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            <title><![CDATA[All We Needed Was A Cross-Chain Credit Card]]></title>
            <link>https://paragraph.com/@sandman/all-we-needed-was-a-cross-chain-credit-card</link>
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            <pubDate>Tue, 03 Sep 2024 11:40:37 GMT</pubDate>
            <description><![CDATA[What if, all we needed to solve the cross-chain UX, was a system that lent you funds on whatever chain you are on without any delay and y...]]></description>
            <content:encoded><![CDATA[<p>What if, all we needed to solve the cross-chain UX, was a system that lent you funds on whatever chain you are on <strong>without any delay</strong> and you could pay back later. Like a simple credit-card. We are all used to this UX in Web2. What's stopping us from building this in Web3?</p><p>Despite calling ourselves the disruptors of legacy finance tech, we sure have created many hurdles for crypto users to simply <strong><em>spend</em></strong> their money. In web2, if you have a simple credit-card, you can spend from it anywhere in the world. In contrast to this, using web3 rails today feels like crossing 7 seas and 11 rivers to simply pay for Farcaster yearly storage on Optimism. To pay $5. That's why we're,</p><div class="relative header-and-anchor"><h1 id="h-introducing-smoke"><strong>Introducing Smoke</strong></h1></div><p>Smoke is a credit-based approach to solve the cross-chain UX problem. The idea is simple. You get your credit-card NFT, deposit some collateral on one chain, say Base, to <strong>instantly</strong> spend from it on any chain out there. It is a novel approach to the cross-chain problem. </p><figure float="none" data-type="figure" class="img-center" style="max-width: null;"><img src="https://img.paragraph.com/cdn-cgi/image/format=auto/https://storage.googleapis.com/papyrus_images/bf3dce4f9b2c84faeadec1325cdea9c5.png" blurdataurl="data:image/png;base64,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" nextheight="1475" nextwidth="2226" class="image-node embed"><figcaption htmlattributes="[object Object]" class="hide-figcaption"></figcaption></figure><p>And it makes total sense. Borrowing on DeFi is insanely cheap.</p><ol><li><p>Instead of paying the swap/bridge fee Metamask charges (0.85%) on their wallet, you can borrow ETH for <strong>2 months</strong> at 5% interest. AAVE's interest is just 2% btw.</p></li><li><p>For the fee Rabby charges (0.25%), you can borrow for <strong>3 weeks</strong>.</p></li><li><p>If you spend $50 of ETH, and you pay back after 2 days, you incur an interest of just $0.01.</p></li></ol><p>So, borrowing is really cheap on-chain. And we expect Smoke to be cheaper than 5%.</p><p>Before we look into the solution further, here's a brief on the status quo and the severity of the problem for comparison. You can also jump onto the next tweet or the website @SmokeOnChain to try it out on testnet.</p><div class="relative header-and-anchor"><h2 id="h-the-bridging-status-quo"><strong>The Bridging Status Quo</strong></h2></div><p>Stargate, Across, deBridge, Synapse, etc., all of them aggregated through <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://jumper.exchange/">Jumper</a> &amp; <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://www.bungee.exchange/">Bungee</a> is the best bridging experience the industry has ever seen. It is much much better than how it was 3 years ago, but it can &amp; should get better, because we have competition now, <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://pbs.twimg.com/profile_images/1730988898526855168/u0DQvZFl_400x400.jpg">the manlet chain</a>. Some of the above bridges are pool-based and some are intent-based, but the user experience is always this:</p><ol><li><p>Find which chain you have funds to spend on (biggest buzzkill, imo)</p></li><li><p>Deposit into a bridge on that chain, aka the source chain</p></li><li><p>Wait for bridging to happen (pretty fast these days tbh)</p></li><li><p>And then spend your funds on the destination chain</p></li></ol><p>This is the best case scenario. It can go wrong in several ways...</p><ol><li><p>What if there are no routes from your source chain to your destination chain?</p></li><li><p>Do you have enough gas on source and destination?</p></li><li><p>Bridge transaction is stuck or delayed, what do?</p></li><li><p>You have ETH on AAVE, you would have to go withdraw it to use it.</p></li></ol><p>It has been painful for all of us. Not anymore.</p><div class="relative header-and-anchor"><h2 id="h-the-smoke-experience"><strong>The Smoke Experience</strong></h2></div><p>Smoke offers an instant and affordable way to spend your assets on any chain, while offering the upmost security, without any worries. Just like pulling money out of the smoke, just like black magic.</p><figure float="none" data-type="figure" class="img-center" style="max-width: null;"><img src="https://img.paragraph.com/cdn-cgi/image/format=auto/https://storage.googleapis.com/papyrus_images/c44db408eebd36e48d6d761cb9d19b39.webp" blurdataurl="data:image/png;base64,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" nextheight="787" nextwidth="787" class="image-node embed"><figcaption htmlattributes="[object Object]" class="hide-figcaption"></figcaption></figure><p>This UX is unheard of. It addresses most of the problems mentioned above:</p><ol><li><p><strong>No need to search for funds when you want to spend</strong></p></li><li><p>No deposit transaction, and no waiting. It's as fast as the destination chain itself</p></li><li><p>No need to search for routes. Smoke either supports a chain or not. We aim to support all chains, even the manlet chain</p></li><li><p>Gas abstraction from day 1, no need to worry about gas, even on EOAs</p></li><li><p>It can be atomic as well, means, if you failed to mint an NFT, you never borrowed</p></li><li><p>You don't need to withdraw your ETH from AAVE to bridge. You can withdraw later to repay your CC bill</p></li></ol><p>The main feature is that, when you are on a dApp, trying to spend your funds, <em>you will have funds to spend</em>.</p><ul><li><p>No one will come between you and that Onchain Summer hoodie you're buying on @base.</p></li><li><p>Or that NFT you are minting on Solana.</p></li><li><p>Or that Fantasy Top card you're apeing on @blast.</p></li><li><p>Or depositing into @HyperliquidX through @arbitrum cuz you're down bad.</p></li></ul><p>Everything will be instantaneous.