Brainjar at Composable Finance, Mary and Syed at Interchain Foundation, and Jack Zampolin at Strangelove for their invaluable feedback on this post.

TLDR;

  • IBC is rapidly expanding by integrating over 85 blockchain zones with a total transfer value of $4 billion in the last 30 days, and extending its reach to various blockchain networks like Ethereum, Polkadot, and Avalanche.
  • As the number of blockchains is expected to grow exponentially, IBC’s role in securely and permissionlessly connecting these blockchains becomes crucial, especially in the context of the burgeoning digital asset market, estimated to reach up to $68 trillion by 2030.
  • The reason why EVM chains pay attention to IBC are based on the following three key characteristics of IBC: #1 Various Security Models, #2 Dynamic Connection, and #3 Permissionless Relayer.

IBC is Expanding

IBC is a blockchain-agnostic interoperability protocol. According to Map of Zones, over 85 blockchain zones have been connected through IBC, and the total value of IBC transfers in the last 30 days reached $4 billion.

IBC on Twitter: “Reminder: Interoperability is a public good.The core IBC protocol never extracts value. No in-protocol rent extraction or hidden fees.The code is open-source, free to use, and rigorously peer reviewed by world-class developers.All blockchains deserve to communicate. pic.twitter.com/2gnpgOzqlO / Twitter”

Reminder: Interoperability is a public good.The core IBC protocol never extracts value. No in-protocol rent extraction or hidden fees.The code is open-source, free to use, and rigorously peer reviewed by world-class developers.All blockchains deserve to communicate. pic.twitter.com/2gnpgOzqlO

While the blockchains currently connecting via IBC are mainly Cosmos SDK appchains, as I mentioned in the introduction, the scope will soon extend to other blockchains.

Some notable initiatives expanding the use of IBC include:

The companies are ordered alphabetically.

The core functions and key components of IBC, such as ibc-go, ibc-rs, ibc-solidity, relayer, and WASM light clients, are imperative for its expansion and are being implemented by organizations like Informal Systems, Strangelove, Interchain Foundation, and TOKI(Datachain).

In addition, non-Cosmos ecosystems are paying attention to IBC and looking to get involved. For instance, teams from Polkadot, Avalanche, and BNB Chain participated in Cosmoverse 2023 this October. Polymer Labs’ IBC Amsterdam saw a significant turnout from the Solana community.

So, why is there such keen interest in IBC?

What intrinsic values does IBC offer that captivate other blockchain networks?

Let’s see it in this post.

If you are not familiar with IBC, this tutorial is the best starting point.

The Internet of Blockchains

To set the scene, let’s start by discussing the future of blockchains.

As of 2024, it is estimated that there are more than 1,000 blockchains in circulation. This number is already significant, and it is expected to grow exponentially in the future.

One of the significant movements in crypto in the coming years is the RWA (Real World Assets) tokenization. According to the report by BCG and ADDX, the market size of digital assets, even when limited to the financial market, is projected to be 16.1 trillion dollars by 2030 in a conservative estimate, and could reach up to 68 trillion dollars in the best-case scenario.

Everything we know, from debt, securities, and funds to even currencies, will digitize. But it does not end there: IDs, games, voting systems, and more will all be part of the blockchain universe.

Given this, the number of blockchains is expected to multiply exponentially from today’s count, leading to millions thriving. In such a scenario, blockchains would emerge and disappear on a daily basis, similar to today’s smartphone apps.

In that environment, it’s imperative that we connect this vast number of blockchains both securely and permissionlessly. This is precisely the environment where IBC is crucial.

Without an open standard like IBC, we risk repeating past challenges. Specifically, a few organizations may control the rules and impose them on others, a problem we currently face with web2 giants and financial giants. We are already seeing signs of this issue. For example, LayerZero’s action of deploying a proprietary representation of wstETH to multiple chains, without support from Lido DAO, demonstrates this emerging pattern.

So, why do we need IBC? The answer lies in the following three key characteristics of IBC:

#1 Various Security Models

#2 Dynamic Connection

#3 Permissionless Relayer

Let’s delve into each characteristic.

#1 Various Security Models

Firstly, IBC can establish various security models as defined by ICS-02, based on the requirements of app chains or dApps. When discussing IBC, it is important to note that while light client verification is often emphasized for its superior security, it represents just one facet of the system.

For instance, the Tendermint light client is a specific implementation defined by ICS-07, while the solo machine client follows ICS-06. This flexibility allows us to set up diverse security models, such as zk-proof, TEE-proof, and multi-sig, in addition to light clients, based on application or chain demands. All these implementations align with ICS-02.

While light clients offer the highest security, it’s currently impractical to natively implement them on every chain, especially Ethereum, due to high gas costs. However, this doesn’t mean IBC implementation is impossible. We can start with a security model compliant with ICS-02 and upgrade as needed.

As shown in the diagram above, some connections use native light clients, while others utilize ZK-proof, TEE-proof, or multi-sig methods. This opt-in and opt-out security model lowers the barrier for apps to implement IBC.

#2 Dynamic Connection

Another key feature is the Dynamic Connection.

This is vital for the internet of blockchains, something non-IBC bridges will never offer. Applications can establish IBC channels both permissionlessly and instantly using multiple pre-existing connections, as defined by ICS-03.

Consider the following scenario: An application on blockchain A wishes to connect with apps on blockchain B. A doesn’t need a direct connection. If A is connected to C, it can establish a channel to apps on B via connections owned by blockchains C and D, without their permission.

These permissionless and hopping functionalities for establishing connections and channels will lead to dynamic network expansion when a massive number of blockchains are running.

