deBridge
deBridge is a generic messaging protocol and cross-chain interoperability infrastructure. It enables transfers either through messages and liquidity in the same transaction, providing the framework for projects and developers to solve any cross-chain needs such as cross-chain composability with smart contracts. The goal for deBridge is to build more capital-efficient solutions by combining protocols and smart contracts from different chains.
Alex Smirnov
Alex Smirnov is the CEO and co-founder of deBridge. He found out about blockchains in 2016 and dropped out of his PhD to pursue web3 full time.
Ep.66 Podcast Summary / Notes
Two Types of Bridges Out There
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Pure cross-chain value transfers
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Cross-chain swaps of tokens
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Liquidity locked in respective bridges
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Alex believes they will have to pivot due to insufficient TVL to compete with big liquidity projects such as Aave, Compound, Frax
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Generic messaging protocols
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Compatible with and sources liquidity from other DeFi projects
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Can leverage on existing DeFi ecosystems
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Bridges do not need their own TVL and instead can source liquidity from other protocols
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A new generation of bridges - less fragmentation, more united, more capital efficient
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Bridge Security and Vulnerabilities
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Keep note of: security audits, protocol authority, multisig
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General vulnerability
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Optimism $2m bounty payout - Vulnerability in bridge security
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Could be exploited to mint any arbitrary amount of assets on-chain
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Theoretically could withdraw the liquidity of 98% of Optimism bridges.
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deBridge implements an isolated security model
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The vulnerability of a particular blockchain will not affect the security of funds integrated with all other chains.
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Social Engineering
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Vulnerability due to poor decentralisation and team management
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Ronin and Harmony bridge exploits
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Lack of decentralisation and multisig management
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Bridge projects need to be fully focused and dedicated to the security and management of their infrastructure
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deBridge Security
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Validators never expose their IP address and infrastructure because validations happen off-chain
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Validators do not need to sign/ broadcast any transactions - sign a unique identifier and store their signature
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No one knows the IP address of the validator and validators do not need to communicate with other validators - less compromise
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Problems with Bridging assets
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Multiple versions of wrapped assets
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Leads to fragmentation of liquidity as there will be multiple versions of wrapped assets on different chains
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Osmosis had a similar issue: How many bridges should be connected to their protocol? Too many bridges lead to liquidity issues for a particular asset.
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Wrapped assets should be an intermediary step during cross-chain transfer
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A certain limit on wrapped assets to be swapped for native tokens - risk management
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Ultimately users don’t care about wrapped assets - they just want their routing to be done
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Swaps of wrapped assets should be performed under the hood
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What’s an underrated issue with bridging?
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The difficulty in building a future where protocols do not need to copy-paste their protocol on different chains
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Depending on the type of protocol,
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Every blockchain ecosystem needs a foundational layer of DeFi
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Lending protocols, DEX, Stable where synchronous composability is needed
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e.g. An Aave that allows flash loans and executes complex logic
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Protocols that enable synchronous composability needs to be deployed in many chains
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95% of all other protocols don’t need to be deployed everywhere
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Can be deployed on one blockchain and gain global accessibility and asynchronous composability
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Leads to less fragmented liquidity
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How is the team handling the bear market?
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Bear market = time for opportunity
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Everyone is overwhelmed during a bull market
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Bear market washes out market speculation
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Focus on building DeFi infrastructure to solve CeFi problems
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DeFi protocols were the first to receive funds back with the default / insolvency / bankruptcy of CeFi institutions
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e.g. MakerDAO receiving their funds from Celsius before ‘unsecured creditors’
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Not many challenges in deBridge
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Just lower transaction volume and activity in deBridge
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