</p><p></p><figure float="none" data-type="figure" class="img-center" style="max-width: null;"><img src="https://img.paragraph.com/cdn-cgi/image/format=auto/https://storage.googleapis.com/papyrus_images/01066d270b9aa174851a8e4f51d3981c.png" blurdataurl="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABMAAAAgCAIAAAB/3NSYAAAACXBIWXMAAAsTAAALEwEAmpwYAAAHJ0lEQVR4nB3NW1BTdwKA8b+KWFEorK3cqq2oFNSKVVmEpVxFEiAXQnJOwsmNhACJCZCE5Jxg7iGJAQICIVwCBJLACSERStW1Kh3GgqVqQZ3xUt22u9Pudrsz6+6LDzvTGXZw5nv9zQeUtFKUTtTABBOn0sYldTVWd0toPVJ6r4zeJ4PcrbUeNXsc4/v1DX59Y9AsC1pkwQ7pnEEE5JQSdQ0BpRO1MMHMIzlEVEcDtUu8hftl8JCc7VFyxjGeXy+aMYlnTJIZkzTUIYtYxKCFVNRGK0drCFqo3MytsvIpDhG1V8bob4H6ZZBbjniUnAmN4O1QEjRJZ0ySoEUWsbUAWVWhglqiopdr6GUGJuGyiIbRy5qrCg0cwkAL5GpF3EqeR1U32d4QMIpxgwQ3SIKWi29l5Wet5OI2ailGKzOzK6ifZqbt3H0kJu6zgx8oaaU9EkaPhOGS1w6rOB6MN4kJAloRbmgKWqRAVpUvq/xTK6kIo5eRszISwPZ94J3U6L0nEt4tPnJQCxOc4hpXS61bjrhakSE5exzlTWkFM2YxEJefu1iR10IqlJOLDu+N3Qui48E72Skpl3k1hPQ0FaVEjxA1jAt2YbWrFemXMd0KxKPiTF4SAGHxH8Xlec1VherqEsqpjESw80xiIjcz7Ue35emQ1QSVs3JPVHyc1lxZ2NVYYxNSHY01rlamF+MD+pnjlcfSlaQCI3TBwqngFZwV553x04gv9IrNO7Pm6tKKjI+g7ONt1GKrgNLZQO9urBmQwR41B+SmJmcnJmpoxZ1sYhe3wllPpmQclmZl3peLfuw1zhubG0tz6wpzRlUNU1oJnPNJ5YmMPhlvsUsNsvbtzz1w0MQsd/KITg6hMT/rZHzCsbi4+pMfT1xEfn94Y93XdXfQsO7r+m1p1sCFAAA5H340Z1GCjLg/FB057ORXukUkV32lET5Pzco4GLXr3P5918wt6xOWW92KG13ygLZ+w9+z+fO6nEEpOnrIxiWDD7btOJ9+dFTKGBVTvHLGeAtDmH86JympoSR/1aW/06NcHdFd72z1qDiLXehT3P366/lHs0OLnQrw4Y5oyuljXiVrUk6fboMH6kl2hMA4lWGvh5ddhrsuzb0R3S2nsque7FHx5q3y1RHjm/vXv3Re2pL8omyvqtangP0KaMEsDGOIoaYE10uW+trXRk0r7vav+lAdrdglhe6PWb/z2h4FnP9dmQfJ26Kaqwr8bSyfAp5WMefNDWMtkINL/MIuv92LfeMxrbi1d12XvrDLV9zGdd/l++P21WHj/XEHOBC1S8u4gKsRfxs8g7JD2rpBMfWKkHKzF11xG+66tfdGDPeGDd95bd96bEv9uohNPaYUepQ8cDh6dyefPIOyp1VQSMMNtbMHhJUuMf1LJ/rAY1332p9M9zwJOFcHjXd6NZNYU6eIjuubXs51g8z4hGFxNa5m+tugkIYXxBA7q9TbjDz22l6GBp7PDqyNWm73amZNYpcU6uCRx5Tcvy9e+SniADmpKT4FE1dv1cMmOBglQ/yKKSH1r1POXxcnNiZsS92qWV1DQN/05sGfn4RcQzLop4jjL+FOcP7ooZCGjavgiJajLjsrzs4c51T5uZSrLbyv3cYxBYJr69dGO0IW1eb/fnm+4BkQ034I21+FHYCV9+mCnoer4AUd38ooEpxOl+QeN5TlthWcQilFSkoBRi+ZwoTuVuHmz49/uO7va6p+OWt9FbYDrKZs0cAPo8iiqW5ETGFlHiIlJ/JPHlUXnVUS8ky1RJeM9bldMYFKNv/57B9Lsz0i8vfT5pdzNuBuIi9oOWEMWTQK5vU8jHCuKilRcCajk105rRHdvqL99Rb+6uroYHP95t8ervm6HVzis8BbGVQzwxokjCGf6wU3LXVXeOW09DQdTLjWrXk41fk40PONxxaxqhUUwpsHN5c9FnPthfVx3TPcAkIoK4xtyQUd/5qJb6AVko+n6xCiTyu+3q1ZGba+CI+8Xr5qFbL+c+/G0/CwpqZguR/d8JlBEGUF1cygujbSzl7Q84z0YmbOJ0ryeYeIMSivm7ejX7ksL+c9E6j0t+XFX+7gWqjkVrfika8D4BgLV8G4ihnWsMPtbCePqKSU+PXyh/6BtcneFxHP74+WXt+9+mrBu/mv5/9ejZjZF647ZBt+K8BR5lsJh7DaIMrqFlTISKX2Rm6PrKGVViUoK1azILtYaORCYbPqRcRzWUie09VvSb8C2qoNxtHagBrubapOjYmPAjuiQdROsD0a7NgDopKj9h7dHSvcn9J07nQHjzSrEz4OWIFXAfkU8KQcxtXItBrua6o+EJOwB+xO2LZn3/bY/VGxybvjD72bmPFekijtCFqab2KXT2vqngSsYEIBe5XwuBzyqWCvAhqU0o7E748Bu+JBTByIiQd73o+KS459P/O9JG5KqqIw28g871UgGz7z/wHFUCaA62cmaAAAAABJRU5ErkJggg==" nextheight="498" nextwidth="289" class="image-node embed"><figcaption htmlattributes="[object Object]" class="hide-figcaption"></figcaption></figure><p>And we are not cutting corners either. It is a fully secure system.</p><div class="relative header-and-anchor"><h2 id="h-how-does-it-work"><strong>How Does it Work?</strong></h2></div><p>The main unlock is the cross-chain lending protocol underneath, like ember for smoke. The protocol accepts some collateral on some of the supported chains and lends you ETH on any of the supported chains at a <em>fixed interest rate</em>. When you request to spend on any chain, an issuer approves your loan and you can spend it instantly.</p><p>You can pay back your bill after you use the dApp you originally intended to use. Or you can pay back end of the day, week or month. But unlike a traditional web2 credit card where you will start accruing absurd amounts of interest as penalty if you don't pay back end of the month, in this initial version of the Smoke protocol, you will be accruing a fixed interest at slightly above the market rate (a cross-chain premium) from the moment you spend. Nothing absurd.</p><p>It will be comparable to the bridge costs you are paying today, if you pay back at the end of the day/week. Minus the UX cost.</p><p>That's it. It is pretty straightforward. Why has this never been done before? Because the cross-chain lending protocols have always needed cross-chain messaging and this model doesn't.</p><div class="relative header-and-anchor"><h2 id="h-try-it-out-on-testnets-today"><strong>Try It Out on Testnets Today!</strong></h2></div><p>It is not a protocol that's months away. This black magic is live for you to test out right now. Please join our Telegram/Discord or DM me to test it out. You don't need your own testnet ETH, you'll get it from us.</p><p>If you're someone who is excited about the cross-chain UX problem and want to work on this amazing protocol with me, please reach out. We will be tackling some of the most difficult problems together, learn and grow together. If you're such a person, read on below!</p><p>If you're an end user, there is nothing much apart from the nerdy stuff from here onward. Go get a testnet credit card right now! Here's a demo of what it feels like:</p><div data-type="embedly" src="https://vimeo.com/1005801279?share=copy" data="{&quot;provider_url&quot;:&quot;https://vimeo.com/&quot;,&quot;description&quot;:&quot;Smoke is an on-chain credit card protocol that lets you deposit funds on one chain and spend it on any chain out there, instantly.&quot;,&quot;title&quot;:&quot;Smoke Testnet Demo&quot;,&quot;author_name&quot;:&quot;Sand&quot;,&quot;height&quot;:1080,&quot;thumbnail_width&quot;:1280,&quot;width&quot;:1920,&quot;html&quot;:&quot;<iframe loading=\&quot;lazy\&quot; class=\&quot;embedly-embed\&quot; src=\&quot;//cdn.embedly.com/widgets/media.html?src=https%3A%2F%2Fplayer.vimeo.com%2Fvideo%2F1005801279%3Fapp_id%3D122963&amp;dntp=1&amp;display_name=Vimeo&amp;url=https%3A%2F%2Fvimeo.com%2F1005801279%3Fshare%3Dcopy&amp;image=https%3A%2F%2Fi.vimeocdn.com%2Fvideo%2F1922421833-24be11580778e8854e174b3d613868a134326123ca1c70fba16825ab1d072de0-d_1280&amp;key=71609d2d442448d7b33ccbb5e51a8341&amp;type=text%2Fhtml&amp;schema=vimeo\&quot; width=\&quot;1920\&quot; height=\&quot;1080\&quot; scrolling=\&quot;no\&quot; title=\&quot;Vimeo embed\&quot; frameborder=\&quot;0\&quot; allow=\&quot;autoplay; fullscreen; encrypted-media; picture-in-picture;\&quot; allowfullscreen=\&quot;true\&quot;></iframe>&quot;,&quot;author_url&quot;:&quot;https://vimeo.com/user225974630&quot;,&quot;version&quot;:&quot;1.0&quot;,&quot;provider_name&quot;:&quot;Vimeo&quot;,&quot;thumbnail_url&quot;:&quot;https://i.vimeocdn.com/video/1922421833-24be11580778e8854e174b3d613868a134326123ca1c70fba16825ab1d072de0-d_1280&quot;,&quot;type&quot;:&quot;video&quot;,&quot;thumbnail_height&quot;:720}" format="iframe"><div class="react-component embed my-5" data-drag-handle="true" data-node-view-wrapper="" style="white-space:normal"><a class="twitter-card-link" href="https://vimeo.com/1005801279?share=copy" target="_blank" rel="noreferrer"><div class="twitter-summary-large-image"><img src="https://i.vimeocdn.com/video/1922421833-24be11580778e8854e174b3d613868a134326123ca1c70fba16825ab1d072de0-d_1280" class="false"><div class="twitter-summary-card-text"><span>https://vimeo.com/</span><h2>Smoke Testnet Demo</h2><p>Smoke is an on-chain credit card protocol that lets you deposit funds on one chain and spend it on any chain out there, instantly.