Photo By Pierre-Selim - Flickr: Pica pica, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=19400996

Despite the recent incidents on bridges, I still believe bridges or anything that allows users to transfer assets between chains will be huge. For a simple reason that it provides a lot more money flow. 

For many bridges, when you are trying to transfer tokens, your tokens will be locked first and then minted on the desired chain. Now what makes Magpie Protocol unique is that it does not lock and mint your tokens. Compare to bridges, it works a lot more like centralized exchanges but decentralized. 

Deducing from the Litepaper, I think what Magpie will do is to build decentralized exchanges located on different chains. When you initialized a transfer action, your tokens will be swapped into stablecoins, then the magpie dex on the target chain will swap the same amount of stablecoins into your tokens. This means you can do so much more than regular bridges. You get to sell your tokens and receive the stablecoin on another chain. This will bring serious benefits to people who concentrate their money on one particular chain. Is this not amazing?

It is really simple and secure, yes? 

For dexes, yes. I believe Magpie will have no problem making dexes and implementing them onto many chains. Though issues may lay somewhere else.  

When you request a transfer, the original dex must find a way to signal the dex from another chain. To accomplish that, Magpie uses Wormhole Guardian. 

Wormhole Guardians are 19 nodes in the Wormhole network that governs the consensus. A message must be verified for it to be successfully sent to the dex from another chain. 

Wormhole has been audited by Kudelski and Neodyme. There is something rather important from Kudelski’s report:

Wormhole smart contracts are built upon Proxy and Upgradable logic that was not used in a secure way, allowing multiple unrestricted initializations. Another problem is a lack of restriction on arbiter fees.

Here is a link to their report: 

https://storage.googleapis.com/wormhole-audits/2022-07-01_kudelski.pdf

I have raised this question to Wormhole, hopefully, we will get something in the next few days.

Other difficulties

While building a dex might not be that difficult, it will be hard to take portions of the market. Four chains that Magpie will be supporting from the start are ETH, BSC, POLYGON, and AVALANCHE. All have dexes who have already taken over a large chunk of the market. It requires a lot of capital and marketing to attract liquidity providers to Magpie. 

Of course, bandwagoning is always an option. Magpie did not specify if they are building dex on their own or if they are collaborating with native dexes. Depending on their decision, things might look different. 

Building their own dex, for users, especially the initial adopters, is a great thing. It means there will be some 0-liquidity pools from which first adopters can earn a good amount of transaction fee. So stay tuned for the mainnet launch. 

Obviously, we do not have the WhitePaper and the protocol has not been launched yet, and there is not much information from the LitePaper. But I think Magpie Protocol’s idea is brilliant and could be something huge in the future. 

WHY BRIDGE IF YOU CAN FLY?

Photo By Pierre-Selim - Flickr: Pica pica, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=19400996

Despite the recent incidents on bridges, I still believe bridges or anything that allows users to transfer assets between chains will be huge. For a simple reason that it provides a lot more money flow. 

For many bridges, when you are trying to transfer tokens, your tokens will be locked first and then minted on the desired chain. Now what makes Magpie Protocol unique is that it does not lock and mint your tokens. Compare to bridges, it works a lot more like centralized exchanges but decentralized. 

Deducing from the Litepaper, I think what Magpie will do is to build decentralized exchanges located on different chains. When you initialized a transfer action, your tokens will be swapped into stablecoins, then the magpie dex on the target chain will swap the same amount of stablecoins into your tokens. This means you can do so much more than regular bridges. You get to sell your tokens and receive the stablecoin on another chain. This will bring serious benefits to people who concentrate their money on one particular chain. Is this not amazing?

It is really simple and secure, yes? 

For dexes, yes. I believe Magpie will have no problem making dexes and implementing them onto many chains. Though issues may lay somewhere else.  

When you request a transfer, the original dex must find a way to signal the dex from another chain. To accomplish that, Magpie uses Wormhole Guardian. 

Wormhole Guardians are 19 nodes in the Wormhole network that governs the consensus. A message must be verified for it to be successfully sent to the dex from another chain. 

Wormhole has been audited by Kudelski and Neodyme. There is something rather important from Kudelski’s report:

Wormhole smart contracts are built upon Proxy and Upgradable logic that was not used in a secure way, allowing multiple unrestricted initializations. Another problem is a lack of restriction on arbiter fees.

Here is a link to their report: 

https://storage.googleapis.com/wormhole-audits/2022-07-01_kudelski.pdf

I have raised this question to Wormhole, hopefully, we will get something in the next few days.

Other difficulties

While building a dex might not be that difficult, it will be hard to take portions of the market. Four chains that Magpie will be supporting from the start are ETH, BSC, POLYGON, and AVALANCHE. All have dexes who have already taken over a large chunk of the market. It requires a lot of capital and marketing to attract liquidity providers to Magpie. 

Of course, bandwagoning is always an option. Magpie did not specify if they are building dex on their own or if they are collaborating with native dexes. Depending on their decision, things might look different. 

Building their own dex, for users, especially the initial adopters, is a great thing. It means there will be some 0-liquidity pools from which first adopters can earn a good amount of transaction fee. So stay tuned for the mainnet launch. 

Obviously, we do not have the WhitePaper and the protocol has not been launched yet, and there is not much information from the LitePaper. But I think Magpie Protocol’s idea is brilliant and could be something huge in the future. 

WHY BRIDGE IF YOU CAN FLY?