[Proposal] Bridge Index ($BRIG5)

With the increasing popularity of alternative L1’s and L2’s and the necessity of good multi-chain bridges to further DeFi, I believe it’s only a matter of time before bridges become a core component to DeFi’s continued success.

Avalanche, Polygon, BSC, Solana, Cosmos, Terra, and Fantom have all had tremendous increases in TVL now that they’ve matured and started to grow their own DeFi ecosystems. This growth has been spurred on by high ETH gas fees but also the technological advancements of these alternative chains.

You can view the growth of these chains on Defillama: Chain TVL - DefiLlama

A multi-chain world is not just on the horizon, it’s here now.

Multi-chain DeFi is inevitable and so I propose we get ahead of the curve by creating a Cross-Chain Bridge Index ($BRIG5).

Below are the proposed constituents:

Project: Ren Bridge
Token: REN
Liquidity: Sushiswap: REN-ETH: $8,062,595.66, Univ2: REN-ETH: $1,594,498, Univ3: REN-ETH: $112,340
Chains: Arbitrum, Avalanche, BSC, Ethereum, Fantom, Polygon, Solana
URL: https://renproject.io/

Edit: Anyswap rebrands to Multichain
Project: Anyswap Bridge
Token: ANY / MULTI
Liquidity: Sushiswap: ANY-ETH: $14,063,747.11
Chains: ETH, BSC, FSN, FTM, Matic, Heco, AVAX, xDai, Arbitrum, KCC, One, MOVR, CELO, SDN, Iotex, CRO, Boba, Fuse, TLOS, OEC
URL: AnySwap - Cross Chain Protocol

Project: Rubic
Token: RBC
Liquidity: Univ2: RBC-ETH: $4,624,628
Chains: ETH, BSC, MATIC, Solana, Avalanche, Moonriver, Fantom, Harmony, xDAI
URL: https://app.rubic.exchange/

Project: RelayChain
Token: RELAY
Liquidity: Univ2: RELAY-ETH: $132,860
Chains: ETH, BSC, Fantom, Matic, Avalanche, IoTex, Moonriver, HECO, Shiden, Cronos, Harmony
URL: Relay App

Project: Synapse Bridge
Token: SYN
Liquidity: Sushiswap: SYN-ETH: $12,387,473.64
Chains: Ethereum, BSC, Arbitrum, Avalanche, Polygon, Fantom, Optimism, Boba, Moonriver, Harmony
URL: https://synapseprotocol.com/

Market Caps:
REN - $520,022,668
ANY - $325,514,660
SYN - $285,639,352
RBC - $22,048,745
RELAY - $11,473,021

These are the tokens I propose we start the index with, however, more protocols can be added later.
Here are a few additional protocols that can be considered once they release a token.

Hop Protocol
Chainflip
Rango Exchange
Evmos
Evo DeFi

Please let me know your thoughts on the proposal and any feel free to suggest any projects I may have missed.

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I think this has legs. We should be looking at up and coming sectors as well as more established ones. I can’t comment on the technical side of things but I know that bridging and the focus on interoperability is growing as we move towards a multichain crypto ecosystem. I can well imagine people wanting to get early exposure to this market. I agree that we see tokens for these other protocols once they work out the tokenomics and best way to distribute them.

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I’m quite familiar with how Relaychain operates but the others were a bit foreign to me.
So I did a deep dive on each project and here are the results:

All of the projects fundamentally work in the same way with some slight differences.

Bridge flow Example:

  1. User wants to bridge ETH (Eth Mainnet) to wETH.e (Avalanche).
  2. User submits the bridge transaction.
  3. ETH is swapped to the project’s native token.
  4. Relayers lock the native token in a contract on Eth Mainnet.
  5. Relayers mint the native token on Avalanche.
  6. Validators confirm the locked and minted values match.
  7. The native token is swapped to wETH.e.
  8. Relayers send the wETH.e to the Users wallet on Avalanche.

That’s generally how these protocols operate, they use trusted Relayers and Validators like Zokyo, Bitcoin.com Exchange, ChartEx, Avalaunch, and Bridge Mutual to secure the bridge functionality.