</p></div></div></a></div></div><div class="relative header-and-anchor"><h1 id="h-a-solver-less-approach-to-chain-abstraction">A Solver-less Approach to Chain Abstraction</h1></div><p>In the last few months there has been a lot of talk about intents, solvers and chain abstraction solving the ultimate cross-chain UX problem. We are all trying to bring the Solana experience, i.e., seamless UX when interacting with any application, to the entire ecosystem of Ethereum, L2s and alt L1s, including Solana. Chain Abstraction is basically abstracting the UX problems away. Solvers are entities that abstract these problems away for you. </p><p>Note: This article does not need you to know the definition of "intents". </p><p>The goal of this post was to find people to work with (join me in this mission), get feedback from the community and to get enthusiasts to test our testnet product out. The rest of this post will achieve this by, </p><ol><li><p>Diving into the existing solutions,</p></li><li><p>introducing our new approach,</p></li><li><p>and comparing the two head to head</p></li></ol><p>Let's dive right in. </p><div class="relative header-and-anchor"><h2 id="h-fighting-finality-or-the-lack-of-it">Fighting Finality (Or the Lack of It)</h2></div><p>One of emergent ideas around the block in the recent past has been a concept called Time Locks or Resource Locks for finality. The idea is to time-lock user funds in a <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://ethresear.ch/t/introducing-onebalance/19557#credible-commitment-machines-4)(CCM">credible commitment machine</a>, for example, a smart contract, an MPC solution or a TEE based solution, to be unlocked by the solvers under certain fill conditions when the user signs intents. A CCM is basically a credible escrow that follows certain unlock conditions. </p><p>For instance, if you want to pay for a Farcaster account on Base with your locked funds on Arbitrum, the solver fronts you the amount on Base instantly in exchange for your signature to unlock your funds on Arbitrum. <em>But why?</em> Because then, you wouldn't have to deposit your funds on-demand when you need funds on Base, like in the current versions of Across/deBridge. Because after depositing funds you wouldn't have to <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://ethresear.ch/t/introducing-onebalance/19557#resource-locks-10">wait for finality</a> on the source chain. Because it's annoying to find your funds on-demand! </p><p>So, instead of doing that, you would have deposited your funds into time-locks (why? We want to prevent you from withdrawing funds right away as some solvers might still have unclaimed funds) and access them instantly on the destination chains whenever you need them. There are two major solutions in this area, <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://ethresear.ch/t/magicspend-spend-now-debit-later/19678#fundamental-primitive-time-locked-vaults-3">MagicSpend++</a> by Socket and OneBalance by Frontier Tech. We would like to call these solutions <strong><em>Current Accounts with typical Debit Cards</em></strong>. </p><figure float="none" data-type="figure" class="img-center" style="max-width: null;"><img src="https://img.paragraph.com/cdn-cgi/image/format=auto/https://storage.googleapis.com/papyrus_images/fc6c3c5054bdaf868bc7d7a45451c3e2.png" blurdataurl="data:image/png;base64,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" nextheight="1387" nextwidth="2014" class="image-node embed"><figcaption htmlattributes="[object Object]" class="hide-figcaption"></figcaption></figure><p>From the solvers perspective, instead of waiting for a chain's finality to fill an order (like on Across/deBridge), they can instantly fill an order and then go back to claim funds. To find you the best solver, MagicSpend++ will be auctioning off your orders based on price and/or speed on Socket's MOFA system. Solvers are the middlemen between the abstraction protocol and the user who front you their capital with assurance that they'll get paid back. Solver tech is an up and coming sector in the industry. It is a validated concept (via Across/deBridge/CowSwap). But what if we didn't need them? </p><div class="relative header-and-anchor"><h2 id="h-a-credit-based-approach">A Credit Based Approach</h2></div><p>What if I told you, all we needed, to solve the cross-chain UX, was simple credit cards. Think about it. If we consider chains as countries, all you should need is a Mastercard/Visa credit card to spend on any chain out there. Whether you want to buy a hoodie on Base's onchain summer, or you want to mint a Retardio Cousin on Solana or you want to repay your friend on Arbitrum, all you need is someone to front you capital at an interest. And you can pay those funds back to the card issuer at the end of the day, week or month. </p><p>In the real world, you stake your social credit score as collateral in your home country and  spend from your credit card all over the world. But since we haven't solved the social credit problem yet, you should be able to just deposit some collateral (maybe, yield bearing assets like wstETH, rETH or sDAI) on one chain and should be able to spend on other chains. This solution resembles traditional <strong><em>Credit Cards</em></strong>. </p><figure float="none" data-type="figure" class="img-center" style="max-width: null;"><img src="https://img.paragraph.com/cdn-cgi/image/format=auto/https://storage.googleapis.com/papyrus_images/45b56c5b79b8c208c5bcfb44b4277f6d.png" blurdataurl="data:image/png;base64,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" nextheight="1387" nextwidth="2742" class="image-node embed"><figcaption htmlattributes="[object Object]" class="hide-figcaption"></figcaption></figure><p>This new approach is very similar to MagicSpend++ or OneBalance that are being worked on by several teams right now. But instead of solvers racing to fill your orders via an auction, you would have selected a credit card issuer beforehand to borrow at a fixed interest rate. And you can pay back anytime. Since borrowing short term loans in DeFi is pretty cheap, you are essentially paying rates similar to the system with solvers and auctions. </p><div class="relative header-and-anchor"><h2 id="h-debit-cards-vs-credit-cards">Debit Cards vs Credit Cards</h2></div><p>Although there are quite a lot of similarities, there are several differences as well. These differences do impact UX and costs to some extent, better or worse. Let's look into these two main factors to differentiate between these solutions, </p><ol><li><p>User Experience</p></li><li><p>Cost Efficiency</p></li></ol><div class="relative header-and-anchor"><h3 id="h-user-experience">User Experience</h3></div><div class="relative header-and-anchor"><h4 id="h-1-setup"><strong>1. Setup</strong></h4></div><p>In both these systems, a user would have to deposit some funds before they can start using the system. Deposit funds to