Imagine a world without a standardized connection like existing bridges. Connections would be overly reliant on specific bridge chains, limiting network expansion due to their permissioned and standalone connections.

Dynamic connections are essential for keeping the internet of blockchains open and adaptable for applications, a feature enabled by ICS-03.

#3 Permissionless Relayer

Having discussed various security models and dynamic connections, it’s clear these features enable another essential component: the permissionless relayer.

As many of you might recognize from the diagram, a relayer is required to transfer packets between chains through a channel. However, as security and connections are abstracted (ICS-02, ICS-03) and the relayer’s responsibility is limited and minimal, focusing only on availability, a relayer can be run by anyone. As a result, packet relay costs are automatically optimized based on demand and supply dynamics.

In contrast, if app chains heavily depend on bridge chains lacking these features, packet relay costs won’t be optimized. These bridges are inherently designed to maximize revenue, and each bridge chain aims to incentivize its token holders and grow its ecosystem.

If a few bridges dominate connection shares, it’s easy to predict that fees will not be reduced or will even rise due to the absence of adjustment mechanisms.

Considering all these factors, in addition to various security models and dynamic connections, the permissionless relayer is essential for the Internet of Blockchains.

Summary and Comments from EVM Communities

In summary, IBC is an interoperability protocol that is highly modularized, can adopt various security models based on the requirements, and has a permissionless nature. Such characteristics are invaluable in a world with a vast number of blockchains in circulation, and IBC is the only standard that possesses these attributes.

Those blockchains are warmly welcoming IBC to connect with other blockchains. To wrap up this article, let’s explore comments from some of the EVM chain communities regarding IBC.

Comment from Avalanche:

IBC has been the leading standard for cross-chain interoperability for the past few years and bringing a combination of COSMWASM and IBC meets Avalanche Consensus and AWM should unify the Cosmos and Avalanche ecosystems and push both forward for the better.

-Matt Schmenk Ava Labs

Comment from Oasys, the leading gaming blockchain:

Oasys has set ‘Interoperability’ as one of the three pillars of its 2024 vision, ‘Oasys Dragon Updates.’ Interoperability is one of the important milestones for Oasys, and we believe it will become increasingly important for the further spread of blockchain games in the future.

IBC has become the go-to standard for cross-chain protocols. It’s kind of a no-brainer that supporting this standard is crucial.

The fact that IBC is permissionless plays a huge role for Oasys. It’s key for giving both users and game devs a secure platform and for growing their ecosystem.

Another cool thing about IBC is its response feature. It lets you know if your cross-chain transactions worked or not. This means you can do transactions across multiple chains with just a single click.

-Daiki Moriyama, Director at Oasys

IBC is expanding, and there are solid reasons for this growth.

In the first half of 2024, TOKI will launch the first IBC bridge between Ethereum and BNB Smart Chain on the testnet. We are looking into rewarding our early supporters, so getting involved with our testnet would be a fantastic opportunity.

Follow us on X (formerly Twitter) and see our Linktree page for more details.


Why EVM Chains Pay Attention to IBC was originally published in Interchain Ecosystem Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

TOKI and Oasys Unite to Bring IBC to the Leading Gaming Blockchain

https://blog.cosmos.network/toki-and-oasys-unite-to-bring-ibc-cbaeb52f95bf?source=rss----6c5d35b77e13---4

Inter-Blockchain Communication (IBC) is expanding like never before. Today, TOKI and Oasys are delighted to announce that we are teaming up to bring IBC to Oasys, the leading gaming EVM blockchain: offering brand-new gaming experiences and enhanced UX through cross-chain functionalities.

Blockchain game is a hot topic worldwide, with a significant demand for blockchain platforms tailored to gaming. Oasys has garnered support from leading game companies such as SEGA, Bandai Namco, Square Enix, and Ubisoft.

These companies not only back Oasys blockchains as validators but also some have announced games set to be released on Oasys. For instance, Ubisoft is poised to launch ‘Champions Tactics,’ the first blockchain game for Ubisoft. Additionally, double jump.tokyo will launch ‘Battle of Three Kingdoms,’ a game that utilizes IP from SEGA’s renowned action games.

In other words, one of the hottest gaming blockchains will come to the interchain.

In this post, we will take a closer look at IBC, introduce you to Oasys, and explore why Oasys is integrating IBC — something both IBC and Oasys communities will find exciting.

TL;DR

  • TOKI and Oasys have joined forces to enable trust-minimized interoperability with IBC on Oasys, a leading gaming EVM-compatible blockchain.
  • IBC is the most widely used interoperability protocol at present, and TOKI is one of its leading contributors.
  • Oasys opted to adopt IBC for several reasons: its status as the go-to standard for blockchain interoperability, the benefits of its permissionless nature for the Oasys community, and its capability to enable single-click cross-chain transactions across multiple chains with a built-in response feature.

TOKI and IBC

TOKI is at the forefront of expanding IBC to non-Cosmos SDK blockchains. As key contributors to ibc-solidity, our current focus includes EVM blockchains such as Ethereum, BNB Chain (BSC), Avalanche, and Polygon.

We’re also in the process of implementing an IBC bridge that connects across EVM blockchains and Cosmos SDK blockchains. Excitingly, our testnet linking Ethereum and BNB Chain is set to launch early next year. Keep an eye on this space for our latest updates here.

Moreover, through our collaboration with Progmat and MUFG, Japan’s largest banking group, TOKI is enabling cross-chain transactions with fully-regulated stablecoins, compliant with Japanese legislation.