I’d also like to make an update to the Anyswap info in the original proposal, it appears that as of 12/16 “Anyswap” is rebranding to "Multichain". They have a 1:1 conversion process from ANY to MULTI. I will update the original proposal to use MULTI as the included token.

You can read about the rebranding here: Anyswap to officially rebrand as Multichain | by Multichain (Previously Anyswap) | Dec, 2021 | Medium

Below are the documentation pages for each projects bridges:
Relaychain: How to bridge crypto tokens cross-chain? - About Relay
Ren Protocol: https://github.com/renproject/ren/wiki#cross-chain-transactions
Rubic: Transfers Flow - Rubic Documents
Synapse: Synapse Network - Synapse Protocol
Anyswap/Multichain: Introducing Anyswap — Fully Decentralized Cross Chain Swap Protocol | by Multichain (Previously Anyswap) | Medium

Hey Kuza,
How sure are you about step 3 in your example above?

I ask because I was (until now) pretty certain the original coins were not liquidated but rather themselves locked in a contract.

The difference is profound. Imagine WBTC being bridged. If Binance bridges 1 million WBTC you can see how locking them into a contract is different for supply than liquidating them and then creating (for example) 1 million WBTC.e, yes?

To really split hairs, if your analysis is right, then both the 1 million WBTC and the 1 million WBTC.e are liquid. I was under the impression the bridge held the WBTC in an illiquid state.

Moreover, if they do in fact follow step 3 and liquidate the WBTC then someone later tries to unbridge, that WBTC is a future liability only backed by the native token, yes?

Any chance at all that my (previous) perhaps naive understanding that there is no Step3, rather that the underlying coin is held in a contract, not liquidated?

Sorry to steal your thread but this is germaine because if you are correct, bridges are printing coins and assuming massive liability, right?

I envision grabbing BTC, bridging it into WBTC, then WBTC.e, then into BTCB then cBTC etc…

UPDATE: Harmony Bridge for sure locks the underlying.

Is it possible I misinterpreted what you meant by “projects native token”?

Hey @LLunatix great questions!

To start, I completely agree that the official bridges use the locking and minting method you describe, and from the list of tokens I included I believe REN behaves in this way and the REN token is only used to secure their darknode validators that process the transfers.

For these other tokens, their bridge mechanisms operate more like DEX’s. For SYN, RBC, and RELAY, the only token that is minted/burned is the project’s native token which is done to facilitate the transfer of value cross-chain. For all intents and purposes, these projects function as DEX’s meaning that they use their native token to incentivize liquidity pools for a select list of tokens they offer bridging/DEX functionality for.

SYN, RBC, and RELAY ONLY mint/burn their own tokens, they do not lock/mint wBTC, ETH, etc.

That’s why in my bridge flow example, steps 3 and 7 are crucial to their bridge process. These projects have LP pools on each chain that they use to swap to the user’s desired token before transferring the tokens to the user’s address and completing the bridge process.

So no additional wBTC, wETH, etc is being created or destroyed in the bridge process.

You may notice that I didn’t include ANY in my explanation above, I have tried to understand their bridge documentation, but for the life of me I cannot find any explanation other than a stupid picture of their “bridge flow”. If I had to make a guess based on what I’ve read, they do operate in the same way as SYN, RBC, and RELAY.

You can see the “Anyswap Architecture” here:
https://anyswap-faq.readthedocs.io/en/latest/General%20Questions.html#how-does-anyswap-work

To answer your question:

“Moreover, if they do in fact follow step 3 and liquidate the WBTC then someone later tries to unbridge, that WBTC is a future liability only backed by the native token, yes?”

This would certainly be an issue for REN protocol since they do use the lock/mint <-> burn/unlock method. So that is a risk factor we should consider when including REN in the index. As for the other projects, since you are swapping into the chains native implementation of a token like wBTC.e for Avalanche then there should still be a liquid market for wBTC.e if you wish to swap, and you can still use the official bridge back to Ethereum with it.

I really appreciate your questions, let me know if I missed anything.

Damn do I love learning. TY

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