be debited (Debit Cards), deposit collateral to be able to spend (Credit Cards). </p><div class="relative header-and-anchor"><h4 id="h-2-refill-vs-repay"><strong>2. Refill vs Repay</strong></h4></div><p>As the user spends their funds, in case of Debit Cards, they'd have to refill their chain abstracted balance periodically. But in the case of Credit Cards, they'd be aware of the accruing interest to always repay periodically. </p><div class="relative header-and-anchor"><h4 id="h-3-spending-experience"><strong>3. Spending Experience</strong></h4></div><p>I do not know how the Debit Cards will be structured, but I expect there to be an option to choose which funds to spend at checkout. But in case of Credit Cards, the user would simply be borrowing USDC or ETH without having to choose at all. Isn't this the reason why we all love credit cards? To spend our money without worrying whether we have funds in our bank accounts to spend? </p><div class="relative header-and-anchor"><h3 id="h-the-cost-efficiency">The Cost Efficiency</h3></div><div class="relative header-and-anchor"><h4 id="h-1-the-debit-card-system"><strong>1. The Debit Card System</strong></h4></div><p>When the users spend money from their [Chain Abstracted Balance](<a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://ethresear.ch/t/magicspend-spend-now-debit-later/19678#magicspend-2">https://ethresear.ch/t/magicspend-spend-now-debit-later/19678#magicspend-2</a>), their order will be auctioned off via solutions like Socket's MOFA. So there is some <strong>auctioneer's cost</strong> involved here. The winning solvers receive approvals from the users to claim funds from the CAB on other chains. </p><p><strong>Borrow costs before claim:</strong> Now, it depends how long the user funds are locked for, if it is something like 20 mins, then the protocol can batch claims to reduce cross-chain messaging costs for that time. If it is an optimistic system like on Across, the solvers can claim after 2-4 hours. So the funds would be locked for that period of time. Remember, solvers are essentially calculating these opportunity costs. So I estimate this waiting period costs to be equivalent to the typical lending market costs. </p><p><strong>Cross-chain proof costs:</strong> To reclaim user funds, the solvers have to submit a cross-chain proof on the source chain proving that they filled an order. I expect this cost to be minimal as it could be either optimistic or batched messaging. But it is still a cost to consider. </p><p><strong>Rebalacing costs:</strong> Finally, the solver will have to rebalance their funds back to the origin chain. They can use Socket's MOFA in Slow Mode again, or use EverClear to rebalance. There is costs involved here as well, especially if they are bearing opportunity costs during the period of batched settlement on Socket's MOFA or EverClear. This cost includes another auction's costs. </p><p>Finally, for doing all of this, solvers will be taking a cut for sure. </p><p>Sum of all costs = Borrow costs before claim + cross-chain proof costs + rebalacing costs + auctioneer's cut x 2 + solver's cut</p><div class="relative header-and-anchor"><h4 id="h-2-the-credit-card-system"><strong>2. The Credit Card System</strong></h4></div><p>When users spend using their credit cards, they start accruing interest on their loans. They can then repay anytime but their leisure to repay anytime cannot be considered into this cost comparison. Let's say they are a frugal L2 user, so they repay after 10 mins. </p><p><strong>Borrow costs until repayment:</strong> This cost is the interest the users pay from the moment they spent their credit till they pay back, which can vary widely as they can pay back anytime. </p><p><strong>Rebalancing costs:</strong> If the user has to bridge to a different chain to pay back, there will be some rebalancing costs borne by the user. Rebalancing can happen via Socket's MOFA Slow Mode, Stargate Train or EverClear. This rebalancing cost includes the interest accrued during the wait to maximally batch orders. Then again, this will be double the interest as they would be losing the opportunity of earning yield on this asset plus the negative interest on the credit card protocol. </p><p>Sum of all costs = Borrow costs until repayment + rebalancing costs + auctioneer's cut (MOFA)</p><p>We believe that we are saving some costs by not having on-demand auctions or solvers in the system. But maybe we are paying the costs in the form of UX since this requires having to repay end of the day/week/month. Well, you're refilling on the other system. We also believe that repayments can be automated as they are all a specific on-chain action. </p><div class="relative header-and-anchor"><h2 id="h-challenges-with-the-credit-card-approach">Challenges with the Credit Card approach</h2></div><p>One of the major challenges in this approach is that it requires individual lenders. The way we have set it up requires lenders to be the sole approvers for a particular user and their collateral. For instance, if you choose the credit card issuer "Towlie", only Towlie is allowed to approve your spend requests. You are stuck with Towlie until you repay all your loans and withdraw your collateral. So it is a centralization factor and you, as a user, could be grieved by the issuer refusing to lend you money at a particular moment. Good thing is, you can rage quit the system anytime. Plus, we will make switching credit cards super easy, unlike the traditional web2 cards. </p><p>Another challenge is finding sophisticated lenders as they would also have to run off-chain nodes to receive and approve requests on demand. Plus, lending will be long term here and the lender will get a bad rep for forcing repayments if they wish to exit the system. </p><div class="relative header-and-anchor"><h1 id="h-conclusion">Conclusion</h1></div><p>Despite a few challenges, we feel more confident than ever before that this is a commendable approach to solving the cross-chain UX problem. With this solution, any dApp can easily pull balances from user's credit card with a simple approval from the user instead of having to lose a potential customer to the annoyance of bridging we have today.