IBC stands as the most widely used, reliable, and universally adopted interoperability protocol in the world to date. According to the Cosmos Chain registry, more than 100 zones have been connected via IBC. As of December 13, 2023, according to Map of Zones and DappsRadar, the total value of IBC transfers has reached $808 million in the past 7 days, more than double the combined transaction volumes of Stargate (LayerZero), Wormhole, Synapse, and Hop protocol.

IBC | Home

IBC offers a permissionless way for transferring data packets between blockchains, setting it apart from many other cross-chain technologies that rely on trusted intermediaries. This unique approach of being permissionless and minimizing trust has ensured zero losses for IBC since its inception in 2021.

While the blockchains currently using IBC are predominantly Cosmos SDK appchains, the technology is expanding its reach. For instance, TOKI is pioneering the connection of Ethereum and BSC (BNB Chain) via IBC. Composable Finance has completed building an IBC bridge between Polkadot and Cosmos, and Polymer Labs is actively developing a hub to connect Ethereum and Cosmos via IBC.

What is Oasys?

Oasys is a gaming-centric blockchain, EVM-compatible and renowned for providing an optimal user experience with its quick transaction speeds and the benefit of zero gas fees.

Its significance is emphasized by the substantial support it garners from major gaming companies such as SEGA, Bandai Namco, Square Enix, Ubisoft, Com2uS and so on. These industry giants are more than just supporters; they play a crucial role as validators for the blockchain.

The upcoming games on Oasys are also fantastic. For example, ‘Captain Tsubasa — RIVALS-’, a highly anticipated title from the renowned Captain Tsubasa series, is scheduled to launch on Oasys in the first half of 2024.

CAPTAIN TSUBASA -RIVALS- on Twitter: “🌐 #Oasys Chain Adoption Confirmed 🌐 #TsubasaRivals is leveling up with multi-chain support! Thrilled to share that we’re teaming up with the gamer-centric blockchain ‘Oasys’. Gear up for this epic update, set to roll out in early 2024🗓️https://t.co/nkYnbD81tf pic.twitter.com/JHaFWb77JW / Twitter”

🌐 #Oasys Chain Adoption Confirmed 🌐 #TsubasaRivals is leveling up with multi-chain support! Thrilled to share that we’re teaming up with the gamer-centric blockchain ‘Oasys’. Gear up for this epic update, set to roll out in early 2024🗓️https://t.co/nkYnbD81tf pic.twitter.com/JHaFWb77JW

Also, as mentioned in the introduction, Ubisoft will release its first blockchain game title, ‘Champions Tactics’, on Oasys in 2024.

https://medium.com/media/506ba710134a7f5d33534e59561299c4/href

Why Oasys Choose to Adopt IBC

So, why did Oasys decide to adopt the IBC out of several cross-chain protocols?

Daiki Moriyama, Director at Oasys, explained to our team the reason behind this decision.

Oasys has set ‘Interoperability’ as one of the three pillars of its 2024 vision, ‘Oasys Dragon Updates.’ Interoperability is one of the important milestones for Oasys, and we believe it will become increasingly important for the further spread of blockchain games in the future.

IBC has become the go-to standard for cross-chain protocols. It’s kind of a no-brainer that supporting this standard is crucial.

The fact that IBC is permissionless plays a huge role for Oasys. It’s key for giving both users and game devs a secure platform and for growing their ecosystem.

Another cool thing about IBC is its response feature. It lets you know if your cross-chain transactions worked or not. This means you can do transactions across multiple chains with just a single click.

How to Implement IBC on Oasys

Technically speaking, Oasys is an EVM-compatible blockchain that comprises two distinct chains: the Oasys Hub (L1) and multipleVerses (L2). We’re planning to employ IBC to facilitate connections both between individual Verses and between the Hub chain and other ecosystems, such as Ethereum and Cosmos.

As depicted in the figure above, our approach involves utilizing ibc-solidity and implementing light clients for both the Oasys Hub chain and the Verses.

Furthermore, we’re integrating the Light Client Proxy (LCP), a middleware utilizing Trusted Execution Environment (TEE), to replace light client verification in hardware-based secure environments.

This approach will not only facilitate secure and gas-efficient cross-chain transactions, but it will also streamline the process of connecting with multiple blockchain ecosystems. It achieves this by eliminating the need for implementing separate light clients for each blockchain within the Oasys ecosystem.

Use Cases

Oasys is planning to introduce innovative cross-chain features through IBC, as outlined below:

Single-Click Cross-Chain Payment:
Users will be able to purchase NFTs using OAS tokens across different Verses with just a single click.

Single-Click Cross-Chain Swap:
Users will have the ability to swap their tokens for any token on the Oasys DEX and then transfer them to a different Verse Chain, all with a single click.

Additionally, Oasys is exploring the possibility of integrating stablecoin settlements using a Japanese-regulated stablecoin, to be issued using the Progmat Coin platform. Following the revised Payment Services Act that took effect in Japan in June 2023, a fully regulated and 100% collateralized stablecoin is expected to be issued in 2024. The introduction of these regulated stablecoins will make purchasing assets on Oasys more convenient and secure for users.

Looking Ahead

We’re excited to share all the latest on this and other exciting developments.

Don’t miss out — follow us on X (Twitter) for all the updates and exclusive insights!


TOKI and Oasys Unite to Bring IBC to the Leading Gaming Blockchain was originally published in Interchain Ecosystem Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

IBC is Finally Landing on BSC

https://blog.cosmos.network/ibc-is-finally-landing-on-bsc-e78a5b9def5

It’s fair to say that the Inter-Blockchain Communication (IBC) protocol is the most widely used, reliable, and universal interoperability protocol in the world to date. According to the Cosmos Chain registry, more than 100 zones have been connected via IBC. The IBC data dashboard demonstrates that the total value of IBC transfers between Jan 2022 and February 2023 reached $29B in value.

