In the Chinese dictionary, a bridge is described as a large structure used to cross obstacles. The bridge spans mountains, rivers, and valleys to connect all parties. The same is true in the blockchain world, except that “each party” refers to chains of different architectures, and “mountain, river, and valley” refer to the consensus difference between chains. This consensus is not just a certain algorithm such as POS, NPOS, and POW. It is a series of on-chain vision, algorithm, and network value. The “bridge” in the blockchain world is used to overcome the barriers of consensus, allowing the communication, application, and performance of the chain to communicate, so as to realize the mutual promotion of each chain ecology.
From a technical perspective, cross-chain is to transfer an asset from chain A to chain B, which can be a token, a piece of information, or an operation instruction. Therefore, the significance of cross-chain comes from fixing two problems:
Breaking through the bottlenecks of the underlying blockchain
With the rapid development of a blockchain network, the performance of the blockchain system, especially those with a single chain, has gradually become a bottleneck restricting the development of the blockchain network. By transferring some tasks to a side chain, a specific chain, or off-chain for processing, the performance of the blockchain network can be improved. Part of the functional innovation can also be achieved through side-chain or multi-chain interaction, maximizing efficiency without breaking the original consensus.
Breaking through the island effect of blockchain
Another problem facing the development of blockchain is the islanding effect. Each chain is more like a single computer, which can compute things on its own but can’t communicate this to anyone else. Only when computers are connected and combine their computing power you can reach much higher efficiency in computing things. Just like the personal computer, the future of blockchain must be an era of interconnection between all chains, and cross-chain interoperability is building the foundation to make this reality. You can see this in recent years with central banks focussing on the development of “bridge” technology. The financial system of the future will be intertwined with digital legal currency and private digital currency of various countries. Each currency has its own unique value and definition, such as CBDC used as digital legal currency, Diem used as a similar dollar, BTC used as value storage, ETH used as electronic fuel, etcetera. Only when the island effect between chains is broken and the interconnected blockchain network takes shape, the value of the entire blockchain ecology can be truly reflected.
ChainX cross-chain technology
ChainX has nearly 3 years of research and development experience in bridge technology. From the initial selection of the Substrate framework, joining the Polkadot ecology and becoming the earliest online project in the ecology, to completing the X-BTC light node cross-chain, and even the upcoming XBTC 2.0 program. Mirror assets are following the pace of the times, promoting cross-chain technology changes and pushing the blockchain world to a more imaginative one. Below we have small introductions to some of the cross-chain technologies that ChainX has mastered.
Multi-signature hosting + light node cross-chain
In BTC cross-chain 1.0, ChainX realizes cross-chain by combining multi-signature custody + light nodes. To put it simply, a trust is formed by selecting a number of institutions with strong credit endorsements to manage a multi-signature trust account. When the Bitcoin is sent to ChainX, the process is completely decentralized and carried out through smart contracts. When BTC is sent from ChainX to the Bitcoin network, the transaction needs to be completed by multi-signature operation of the trust account (because the Bitcoin network cannot run smart contracts).
Figure 1. Bitcoin cross-chain to ChainX
Figure 2. ChainX cross-chain to Bitcoin
Asset vault + light node cross-chain
In BTC cross-chain 2.0, ChainX realizes a cross-chain by combining an Asset Vault with Light Nodes. It almost perfectly overcomes the shortcomings of multi-signature custody and cross-chain security, which comes from still having a little bit of trust included. In BTC cross-chain 2.0, the trust is any ChainX user who is willing to participate and needs to use PCX for over-collateralization. If the value of the collateral is much lower than the value of the issued X-BTC, there will be a series of automatic liquidations in the system to force proper collateralization.
For example, if Alice cross-chains 1 BTC to ChainX, and asks to transfer it back to the BTC network a few days later, the process is as follows:
- Alice transfers 1BTC to the Asset Vault X address on the BTC chain and adds Alice’s ChainX address through OP_return
- The Relay program monitors the arrival of Bitcoin at the X address of the Asset Vault, and it confirms the amount exceeds the minimum deposit
- The Relay program reads the op_return, packages BTC receipt certificate and Alice’s ChainX address and other content, and sends them to the ChainX chain
- ChainX verifies the proof of receipt according to the BTC Light Nodes on the chain. After the verification is passed, it issues X-BTC to Alice’s ChainX address and locks the PCX of Asset Vault X
At this point, the process of BTC cross-chain to ChainX is completed autonomously without risk of centralization.
- Alice wants to cross the XBTC on ChainX back to the BTC network so she submits an application to the ChainX network to destroy X-BTC
- After ChainX verifies the destruction of X-BTC, it sends a redemption application to Asset Vault X for a limited time
- Asset Vault X manually transfer BTC to Alice’s Bitcoin address
- The relay program monitors the arrival of Alice’s address in Bitcoin and has confirmed that it exceeds the minimum amount
- The Relay program packages BTC arrival certificate and other content, and sends them to the ChainX chain
- ChainX verifies the proof of receipt according to the BTC Light Nodes on the chain. After the verification is passed, it unlocks the PCX of the Asset Vault X
The process of ChainX’s cross-chain to BTC is completed. Since the smart contract cannot be run on Bitcoin, there needs to be a manual transfer from Asset Vault X, but due to the existence of over-collateralized PCX and liquidation mechanisms, there is little to no risk in the cross-chain process.
Mirror cross-chain is a kind of economic cross-chain. There is no direct interaction between chains. Instead, the ecological value of the target chain is transmitted by mapping the token on the target chain to achieve the cross-chain purpose. Among ChainX’s mirrored assets, the most unique thing is that we will give full play to the value of the Bitcoin network and use X-BTC as collateral to generate various mirrored assets to achieve the value of Bitcoin. In addition to meeting the investment needs of users, ChainX’s mirrored assets will circulate to the entire Polkadot ecosystem and even Ethereum and other networks after the Polkadot Parachain is officially launched in the future.
The following figure shows the simplified structure of the mirror asset:
(This figure is not used as the final architecture, it will be optimized and iterated according to the actual situation in the future)