</p><p>If you are working on a similar product, we welcome you to collaborate with us. One of the main goals of this post is to find co-workers and collaborators. Please reach out. </p><p>The on-chain credit cards will surpass the convenience provided by the web2 credit cards. Don't take my word for it. Here's a video that displays the ease of spending money on-chain. </p><p>Join our <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://discord.gg/NwwV9qu5cQ">Discord</a> or <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://t.me/+ND3KA-EKHH82NGQ1">Telegram</a> to be the first ever testnet credit card holders. (PS: They're NFTs)</p><p>PS: Here is how these solutions compare to normal bridging. Kudos to <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://x.com/vaibhavchellani">Vaibhav</a> for the original comparison. </p><table style="minWidth: 75px"><colgroup><col><col><col></colgroup><tbody><tr><td colspan="1" rowspan="1"><p>Normal Bridging (Push based)</p></td><td colspan="1" rowspan="1"><p>The Debit Card System (pull)</p></td><td colspan="1" rowspan="1"><p>The Credit Card System (pull)</p></td></tr><tr><td colspan="1" rowspan="1"><p>Asset fragmentation still persists across chains. Users still have to think about fragmented assets on different chains</p></td><td colspan="1" rowspan="1"><p>Single Chain Abstracted Balance</p></td><td colspan="1" rowspan="1"><p>No balance, an unified credit</p></td></tr><tr><td colspan="1" rowspan="1"><p>Bridging latency- Users sign a UserOp on the source chain, wait for source chain finality before tx is processed on target chain</p></td><td colspan="1" rowspan="1"><p>Instant finality- User sign a UserOp on the target chain which is fulfilled immediately. No need to wait for finality on source chain.</p></td><td colspan="1" rowspan="1"><p>Instant finality. Since the user isn't bridging at all, no need to wait for finality either.</p></td></tr><tr><td colspan="1" rowspan="1"><p>Failure on dest chains - UserOp can fail mid-bridging. Users get stuck with arbitrary funds on target chain in this case</p></td><td colspan="1" rowspan="1"><p>Guaranteed execution - user funds are deducted from the balance only if their transaction is successful</p></td><td colspan="1" rowspan="1"><p>Guaranteed execution - if the spend txn fails, the user never spent from the card.</p></td></tr><tr><td colspan="1" rowspan="1"><p>Users get tied into trust properties of the bridge for settlement</p></td><td colspan="1" rowspan="1"><p>Users have tighter control over security where they can configure how paymasters can settle</p></td><td colspan="1" rowspan="1"><p>There is no bridging. Bridging is only required when the user is exiting the system.</p></td></tr></tbody></table><p><a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://frontier.tech/the-cake-framework">CAKE</a> (Chain Abstraction Key Elements) is an open framework where each CAF (Chain Abstraction Framework) team is free to choose their own model to solve the same problem. It essentially means choosing a different set of Key Elements. We chose to go with the credit based system with lenders as opposed to the solver based system. We just replaced solvers with lenders here with some trade-offs. </p><p>We will make spending great again. Imagine the cross-chain UX in your wildest dreams. We will surpass that. </p>]]></content:encoded>
            <author>sandman@newsletter.paragraph.com (Sandman)</author>
            <category>defi</category>
            <category>crosschain</category>
        </item>
        <item>
            <title><![CDATA[Why is Everyone Quiet about the Cross-Chain Honey Pots? ]]></title>
            <link>https://paragraph.com/@sandman/why-is-everyone-quiet-about-the-cross-chain-honey-pots</link>
            <guid>Qdq6NwYPvOQgLPnl1w8e</guid>
            <pubDate>Fri, 16 Aug 2024 08:15:12 GMT</pubDate>
            <description><![CDATA["Decentralised Verifier Network" aka DVNs by LayerZeroLayerZero Labs DVN: 2/3 multisig Nethermind DVN: 1/1 multisig Stargate DVN: 1/1 Google...]]></description>
            <content:encoded><![CDATA[<div class="relative header-and-anchor"><h3 id="h-decentralised-verifier-network-aka-dvns-by-layerzero">"Decentralised Verifier Network" aka DVNs by LayerZero</h3></div><p>LayerZero Labs DVN: 2/3 multisig<br>Nethermind DVN: 1/1 multisig<br>Stargate DVN: 1/1<br>Google Cloud DVN: 2/3<br>Horizen DVN: 2/2</p><p>Source: You gotta go to Etherscan and call the signerSize and Quorum functions. Here are the contracts: <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://docs.layerzero.network/v2/developers/evm/technical-reference/dvn-addresses">link</a></p><p>Note: There is not guarantee that these multisigs are actually distributed and not maintained by a single person like in the case of Multichain. Later in the post, I will also discuss how much value is potentially at risk here. </p><p>The name "DVN" itself is misleading. It certainly mislead me into trusting them more. A DVN is a modular validator entity inside LayerZero. That means, if you choose a single DVN set-up, your cross chain messages will be solely validated by this DVN. You can choose multiple DVNs or M out N DVNs to secure your setup. </p><p>Most protocols (clients using LZ) using LayerZero have 2 DVN setups at max. I had to create this Dune dashboard myself to look into what's happening on-chain. </p><figure float="none" data-type="figure" class="img-center" style="max-width: null;"><img src="https://img.paragraph.com/cdn-cgi/image/format=auto/https://storage.googleapis.com/papyrus_images/9dd78caa5a7c40cfc61315baef7d166d.png" blurdataurl="data:image/png;base64,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" nextheight="900" nextwidth="1751" class="image-node embed"><figcaption htmlattributes="[object Object]" class="hide-figcaption"></figcaption></figure><p>For instance, Stargate has 2 DVNs. Stargate DVN + Nethermind DVN. Both are 1/1 multisigs. Securing, checks notes, $442.84m. </p><p>Dune is doing a terrible job here, here's how the distribution looks like. Look at the numbers that start tapering off as we go down the list. <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://dune.com/sandman2797/layerzero-dvn-distribution">Link</a> to the dashboard. </p><figure float="none" data-type="figure" class="img-center" style="max-width: null;"><img src="https://img.paragraph.com/cdn-cgi/image/format=auto/https://storage.googleapis.com/papyrus_images/28485f55a3767eea5ea699be51df4b83.png" blurdataurl="data:image/png;base64,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" nextheight="1426" nextwidth="2473" class="image-node embed"><figcaption htmlattributes="[object Object]" class="hide-figcaption"></figcaption></figure><p>So, most protocols (clients using LZ) simply trust this one entity, LayerZero Labs, a 2/3 multisig. It's baffling to me that we're all fine with this and nobody is talking about it. We gotta push these teams towards more secure systems, rather push protocols that are using LayerZero to demand for more security. </p><div class="relative header-and-anchor"><h3 id="h-lets-look-at-hyperlane-layerzeros-biggest-competitor-atm">Let's look at Hyperlane, LayerZero's biggest competitor atm</h3></div><p>First of all, thank God they call their default setup "Multisig ISM", ISM = "Interchain Security Module". They are at least honest about it. It is a multisig. Period. </p><p>Hyperlane has setup their default ISM to be a distributed set of validators with different quorums for different chains. Each of these validators in this multisig setups are different entities, like various DVNs on LayerZero. </p><p>Here's how their default setup looks