While it has taken a few years since its launch in 2021, the expansion of IBC to non-Cosmos SDK blockchains is accelerating, and it will become everywhere within a year because of the strong and huge community who work on making IBC standard.

In July, the first IBC connection between Cosmos appchains and Polkadot went live on the mainnet, largely thanks to the efforts of the Composable Finance team. The IBC adoption for Ethereum is also underway with multiple approaches: solutions using ZKP by Polymer Labs (zkMint), Electron Labs and Composable Finance, and solutions using TEE (Trusted Execution Environment) by TOKI. Additionally, Landslide is working on implementing a light client for Avalanche.

Needless to say, Informal Systems, Strangelove, Interchain Foundation and others have dedicatedly contributed to IBC’s core implementations, which are the foundation of the above initiatives.

Today, TOKI is excited to announce that IBC is finally landing on BSC (BNB Smart Chain). As many of you might know, according to DefiLlama, BSC is the third-largest blockchain network in the world by TVL. So, this represents a significant milestone for IBC.

Let’s dig into the details.

Here’s a comment about our work from Jack Zampolin:

Trust-minimized interoperability across blockchain ecosystems is greatly needed, and IBC is the clear front-runner for it. However, IBC is losing market share to dangerous centralized bridges, putting the whole crypto industry at risk. As such, it’s imperative that we intensify our efforts to promote IBC adoption. In this context, I’m greatly excited about the contributions from TOKI and Datachain, which are expanding IBC’s reach to non-Cosmos SDK chains such as Ethereum and BSC. I’m looking forward to seeing their ongoing contributions to IBC!

BSC Meets IBC

BNB Smart Chain (BSC) has finally gained the ability to communicate with other blockchains using IBC.

TOKI team, including Datachain, has contributed to IBC’s expansion since 2021. This includes the implementation of IBC-Solidity with two grants from the Interchain Foundation and various light client implementations for major enterprise blockchains such as Hyperledger Fabric and Corda.

To enable IBC on BSC, we primarily need the following modules:

  • Light client for Parlia, BSC’s consensus engine
  • IBC-Solidity, IBC implementation in Solidity (A security audit is scheduled in Q4 2023.)
  • yui-relayer, a relayer that supports BSC (EVMs)
  • LCP Clients for Ethereum and Tendermint, clients to verify proofs submitted from the LCP node.

Here is the light client for Parlia, which we have just unveiled: https://github.com/datachainlab/parlia-elc.

Although this light client is primarily designed to run within the Enclave in the middleware using TEE, “only minimal effort is required to support ICS-02.

Of course, we will support ICS-02 if the community desires it.

With those implementations in place, we now have everything we need to run IBC on BSC.

How TOKI Connects BSC and Ethereum via IBC

TOKI’s first implementation for connecting BSC with Ethereum using IBC is described below.

Since the high verification (gas) cost could pose a significant challenge in making IBC available on both blockchains, we adopt LCP (Light Client Proxy), a proxy middleware embedded with a TEE (Trusted Execution Environment), to replace light client verification in a trust-minimized manner.

The connection flow from BSC to Ethereum proceeds as follows:

  1. BSC submits a packet, and the relayer queries it.
  2. The relayer sends it to the LCP node.
  3. The LCP node verifies the packet and creates a proof using the key generated in the enclave.
  4. The relayer submits the packet, along with the proof, to LCP Client on Ethereum.
  5. Light Client on Ethereum then verifies the proof, incurring a reduced gas cost.

For more details, please refer to the following article:

LCP — A Proxy for Light Client Verification to Realize Trust-minimized and Gas-efficient…

We are planning to add an interface for the WASM light client to LCP Clients so that developers can easily integrate light clients.

Use Cases

TOKI is now building cross-chain unified liquidity on top of the messaging layer, which will be the first application to connect BSC and Ethereum via IBC.

The cross-chain bridge will realize the following use cases:

  1. Cross-chain swap: Swap tokens on PancakeSwap using your Ethereum tokens.
  2. Cross-chain Lending: Deposit your Ethereum tokens to borrow stablecoins on BSC, such as through the Venus Protocol.

Binance Japan has announced a partnership with MUFG, one of the largest banking groups in Japan, to explore the issuance of a new stablecoin on both Ethereum and BNB Chain.

CZ 🔶 Binance on Twitter: “More stablecoins coming.Binance Japan partners with MUFJ on stablecoin development https://t.co/NuuY5eg2zl / Twitter”

More stablecoins coming.Binance Japan partners with MUFJ on stablecoin development https://t.co/NuuY5eg2zl

The Binance stablecoin will leverage “Progmat Coin”, a stablecoin platform by Progmat. Thanks to a collaboration between Progmat (MUFG) and TOKI, which enables cross-chain capabilities via IBC, TOKI will support cross-chain transactions of Binance’s new stablecoin once it’s issued.

These are just a few examples, and there’s much more you can do when these blockchains are interconnected.

Looking Ahead

We deeply sympathize with the vision outlined in the Interchain Stack Roadmap 2024, which states, “to push the widespread adoption of IBC across external blockchains, built on different consensus protocols.”

In line with this IBC vision, we will continue to contribute to IBC’s expansion. One of the most significant milestones in 2024 for us is the launch of the IBC-enabled cross-chain bridge. As demonstrated in this post, we are on the verge of completing the messaging layer to connect Ethereum BSC via IBC. Additionally, we are in the process of building the liquidity layer, which will enable a single-click native token swap between those chains. We plan to launch the testnet in Q1 2024 and follow it up with the mainnet release in Q2 2024.

