MicroChains Network
Author: Emir Olgun
Date: 1 March 2023
Update
Microchains network has been down for couple of months. Discord community is not not active and the Twitter account has turned into a meme account. We believe this project is dead.
Introduction
There are lots of different blockchain networks and all of them have different traits. As the number of blockchain networks increase, more and more people got into these new ecosystems. The interaction between different blockchains is essential for the future of web3 and MicroChains Network is one of the services that aim to provide a secure and smooth cross-chain solutions.
What Does It Do?
MicroChains allow transfer of assets on two or more different blockchains. These chains can be EVM compatible or not including Cardano. They have protocols for both kinds of cross-chain transfers.
Microchains claim to be very secure, very efficient, and fast. They also cover top 200 marketcap crypto currencies. When their app is investigated, not many cross-chain actions seem to be taken. Only twenty five transactions took place in the last six months and almost all of these transactions are done between Ethereum and Cardano chains.
How Does It Work?
MicroChains cooperates with Huobi Trust and Cobo Custody.
Huobi Trust has launched its product in 2021 and is backed by eight year accumulation of blockchain technology of Huobi, they claim its experience in digital currency custody is much more sufficient than most projects in the industry. It will also be covered by insurance so the security of funds is expected to be better assured.
Cobo Custody is a custodian and the reason they cooperate with Cobo Custody is to reduce single-point risks and make asset custody diversified.
Multi-node Verification
MicroChains verifies minting through an internal multi-node risk control module, and performs posting verification of source-chain asset. The custodian service providers lock-up the source-assets. Microchains also performs multiple audits of withdrawals.
Enhanced Node Verification and Proof of Trust
Microchains claim by working with Huobi Trust and Cobo Custody, they can prevent asset theft, over-issuance and asset abuse. Their proof of trust mechanisms depend on the trust services they work with.
Prevention of Theft
All transfers and withdrawals of cross-chain delegated assets from Trust accounts will be verified by the third-party witness.
Prevention of Over-Issuance
The minted assets will only be released to the user address after verification. Each withdrawal from locked account must be approved by validators before assets are officially released.
Prevention of Asset Abuse
They regularly publicize custody assets in Huobi Trust and Cobo Custody to show the adequacy of collateral assets. Also, there are regular audits for the escrow assets by well-known auditors after stable operation.
Major Cryptocurrencies
For current mainstream public chains, they work by the method of liquidity pool. They incentivize users to provide liquidity on both ends of the chains with MicroChains project tokens.
![[Screenshot 2023-03-03 at 17.28.58.png]]
Emerging Chains and Tokens
Microchains's method for other chains is locking source-asset in a custodian and minting wrapped tokens in the target chain. The source asset then can be burned. At the same time, cross-chains between different chains are derived, which means assets can be burned in the source chain and new assets can then be minted in the target chain.
So there are three situations:
Lock then Mint: Deposit native assets and cross-chain into wrapped assets of any chain.
Burn then Unlock: Deposit wrapped assets of any chain and cross-chain into native assets.
Burn then Mint: Deposit wrapped assets of any chain and cross-chain into wrapped assets in another chain.
Wrapped Asset: Wrapped asset is a representation of another asset, which can be a FIAT currency or native assets on another chain.
Conclusion
Microchains' claims of being very secure, fast and efficient seems a little too good to be true. It had potential but their whitepaper lacks a lot of details about the concepts and methods they claim to use.
Additional Links
Disclaimer: The content is for informational purposes only, may include the author’s personal opinion, and does not necessarily reflect the opinion of littlefish Foundation. Most of the information covered in this article was obtained from MicroChains Whitepaper and was analyzed independently.
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