like, (source <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://github.com/hyperlane-xyz/hyperlane-monorepo/blob/main/typescript/sdk/src/consts/multisigIsm.ts">link</a>):</p><p>Arbitrum: 3/5 multisig<br>Base: 2/5<br>Blast: 2/3<br>BNB: 2/4<br>Ethereum: 3/7<br>Optimism: 2/5</p><p>It is not very far off from the LayerZero setups their clients are using. But atleast you can eb sure that 3-7 of these entites are actively validating in the system. It also seems better than using a single LayerZero Labs DVN setup. By the way, in a m/n multisig setup, if n is &gt;&gt; m, you are compromised if ANY of m keys are compromised. In their Base setup, 2/5, if any of the 2 validators out of 5 are compromised, you are compromised. </p><p>If you compare these with Wormhole's default 13/19 setup, Wormhole looks a lot better. But I've heard it is upgradable. Do they need 13/19 signers to upgrade? I don't know. </p><p>There are two main arguments by the GMPs (General Messaging Protocols, LZ &amp; HL in this case) defending the lack of security of individual setups at the moment. </p><ol><li><p>You can make it as secure as you want by adding as many DVNs/ISMs as possible. This is a marketplace and the market isn't choosing their security right. </p></li><li><p>You can upgrade to a secure setup when they are available. </p></li></ol><div class="relative header-and-anchor"><h3 id="h-choosing-your-own-security">Choosing your own security</h3></div><p>In fact, I'm writing about this after I had to choose my own setup for my protocol built on LayerZero. I had no idea what to choose. LayerZero does not provide any information on the current usage distribution of DVNs, nor do they advice you on a secure setup as they want to be agnostic. Layerzeroscan only provides data on the distribution of messages by different protocols using LZ. But that is not useful to me at all. They don't even tell us what DVNs these protocols are using. So I had to build my own Dune dashboard. </p><p>Here are the most used DVNs across major EVM chains: </p><figure float="none" data-type="figure" class="img-center" style="max-width: null;"><img src="https://img.paragraph.com/cdn-cgi/image/format=auto/https://storage.googleapis.com/papyrus_images/35399eb72316fe82dfdaa2afb70acea1.png" blurdataurl="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAACAAAAARCAIAAAAzPjmrAAAACXBIWXMAAA7EAAAOxAGVKw4bAAADmUlEQVR4nH2UfWgbdRjHv6ggq+yPOsaUStFtOnVSmTiYjYXiQNA/fGGsds2qe2n7hyJYmFARnAqrMHVuiwGhm1PxhVq1IGU4R7ItaZZ5adLL5S7tlt4207wuzWWXJtekd7/8JHdWSnLx4f46nvt+nu/zcpgVhAtO5xWv133J5XA4Jt3ui05nkGUppZqqqWq5QjRKaYUQuhJEXSbqcoWQxo9m5GvlMhSlKMv5gh6yLOcXF2U5ryiKAaCUVjTlRmg8mU2GRs9cHB5K81W2oUIbR6lU4jguFY+jUV6FaIRUIpPfTBzFiV78/udp+zNtXcAB4NjWlrjPo1tRTaV5nr8WmeO8HpZhzAFEN3j6gP15PHCyF59145cf3xrpbO8B9gHdQB/Aj31ryiCERCJzfr/f52Y4f8AEYHRmYni0HZst2NHffO9X+zBqf/TMC891AXt1E1agH0gEmJrxGABRFBkfyzFOLlDnwMjOpaVX0Pk0Nu7AFgueGP/QIiXPSeL1qVPH3wN6gP26jxPbHjSaWVNiLBYPC4Jnig0E6hwY5f8xPGbBlp14qh2PnHz145WpVtlKdmFI9/G6buWWEKw3oShKkOVdQVeA9dcCVL2n7/a9sxkt2/H4i3g2HYlTWlnMJJeLBa1cppR6bUeMYViBqVPHayZBCMlmszMzs57LzumpuhapWjW1e2/P3c1NzRvWdXR2UErl+b+vnR2L/jW5kMnMp2/5f/1ht27CCjgODxqXsRoQjUY5LuRwTfp9PnMHA/0Dd+KOtU1NT7a1SbdvFzPpiZ9+87iYvJTNFIoXvjy6S2+RFfDajtTvkqIofFi47PDy06w5wGaz3bNmzf2trevWr//580+qY18slpf/Vfn04Q17gF7gDSDGuE3nHI3FuPOXcqlULcC4gOui2PrQxk0t972kq5w91F/MpLTyUppn7ZbHjAF0AR+tvWtlwpXVCkJ4hmVZhuWkbNb0DqqV2j8Y2qWX2avv5ZvAIeAgsEdXN96Hx783vbVSaYnjQsJVLi9LJoDqRlKqLinHtra8pgsZisZq7tdbbwXOv/92o79FLpfj+PDN0HRRMgMYlCqjXBof2N2nV/3f0wMMAv6vbY3UKaWFQoHjQuHZ2XxOgqaqZCVqfBjfL1wNOw4PjuzcZtu+6buXO3wjXyzlpP9Rr661LAfZYEAQFjIZpOJRURTnY7FEIlnfq9ULXs82DUJIIpFMJ1M3cum55M1/ANtp98mgTjXwAAAAAElFTkSuQmCC" nextheight="1323" nextwidth="2475" class="image-node embed"><figcaption htmlattributes="[object Object]" class="hide-figcaption"></figcaption></figure><p>Again, Dune doesn't do any justice here: </p><figure float="none" data-type="figure" class="img-center" style="max-width: null;"><img src="https://img.paragraph.com/cdn-cgi/image/format=auto/https://storage.googleapis.com/papyrus_images/31cd0bec0df13754e272b768f17739c9.png" blurdataurl="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAACAAAAAcCAIAAACPoCp1AAAACXBIWXMAAA7EAAAOxAGVKw4bAAACSklEQVR4nLWWQWjTUBjHA9HtJM5tNxcpeKgNCFuaHWsqoq+mB7v1UZGV9TFFN+iyi4dot5Mr3XHtOtmwroPeRmluhUB3LsxzSa+u0E4vLtrstj5JM/Qga17UfHzHP++X//993yMUTdPUH8X6WIyxruv436r747t53GMhsBife/EsFnn4wOp45MnrpVcDenz492ctxucGKKlJlr19i5kJi4/uBw9KpapSqSqVg1Lpsi68364qlWtXr1AUdfeO9yVK7O/uXCbe392hAoHA9ZERv5//UCiQuNb7uUEIx8bGW62WfURhURwdvbGaSmGMjW7XtvU+ICyKDMN02u3B4i+djgkYHhpCCB3WaiQOer1zywHDMLZT8PXkxIxoamoyl8upqkrioNNuY4wBAKyPPTPOiBxMTNzc2spjJ5VIzFup2jsIi2JQEMrlcq93TtKnp98swN7eRyuxAW06YH2+ZDL5i0mSktHtSsvLn46ObPUmgPf7AQDZ7Kbcr+PjzyQ+0uk0idIEAAA4jluRJIQQhLCpaSSA9fV3pAAIIULIaUTb+bztElxEFBQEjuN0XbeWiBBwWKuRyC4A1iUTHm04BUSjs9nsZlPTHDEURXHggKIoWZaLxSJJrIZTwNNYzOPxIITWVtdcAUzzfCgUItka4+8Awr3ARibT1DRHl6yQA6LRWZqmNzIZtwBhUYzMRMg3wHAKAAAwDNNoNFwcU6/Xq6pqvV53ywHHcYnEPITQlTF9vrAwzfMujmmwv8krkmT9kvx/QOrtG1mW3XvsfgKyUuQYOkC3+QAAAABJRU5ErkJggg==" nextheight="2184" nextwidth="2469" class="image-node embed"><figcaption htmlattributes="[object Object]" class="hide-figcaption"></figcaption></figure><p>Outside of the top 6 DVNs I mentioned at the top of this post, none of the DVNs are getting any volume. Why would a protocol choose to even trust DVNs other than the active ones? What guarantee is there that they are active and will be active in the future? What if you brick your system by choosing a dying DVN? If a DVN is not getting any volume, they would rather turn off their setups as it costs to run a DVN. </p><p>It's the same with complex DVNs or ISMs. If there is an ISM that is not being used, that means, it is not battle tested. If it is not securing any value, why would you trust it to secure your protocol? So the argument that these GMPs are agnostic marketplaces does not hold true at all. Someone has to help the crypto protocols choose the right setups. It is as if Amazon offered a default product for all of your searches and gave you a list of other options without product availability, reviews or even a description. </p><p>In my experience, Hyperlane is more eager to engage protocols with education than LayerZero. </p><p>It should be easier for more DVNs to start competing in the GMP marketplaces. In reality, there is no way for them to market themselves to the protocols using Hyperlane/LayerZero outside of shouting into the void on Twitter. Apparently the teams(LZ/HL) are currently working on dashboards to showcase more data about individual DVNs/ISMs. Maybe this post pushed them to do so. </p><p>The second main argument is that, protocols should use this trusted setup now, you can upgrade to a ZK bridge or a restaked security setup later down the line. </p><div class="relative header-and-anchor"><h3 id="h-the-upgradability-of-interoperability">The Upgradability of Interoperability</h3></div><p>First of all, I want to highlight that this is so far from the crypto ethos that got me into this space. Let's compare an ERC20 with an omnichain token. </p><p>An ERC20</p><ol><li><p>Has a fixed supply that nobody can change (most of em)</p></li><li><p>Exists on a blockchain where nobody, including the team itself, can mint extra ERC20s</p></li></ol><p>An OFT or Warp Token</p><ol><li><p>Has a fixed supply in theory, but an unlimited number of tokens can be minted if the interop setup is compromised, unless there is a rate limit.