Following this, TOKI will extend support to Cosmos SDK appchains, Avalanche, Polygon, L2s such as Arbitrum, and other networks, further promoting the adoption of IBC across an even broader range of blockchains.

We’re committed to expanding the IBC ecosystem, aiming to establish IBC as the de facto standard for blockchain interoperability and envisioning a world where seamless interoperability unites diverse blockchain ecosystems.

We’ll be at Cosmoverse, presenting a keynote session. See you in Istanbul!

Follow us on X (formerly Twitter) and see our website for more details.


IBC is Finally Landing on BSC was originally published in Interchain Ecosystem Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

How TOKI and LCP Bridge Cosmos and Ethereum via IBC

https://blog.cosmos.network/how-toki-and-lcp-bridge-cosmos-and-ethereum-via-ibc-325d8f19ac87?source=rss----6c5d35b77e13---4

How TOKI and LCP Bridge Cosmos SDK Chains and Ethereum via IBC

TOKI aims to become the first cross-chain bridge that achieves 1 click native token swap between Ethereum and Cosmos SDK Chains using IBC. Today, we will deep dive into how it works, focusing on its groundbreaking messaging layer.

TL;DR

  • While cross-chain bridges using IBC are in high demand, there are challenges in terms of gas cost and implementation cost, especially on EVMs.
  • ZK-based solutions are promising for addressing these problems. However, there still remain issues to be addressed, particularly concerning gas costs and practical implementation methods.
  • TOKI resolves these challenges by using secure hardware (TEE), commonly used for advanced privacy protection.
  • TOKI will enable users to carry out cross-chain transactions securely between blockchain networks, such as Cosmos SDK Chains and EVMs, in an environment that is securely protected from malicious bridge administrators and others.

Last week, TOKI announced a collaboration with Noble to bring Japanese stablecoins to the interchain ecosystem.

TOKI and Noble to Bring Japanese Stablecoins to the Cosmos Ecosystem, in Partnership with MUFG

In the wake of Terra’s absence, the demand for stablecoins within the interchain ecosystem has been on the rise. However, there are over 100 bridged versions of USDC within the ecosystem because 1) various bridges issuing wrapped USDC, and 2) IBC routing can make different types of USDC even within the ecosystem. This problem is a significant obstacle to achieving efficient liquidity and ensuring a good user experience.
(For a more detailed discussion of these issues, we refer you to Noble’s blog post.)

The native USDC on a specific chain like Noble could potentially alleviate the second issue. However, what’s still missing is the capability for cross-chain native token swaps. This is exactly where TOKI steps in, providing a much-needed solution for native token swaps across chains such as Ethereum and others using IBC.

So, how does TOKI achieve this?

TOKI will address the challenge by offering unified liquidity and IBC messaging for multiple blockchains, including EVMs. These two features will facilitate secure, one-click native token swaps across various chains.

However, establishing secure messaging using IBC across various chains beyond the Cosmos SDK Chains is still challenging. Overcoming this hurdle requires a key focus on the messaging layer. So, in this article, we will focus on the messaging layer of TOKI, which solves IBC’s challenges and enables native token swaps between EVMs and Cosmos SDK Chains.

Before digging into the detail, let us express our gratitude to Ethan Frey, one of the core developers of the Cosmos SDK and also known as the “Father of CosmWasm”, to have had extensive discussions. He now serves as an advisor to TOKI.

Here’s a comment from Ethan:

I am impressed by the level of knowledge of both EVM and IBC that the TOKI team possesses. Various teams have been working on an Ethereum — Cosmos IBC bridge since 2018, but existing solutions have some trust limitations and do not expose the full power of IBC. LCP is a novel solution to make highly secure bridges realistic. TOKI also counts on the maintainers of IBC-Solidity, which exposes the power of custom IBC-enabled Solidity contracts, and the rapid protocol development which is currently only available in CosmWasm. As an advisor, I am delighted to support this initiative and eagerly anticipate the broadening of IBC connections throughout the entire ecosystem.

Table of Contents

What is TOKI?

Let me start by briefly introducing TOKI.

TOKI is the first cross-chain bridge to enable 1 click native token swaps between Ethereum, Cosmos SDK Chains, and other EVM blockchains. We achieve this by leveraging TEE (Trusted Execution Environment) to enhance the IBC and build unified liquidity on top of the messaging.

Here is the high-level architecture of TOKI.

Our idea is to employ a proxy using TEE. That enables more blockchains to use IBC to connect with each other by replacing the light client verification compliant with IBC.

Another key component to connect EVMs using IBC is IBC-Solidity, the IBC implementation in Solidity, described as “IBC-modules” in the diagram.

In addition, we’re working on TOKI Liquidity, unified liquidity on top of the messaging layer. This feature will enable single-transaction native token swaps without using wrapped tokens, providing finality on the source chain and enhancing capital efficiency, thereby offering users a more secure and convenient transaction experience.

For more detail, please visit our website.

Challenges to Expand IBC into non-Tendermint Chains

IBC requires light client implementations on each blockchain to verify the consensus and validity of transactions with each other. While this nature of mutual verification enables the most secure way of blockchain communications, it is indispensable for the communication protocol to be extensible to various blockchain networks.

The constraints bring two following challenges for IBC to expand it to other networks beyond Cosmos SDK Chains:

  1. High verification cost (gas cost)
  2. High implementation cost

The high verification cost depends on the consensus algorithm for each blockchain and the availability of support for the cryptographic primitives required for verification. For example, the Tendermint light client requires verification of the validator’s signatures, serialization, Merkle Proof verification, etc.

Those series of procedures demand considerable cost, especially on Ethereum and other EVMs. For example, according to Chorus One’s report, tendermint-sol, which implements Tendermint light client on IBC-Solidity, requires over 10 million gas costs.

The high implementation cost means that it takes so much time and cost to expand its network and maintain them because it is required to implement various light clients on each chain to support a variety of consensus algorithms each counterparty blockchain has. It must be a massive problem if you want to connect more and more blockchains with each other.

To overcome those challenges, Datachain developed LCP (Light Client Proxy), which can solve both challenges by replacing light client verification in cryptographically secure areas on memory.

Other Approaches (ZK-based Approach)

Other than that, there are several approaches to address the above-mentioned issues, one of which is the ZK-based approach. Recently, some projects have used ZK to verify validators’ signatures, which is one of the processes in light client verification.

When classifying ZK-based approaches, they fall into two categories:

  • Direct verification: construct a zk-proof of signature validity and verify the proof on-chain. Some notable examples include Polyhedera Network, Wormhole, Electron Labs, and Succinct Labs.
  • Hub verification: where a hub network verifies and constructs a zk-proof of the result. The primary example is Polymer Labs.

Now, if we organize these two categories based on trust assumption, gas cost, and implementation cost, the classifications would look something like this:

Trust Assumption

  • Direct verification: It basically doesn’t require additional trust assumptions outside of the connected chains.
    (Some methods require a trusted setup.)
  • Hub verification: It requires putting additional trust in the hub network.

Gas Cost

There are various types of costs regarding the light client verification using ZK, including the cost of header verification, the cost of packet verification, and the proving cost to construct zk-proofs.

  • Direct verification: It can reduce the cost of verifying validators’ signatures, a part of the header verification cost.
  • Hub verification: It can reduce the whole header verification cost by adjusting the consensus ZK-friendly as Polymer Labs did in zkMint.

Both types of verification can reduce some costs, but the costs of packet verification and proving still need to be addressed. That’s why the use cases for ZK solutions are currently limited. As for the proving cost, according to the research by Electron Labs, there is a tradeoff between proving cost and latency.

The Electron labs’ report also indicates that in instances with 200 validators and 50 signatures included per zk-proof, verifying a Tendermint light client header on Ethereum takes approximately 8 minutes. Polymer Labs’ research demonstrates that when utilizing zkTree, the runtime required to verify 32 ed25519 proofs on Ethereum could potentially be reduced to 77 seconds.

Implementation Cost

  • Direct verification: It takes a lot of implementation resources to connect with various blockchain networks because it has the same challenges as the standard light client verification.
  • Hub verification: It takes fewer resources to connect with multiple blockchain networks as it doesn’t require distinct implementations for each blockchain connection.

Beyond these three aspects, another distinct challenge of utilizing ZK is the complexity of security audits. The security incident that occurred just after Electron Labs’ mainnet launch recently provides a clear example of this.

In summary, although ZK-based approaches are promising, the challenges of high gas and implementation costs are yet to be fully addressed. This indicates the need for an alternative solution.

TOKI’s Solution: IBC Enhanced by LCP

So, how does TOKI approach these issues without sacrificing the degree of security?

In a nutshell, TOKI adopts TEE to solve those challenges and enhance IBC capabilities.

TEE is a hardware-based tamper-proof solution by separating the area of the processor from the rest of the CPU. Among some types of implementations of TEE, the most widely adopted implementation of TEE is Intel SGX.

As the diagram above illustrates, Intel SGX has a key component called an “enclave,” which is an isolated environment in the computer’s memory. Intel SGX acts like a secure vault in the processor itself, combining strong encryption and hardware-level isolation to safeguard enclave programs. Anyone, even the node operators, could observe or tamper with its codes. In fact, no practical attack has happened in the latest version of Intel SGX.

TEE (SGX) is a proxy middleware for light client verification to securely replace the on-chain verification process. We call it Light Client Proxy, or “LCP” for short. The initial implementation of LCP utilizes Intel SGX as its TEE.

As the diagram above illustrates, the relayer sends a commitment and proof from a source chain to the LCP node. This node then securely executes light client verification within the enclave and generates a commitment that indicates the verification result along with proof. These are then sent to the destination chain, which verifies them.

The main features of the LCP are:

1. Minimal trust assumptions
In addition to the trust assumptions of the native IBC, LCP needs to add as little trust as possible, the TEE trust.

2. Ultra-efficient on-chain verification
LCP does not require on-chain light client verification for the target chain. Instead, a client on the verifying chain verifies a signature(s) on a resulting commitment generated in the enclave.

3. Efficient Implementation
With LCP, there is no need for on-chain light client implementations for each chain combination. Instead, we need only a light client implementation (LCP Client) for each individual chain. As a result, supporting new chains becomes significantly easier.

Those features make LCP enable cross-chain communication with high security, equivalent to on-chain light client verification at a lower cost.

If we compare on the same axis as we did with ZK earlier:

  • Trust assumption: LCP is based on the TEE trust.
  • Gas cost: By replacing the entire verification process, not just a part of it, LCP can dramatically reduce verification costs without compromising latency. It can execute cross-chain transactions within milliseconds.
  • Implementation cost: LCP dramatically reduces the implementation costs, as it necessitates the implementation of only a single light client per chain to establish connections with multiple chains. Furthermore, it can be coded in Rust (e.g., ethereum-ibc-rs).

Compared to ZK-based solutions, which still have some technical issues to work out, it’s fair to say that LCP is currently more practical. It improves gas and implementation efficiency without sacrificing security.