</p></li><li><p>Has its interop setup managed by a multisig controlled by the token issuer (protocol). This multisig can change the rate limit as well (lol?). </p></li><li><p>Exists on multiple blockchains where if one of the chains is malicious, they might be able to mint as many tokens as possible, unless there is a rate limit, which can be changed. </p></li></ol><p>Let's look at team multisigs for a second. At least they are dormant addresses locked up in a basement, right? Right? </p><figure float="none" data-type="figure" class="img-center" style="max-width: null;"><img src="https://img.paragraph.com/cdn-cgi/image/format=auto/https://storage.googleapis.com/papyrus_images/84cb3583b89cfa8fc285a6ac5ffcc8f5.png" blurdataurl="data:image/png;base64,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" nextheight="1536" nextwidth="1536" class="image-node embed"><figcaption htmlattributes="[object Object]" class="hide-figcaption"></figcaption></figure><p><a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="http://Ether.Fi">Ether.Fi</a> is a protocol with $5B+ in TVL. </p><p>Here is the <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://basescan.org/address/0x7a00657a45420044bc526B90Ad667aFfaee0A868#code">multisig</a> securing their weETH OFT. 5 out of these 6 wallets have been active in the 2 months. That means a higher likelihood of getting their private keys stolen.. For context, Ronin ($600m) and Harmony Bridge ($100m) hacks were due to comprises of multisigs. </p><p>Renzo is a protocol with $1.5B in TVL. And their ezETH is an xERC20. It also secured by a 3/5 <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://basescan.org/address/0x8410927C286A38883BC23721e640F31D3E3E79F8#code">multisig</a>. All 5 of these addresses have been active recently. And they all seem to be kinda interlinked. But I am not an expert on-chain sleuth to comment on that though. </p><p>Will Ethena's USDe ever depeg? Perhaps not due to their stablecoin design, but rather because of their interop setup (LayerZero Labs DVN + Horizen DVN, basically a 4/5). </p><p>So, can we say a total of around $10B+ is at risk here? </p><p>I am not blaming these GMPs. They are simply selling a setup. I am blaming the community for not demanding enough of the protocols that are using these setups. Did we all forget that the bridge hacks have accounted for &gt;50% of all funds we have lost? Now we are offering billions more on a platter to the hackers around the world. Kim Jong-Un is rubbing his hands right now. </p><div class="relative header-and-anchor"><h3 id="h-native-bridges-ignored-and-left-for-dead">Native Bridges, Ignored, And Left for Dead</h3></div><p>It is easy to point out problems than to offer solutions. What is the best security for cross-chain messaging/tokens right now then? I would suggest studying wstETH by Lido. It uses native bridges to bridge and also to control the upgradable token setups on L2s. The upgradability is controlled by the Lido DAO on L1. Except the upgradability aspect of this, I have no issues with this setup. There is no way an unlimited amount of wstETH can be minted in this case. </p><p>There will be solutions based on restaking in the future, hopefully they will offer a much better security than what we have today. </p><div class="relative header-and-anchor"><h3 id="h-closing-thoughts">Closing Thoughts</h3></div><p>I used to think very highly of LayerZero as a protocol. A protocol that is <a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://x.com/mark_murdock3/status/1766536624123654154">marketed</a> as a peer next to Bitcoin and Ethereum. Bitcoin, Ethereum, LayerZero. But I do not feel strongly about it anymore. I don't think it's even close. Bitcoiners chose the smaller blocks chain, Ethereans still care about the solo stakers, but the protocols using LayerZero are fine with one or two DVN setups. </p><p>This is not a post targeted towards any of the GMPs/protocols mentioned here. I wanted to voice out my concern because I hold a lot more ETH than I hold ZRO (I do hold some ZRO, sandmanarc.eth). I have also integrated LayerZero into the protocol I am currently building. Although I am having second thoughts about it now. </p><p>Let's demand better standards from our industry. - A humble community member, Sand</p>]]></content:encoded>
            <author>sandman@newsletter.paragraph.com (Sandman)</author>
            <category>defi</category>
            <category>crosschain</category>
        </item>
        <item>
            <title><![CDATA[Ethereum and The Monolithic Experience]]></title>
            <link>https://paragraph.com/@sandman/ethereum-and-the-monolithic-experience</link>
            <guid>NI8nbuuGNwAGVUlOOyLm</guid>
            <pubDate>Sat, 13 Apr 2024 08:23:14 GMT</pubDate>
            <description><![CDATA[This simple article is about a new kid in the block that is forcing us to up our game, the options we have left and why we should keep playing the ga...]]></description>
            <content:encoded><![CDATA[<img src="https://img.paragraph.com/cdn-cgi/image/format=auto/https://storage.googleapis.com/papyrus_images/7903ba75a7dd0eedbbfb447996e50add.png" blurdataurl="data:image/png;base64,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" nextheight="480" nextwidth="1200" class="image-node embed"><p>This simple article is about a new kid in the block that is forcing us to up our game, the options we have left and why we should keep playing the game. This piece is divided into 3 sections.</p><ol><li><p>A Worthy Competitor with a Monolithic Experience</p></li><li><p>Ethereum's Hope for Survival</p></li><li><p>Why Ethereum is Worth Fighting For</p></li></ol><div class="relative header-and-anchor"><h2 id="h-a-worthy-competitor-with-a-monolithic-experience"><strong>A Worthy Competitor with a Monolithic Experience</strong></h2></div><p>Everyone normal I’ve spoken to loves using Solana. It just works they say. Yes, the transactions may fail now and then, but usually, it is fine, and it will be fine. Forget gas abstraction, forget wallet recovery (for now), forget bridging. It just works. All your assets are on a single chain and it has enough block space to accommodate all kinds of dApps in the ecosystem. It scales.</p><p>If you want to batch swap, deposit, borrow, and swap, it’s possible. If you find a yield opportunity, you can deposit into it in a single transaction. You can buy an NFT, ape into a meme coin, and stake a governance token—all with a single wallet and with simple transactions.