Furthermore, app developers can effortlessly establish their own LCP nodes, thereby streamlining the process and facilitating rapid environment setup. This could further enhance the widespread usability of LCP.

Security Enhancements

While questions about TEEs and their security levels have been raised due to some documented vulnerabilities (e.g., ÆPIC Leak), it’s important to note that there have been no practical attacks on the latest patched version of SGX so far.

Moreover, the type of attack that compromised the Secret Network would not prove effective against LCP. This is because LCP does not possess the shared component among nodes that was exploited during the Secret Network attack. (See the FAQ for more detail).

Not only that, LCP has other security enhancements:

  1. Node validation: LCP client will check the LCP nodes to ensure that each of them does not include unacceptable Advisory IDs at the registration. (Advisory ID refers to a vulnerability reported by Intel.)
  2. Key rotation: The key pair used to prove and verify messages between blockchains is changed periodically. LCP nodes are checked to see if they support the latest Advisory ID every time period continuously
  3. Multiple operators: LCP is designed to provide additional securities by running a sufficient number of LCP nodes to enable the multiple key signature operation(e.g., 4 of 6 multi-sig) by multiple individual LCP node operators. This prevents unforeseen vulnerabilities and improves the decentralization of LCP nodes. This effort is in collaboration with node operators such as Everstake, Allnodes, DSRV, Swiss Staking, and others.

Visit the link below to learn more about LCP

Summary

Summarizing our discussion thus far, we can present the main points in the following table:

* To clarify our comparisons, we’ve created a new ‘Latency’ category and reorganized the issues we discussed under ‘Cost’ into this new category.

Looking Ahead

Datachain and TOKI have been doing research on ZK as well. While ZK for light client verification is not entirely practical at present, we are poised to consider it as one of the promising options. TOKI aims to empower users and developers to choose the appropriate message protocol (for instance, Native IBC, IBC enhanced by TEE, or ZK-based IBC) based on their specific security requirements.

TOKI is set to launch its testnet in 2023 Q3, with the mainnet following in Q4.

Stay tuned for more announcements!

Follow us on @tokifinance.
Discover more about TOKI at https://tokifinance.notion.site/.


How TOKI and LCP Bridge Cosmos and Ethereum via IBC was originally published in Interchain Ecosystem Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

TOKI and Noble to Bring Japanese Stablecoins to the Cosmos Ecosystem, in Partnership with MUFG

https://blog.cosmos.network/toki-and-noble-to-bring-japanese-stablecoins-to-cosmos-5e1d70a9ea9b?source=rss----6c5d35b77e13---4

TOKI and Noble have formed an exciting partnership which aims to introduce fully collateralized fiat-backed Japanese stablecoins to the wider Cosmos ecosystem. This partnership will leverage Noble’s native asset issuance infrastructure which is purpose-built for institutions looking to issue highly liquid stablecoins, among other types of crypto-assets, in a manner consistent with strict regulatory adherence.

Additionally, the partnership will further expand the ecosystem by giving developers and entrepreneurs direct access to fully collateralized and regulated native Japanese stablecoins, thereby unlocking a host of exciting real-world use cases for cryptocurrencies.

TOKI is an IBC-enabled bridging provider for various blockchains such as Cosmos appchains and EVMs. The core infrastructure is built by Datachain — a blockchain interoperability R&D team that has been working on developing and standardizing core Cosmos protocols with large institutions and enterprises. Datachain is also a grantee of the Interchain Foundation, and previously produced the first implementation of IBC in Solidity (IBC-Solidity).

TOKI has recently teamed up with Progmat — a project spearheaded by Mitsubishi UFJ Financial Group (MUFG), other Japanese megabanks and JPX — to launch stablecoins on multiple public blockchains, including Cosmos and Ethereum. This collaboration is in partnership with over 200 companies, including Japan Exchange Group (JPX) and major Japanese banks such as MUFG, SMBC and Mizuho.

A reliable Japanese stablecoin is the beginning of a larger effort to cement Japan as a leading cryptocurrency hub for tokenized assets on public blockchains. Japanese businesses, including startups and large enterprises, will be able to tap into the vast potential of public blockchain infrastructure to facilitate the mass adoption of digital assets in a way that is both useful and tangible for the average consumer. To learn more about how TOKI will enable cross-chain activity for fully collateralized Japanese stablecoins, read this blog post.

Further, the revisions to Japan’s Payment Services Act has made it possible for stablecoin innovation to flourish. While stablecoins have found incredible product-market fit globally, the number of businesses licensed to handle them has been limited. This collaboration between Progmat and Japan’s largest banks and corporations will advance the mass adoption of permissionless stablecoins that can be freely and safely used by Japanese businesses and consumers alike. These stablecoins will be pegged to a variety of currencies, including JPY, USD and other fiat currencies, thus referring to them more broadly as “Japanese stablecoins.” These crypto assets will be propagated via permissionless public blockchain networks including Noble.

What This Partnership Unlocks

Launching Japanese stablecoins on Noble as a gateway for the broader Cosmos ecosystem is straightforward, and any Cosmos blockchain, such as dYdX, Osmosis, etc., can seamlessly utilize stablecoins via a permissionless IBC connection with Noble.

However, our ambitions extend beyond this goal. Through this strategic partnership, we envision integrating existing Cosmos appchain applications to enable a wide range of cross-chain use cases “in a single transaction,” leading to a significant expansion of the ecosystem.