</p><p>This is <strong>the monolithic experience</strong>, it's the Solana experience. Ethereum finally has a true competitor it has to compete with. It should either match the Solana experience or slowly become increasingly irrelevant as more and more retail users end up on Solana rather than on L2s.</p><div class="relative header-and-anchor"><h2 id="h-ethereums-hope-for-survival"><strong>Ethereum's Hope for Survival</strong></h2></div><p>In short, we need to build this experience for the Ethereum ecosystem. But it is hard, it requires all the following players to come together.</p><ul><li><p>Token standards like OFTs by <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@LayerZero_Labs"><u>@LayerZero_Labs</u></a>, xERC20 by <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@Connext"><u>@Connext</u></a>, NTTs by <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@wormhole"><u>@wormhole</u></a>, ITS by <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@axelarnetwork"><u>@axelarnetwork</u></a>, Warp Routes by <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@Hyperlane_xyz"><u>@Hyperlane_xyz</u></a>, etc., need to abstract token ownership across chains</p></li><li><p>Intent protocols like <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@AcrossProtocol"><u>@AcrossProtocol</u></a>, <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@deBridgeFinance"><u>@deBridgeFinance</u></a>, <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@Uniswap"><u>@Uniswap</u></a> X, etc. need to enable any-to-any swaps, deposits and general actions</p></li><li><p>Smart accounts and 3074 enabled accounts by <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@4337Mafia"><u>@4337Mafia</u></a> and <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@lightclients"><u>@lightclients</u></a> respectively should abstract away all the chains and token balances</p></li></ul><p>I am not going into each of these solutions right now because that's not the point of this post.</p><div class="relative header-and-anchor"><h2 id="h-why-ethereum-is-worth-fighting-for"><strong>Why Ethereum is Worth Fighting For</strong></h2></div><p>We are all fighting for Ethereum's survival. We have not won yet. It is a hard battle. But it will be worth it. But why? Why bother? Why not just move over to Solana?</p><p>Because we are incentivized to. Ethereum enables so many things. It will help so many founders to emerge in their own niche fields. Here are the reasons why Ethereum will survive.</p><ol><li><p><strong>Freedom to innovate. </strong>This is the main reason why I am excited about the "modular future". We should be able to innovate around execution environments, fee markets, MEV mitigation, etc., these problems are yet to be solved. To expand on this.</p><ol><li><p><strong><em>Execution Environment:</em> </strong>We can all agree that SVM is good but we can always learn from its issues and build a better one. Why not improve Solana you ask? Because you don't OWN AS MUCH SOLANA. As simple as that. Build your own L2 with your own token.</p></li><li><p><strong><em>Fee markets:</em></strong> Recently <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@notnotstorm"><u>@notnotstorm</u></a> <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://x.com/notnotstorm/status/1778803270750023813"><u>posted</u></a> about how Base's long term storage is not priced in. Fees still spike on many L2s. No one has solved all the problems yet. Solana does not seem to have either, transaction failures. We need to innovate around fee markets a well. Again, become a founder and innovate around fee markets.</p></li><li><p><strong><em>MEV Mitigation:</em></strong> MEV is a bigger problem on Solana as it is possible to sandwich each and every swap out there. Ethereum's focus has been on MEV for a few years now. L2s simply don't have MEV because they are centralized, for now. Innovate around MEV on the chain level.</p></li></ol></li><li><p><strong>Network Effects of Ethereum.</strong> The chad-VC <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@KyleSamani"><u>@KyleSamani</u></a> spoke about this in the <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@thebellcurvepod"><u>@thebellcurvepod</u></a> by <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://twitter.com/@MikeIppolito_"><u>@MikeIppolito_</u></a>. The network effects of blockchain state is real. Ethereum's state growth is nothing but the ownership of assets on the blockchain. If you hold treasury bonds, stables with yield or LSTs on Ethereum, there is no reason to move them over to Solana. If you hold ETH as an asset, you <a target="_blank" rel="nofollow ugc noopener" class="dont-break-out" href="https://old.reddit.com/r/ethereum/comments/rwojtk/ama_we_are_the_efs_research_team_pt_7_07_january/hrngyk8/"><u>SHOULD NOT</u></a> move it to Solana. But you can trustlessly move to L2s as L2s are extensions of Ethereum. People hold a lot of assets on Ethereum already. Asking them to move their entire networth is like asking someone to move from the US to China just because a city in China is better (they are). Instead, you're more likely to move to Miami or Austin. The network effects lock users in the place despite certain issues.</p></li><li><p><strong>Existing consensus and infra.</strong> I hope we agree on the fact that we need to innovate further on blockchains. Building Alt L1s is an alternative approach to solving the above problems. But having to bootstrap consensus from scratch in hopes to reach Ethereum-like decentralization is tough and might not be worth it. You would have to build an ecosystem of clients, RPC infra, wallet infra, and many many things. Alt L1s are harder than L2s. But we will see more L1s emerging in the market as well, they can also innovate on the problems I mentioned above along with consensus or they can use EigenLayer for bridging. But you will have another trust assumption on top of Ethereum's primary consensus layer. Trade-offs.</p></li></ol><p><strong><em>If you are a founder who wants to compete with your ideas, you are better positioned to align with Ethereum's consensus and innovate in your niche than starting from scratch.</em></strong></p><p>Ethereum is here to stay because that is its fate. If you are here and you own assets through Ethereum's state you are likely to stay. If you are a builder and you can help Ethereans and ETH holders compete with Solana, you will be providing immense value to a lot of us while becoming wealthy yourself.</p><p>If you want to help the Ethereans achieve <strong>the monolithic experience</strong>, let us work together and grow together. DMs are open.</p>]]></content:encoded>
            <author>sandman@newsletter.paragraph.com (Sandman)</author>
            <category>blockchain</category>
            <category>ethereum</category>
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