Some ground-breaking use-cases include:

  • Cross-chain swaps: Stablecoins on Ethereum, like USDT, USDC or the upcoming Japanese stablecoins can be swapped into any token in the Cosmos ecosystem by integrating with DEXs (e.g., Osmosis) in a single transaction, and by working with Noble to efficiently route liquidity.
  • Cross-chain lending: Users can deposit their NFT into UnUniFi to borrow stablecoins on Ethereum with a straightforward user experience.
  • Cross-chain migration: dYdX users can migrate their deposit on Ethereum into dYdX v4 in Cosmos easily.

Of course, potential use cases that arise from this collaboration are vast and extend far beyond the examples mentioned. Together, TOKI, Noble, and our visionary partners at Progmat are propelling the vision of an interconnected network of blockchains, shaping the future of “the Internet of Blockchains.”

The Partnership Between TOKI and Noble

Noble, a native-asset issuance platform, has partnered with Circle to bring USDC to the Cosmos ecosystem. Noble’s goal is to onboard institutional partners to the growing interchain by providing a seamless path to asset issuance. Now, TOKI and Noble are working together to accelerate the introduction of Japanese stablecoins within the ecosystem.

As highlighted in Noble’s post, a highly liquid and fully collateralized native U.S. Dollar fiat-backed stablecoin was a critical missing piece to be able to facilitate more efficient liquidity and onboard mainstream applications to the interchain. Additionally, launching fiat-backed stablecoins for the Japanese market is essential to onboarding a swath of Japanese businesses and consumers into the ecosystem. TOKI and Noble are actively collaborating with Progmat to make this initiative a reality.

Furthermore, since TOKI provides the first IBC-enabled unified liquidity across various blockchains, users will be able to natively make a token swap between Cosmos appchains and EVM chains, including Ethereum, in a single transaction. In addition to the Japanese stablecoins, TOKI will support a variety of stablecoins, including USDC and USDT.

This initiative holds significant importance both for Noble and the entire interchain, and generous support and engagement from the community will drive this forward. So, we warmly welcome contributions from the community.

Looking forward to seeing more Cosmonauts get excited about this initiative. Join us and share your thoughts on social media to be a part of this exciting journey🚀

Comment from Jelena, Founder of Noble

We’re extremely excited to be collaborating with TOKI on Japanese stablecoins for Cosmos! The Japanese market offers vast potential for onboarding a diversity of businesses to Web3,, and the launch of Japanese stablecoins will be a pivotal step toward tapping into this potential. TOKI and Noble are on the same path, aiming to provide native and fiat-backed stablecoins to the entire Cosmos community, and ultimately working together to drive the ecosystem further towards real-world mass adoption.

Looking Ahead: Our Future Plans

We plan to develop and launch the issuance of stablecoins on Noble by spring 2024 after thoughtful discussions among relevant companies, including Noble and Progmat. We’d love your support, so stay tuned!

The cross-chain bridge of TOKI itself is scheduled to launch its mainnet in Q4 2023 or Q1 2024. As we’ll be releasing information about airdrops and other future initiatives, make sure to follow us on Twitter @tokifinance and Telegram, and don’t miss important updates.

Reach out to contact[at]toki.finance if you want to discuss future partnerships or funding opportunities with us.

What is Progmat?

Progmat is an innovative project focused on transforming various forms of value into digital assets and seamlessly connecting society through their programmable networks.

Conceived and launched by Mitsubishi UFJ Trust and Banking, the project has become a significant influence in the Japanese financial landscape. Over 200 companies are involved, including Japan Exchange Group (JPX) and major Japanese banks like SMBC and Mizuho, all working together to enhance the initiative’s impact and reach even more.

Progmat offers three kinds of token issuance platforms: security tokens, utility tokens, and stablecoins. And what’s innovative about Progmat is that they’re going to roll out multi-chain deployments, even on public blockchains such as Ethereum and Cosmos.

This means they’re making it possible to issue stablecoins that adhere to Japan’s strict level of regulatory compliance on public Layer 1 chains. It’s a game changer and marks a major step in bringing Japan’s real-world assets (RWA) into public blockchain ecosystems and blending traditional finance with Web3.

As mentioned above, Progmat and TOKI announced their partnership to bring Japanese stablecoins into public blockchains in May 2023.

TOKI and MUFG Unite to Bring Japanese Trust Bank-backed Stablecoins to Public Blockchains

Please visit the link below to learn more about Progmat:

What is TOKI?

TOKI was founded to provide top-notch cross-chain bridges with an emphasis on security and UX. TOKI boasts three key features that set it apart:

  • Secure and Extensible: By utilizing IBC and LCP as messaging protocols, TOKI enables exceptional inter-blockchain communication, focusing on both safety and extensibility.
  • Efficient Liquidity and Native Token Swap: We’ve introduced Unified Liquidity, which allows for highly efficient liquidity and native token swap.
  • High Composability: Dapps can easily integrate with TOKI through SDK, enabling cross-chain functionality

Fun fact: The name “TOKI” is derived from a traditional Japanese migratory bird, “Japanese Crested Ibis”. Just like these birds, we aim to seamlessly connect various blockchains, creating smooth transitions between them. Soar through the blockchain skies with us!

Together with Datachain, TOKI’s core development partner who boasts a proven track record of expertise in IBC, and having received grants from the Interchain Foundation twice, we are diligently working to advance the development of our cross-chain bridge. We anticipate launching it by the end of 2023.

https://www.datachain.jp/

TOKI is set to play a pivotal role in fostering stablecoin issuance across multiple blockchains, enabling cross-chain functionalities, and maintaining the high level of security inherent in IBC.

To learn more about TOKI, please visit the link below.

https://tokifinance.notion.site/

Twitter | notionTelegram


TOKI and Noble to Bring Japanese Stablecoins to the Cosmos Ecosystem, in Partnership with MUFG was originally published in Cosmos Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.