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Author: Emir Olgun
Date: 1 July 2023
A blockchain bridge is a way to transfer assets between different blockchains. This is a very difficult task because most blockchain networks are not compatible and they do not support each other assets. For example, some blockchains support account model and some support utxo model. Their protocols are different, and smart contracts are different. A way to overcome this issue is to wrap a token in another blockchain.
A wrapped token is like a collateral or a stable coin. It is a token that is pegged to a token in another blockchain. For example, a WBTC or Wrapped Bitcoin is used on Ethereum blockchain and it has the exact same value of Bitcoin. When an asset is wrapped, the original token is either locked in a smart contract or kept in custody by the bridge, so the number of assets in circulation stays the same. When the user wants their original tokens back, the wrapped assets will go back to the bridge pool or be burned and original assets will be released.
Simply, a wrapped token is like a human going underwater. A human naturally needs breathable air to stay alive and he/she wrappes themselves in a suit supplying breathable air. A Bitcoin cannot exist in Ethereum blockchain so we wrap it as an Ethereum token.
Some bridges also support locking the originals in case the user wants to reclaim them in the future.
Another method is burning the original asset. Unlike locking original tokens in a smart contract and minting wrapped tokens, when transferring an NFT from a chain to another, the original NFT is usually burned and an NFT with exact same traits is minted in destination chain.
There are two dimensions to bridges. One dimension is about the centralization of them and the other dimension is about the way they operate for example, direct bridges or side-chain bridges. There are two types of bridges, centralized and decentralized. Also known as trust-based and trustless.
These bridges are operated by third party organizations. These organizations are trusted to respect the custody of funds by the users. When using Centralized trust-based bridges, the user gives up control of their assets to the third party. Centralized bridges are as safe as the third party that operates it can be. These bridges usually have pools of wrapped assets on both blockchains to conduct transactions in a short time. The transaction time also depend on how many people use the bridge and how balanced is the traffic between the blockchains. If a pool on one side is empty, the users will have to wait for another user to release their wrapped tokens and these waiting times can be as high as days.
In 2022, hackers infiltrated Axie Infinity's systems by social engineering and got access to more than half of validator keys. By controlling the majority of validators, they sent all the native assets in custody resulting 620 million USD heist.
Pros
Cheap transactions fees
Fast transactions
Cons
Prone to attacks
Requires off-chain trust
Risks
There is only trust between the centralized bridge and the user. If the bridge operators decide to steal user's funds, there is no way to prevent this. If the operator is compromised, the funds in custody can be stolen. On some bridge attacks, the operator
Decentralized bridges rely entirely on smart contracts. When a user go from a chain to another chain, their original assets are locked in a smart contract and issue wrapped tokens to the user. The smart contract can only be accessed by the wrapped tokens and the user who minted them. When the user wants to retrieve their originals assets, the wrapped assets are burned. The transaction fees on decentralized bridges are usually higher than centralized bridges since they also have to pay for the minting process of wrapped assets. These decentralized bridges are as safe as the chains they bridge and their smart contracts.
Pros
Safer than centralized bridges in theory
Decentralized
Cons
No customer support
High transaction fees
Slow Transactions
Risks
The smart contracts used for blockchain bridges are more complex and there is a risk of bugs on smart contrac codes which can cause the loss of funds. Since there is not actual backer of these bridges, the chance to save lost funds are almost none.
Blockchain bridges are more susceptible to malicious attacks. In case of a 51% attack on a blockchain, native assets on a crypto wallet is mostly safe since the malicious attacks will be rejected by the nodes since they do not follow blockchain protocols. In case of a bridge, if the attackers buy the wrapped assets and revert the transaction, the bridge validator on the other chain will still release the wrapped assets to the attackers and there will be more wrapped assets than the actual assets. The bridge users will not be able to go back to their original chain in this situation or the value of their wrapped assets will be significantly lower than the original assets.
Currently there are not many bridge options for Cardano. Microchain and Milkomeda are current bridges that connect Cardano to other blockchains like EVM based chains. These both bridges are Centralized bridges. There is also Wanchain. Wanchain is working with IOHK to make Cardano interoperable with other blockchains and they are online on Cardano Testnet currently.
Author: Donald Date: 20 May 2023
Comment
The Milkomeda protocol is a pioneering cross-chain DApp creation platform introducing innovative technology that aims to deliver Ethereum Virtual Machine (EVM) capabilities to non-EVM blockchains such as Solana, Cardano and Algorand. Leveraging Ethereum’s core system’s capabilities, the protocol seeks to provide developers and users with access to features from both blockchain ecosystems, potentially increasing the variety of decentralized applications on Solana, Cardano and Algorand, and unifying the user experience within these blockchain ecosystems.
Milkomeda protocol enables Cardano users to access Ethereum smart contracts directly.
Allows Solidity developers to develop for non-EVM ecosystems like Cardano and Algorand
Connects platforms like Cardano and Algorand to EVM contracts and provides staking rewards.
Enhances cross-chain interoperability with blockchain bridges and wrapped smart contracts.
Inherits key elements from EVM-based ecosystems and plans to implement future innovations.
Milkomeda C1 EVM Sidechain and Milkomeda A1 Rollup are layer 2 solutions that bring EVM capabilities to Cardano and Algorand ecosystems, respectively.
Milkomeda is a smart contract-enabled sidechain protocol that offers several benefits to its users. Sidechains are separate blockchains that operate alongside primary blockchains and are designed to allow for the transfer of assets between the two chains. If you would like to learn more about sidechains, you can read this informative article. The benefits of Milkomeda’s sidechain protocol include:
Connecting platforms like Cardano and Algorand to Ethereum Virtual Machine (EVM) contracts
Facilitating staking rewards for all EVM users, including smart contract developers
Automatic payment of staking rewards every five days for Cardano products built on the Milkomeda platform
In addition to these benefits, the Milkomeda protocol enhances the utility of Cardano tokens for holders by enabling the exclusive use of ADA for applications, rather than Ethereum’s native token, Ether (ETH). This development is a significant step forward in expanding Cardano’s usefulness and promoting greater collaboration and interoperability within the blockchain ecosystem.
Milkomeda, an L2 protocol developed by dcSpark, aims to enhance cross-chain interoperability by establishing blockchain bridges between Cardano and other prominent layer 1 networks such as Solana and Algorand. These bridges facilitate the transfer of assets between different blockchain networks, fostering a more interconnected and accessible ecosystem. Layer 1 blockchains refer to the foundational infrastructure of a blockchain network, responsible for maintaining the core protocol, consensus mechanism, and transaction processing. Some well-known Layer 1 chains are Bitcoin, Ethereum, Cardano etc.
Focusing on non-EVM projects, Milkomeda seeks to accelerate their mass adoption by providing EVM-compatible sidechains. By leveraging sidechain technology and introducing wrapped smart contracts, the protocol allows developers to create dApps using familiar programming languages and tools, streamlining the onboarding process. This innovation also enables users to interact with smart contracts on various sidechains without needing to switch wallets or acquire extensive knowledge of the underlying technology.
The wrapped smart contracts function lets applications or users easily transfer smart contracts from one blockchain to another, making them usable for Cardano users. This means people can smoothly work with smart contracts from different blockchains, even if they’re not written in Cardano’s language, Plutus. Wrapped smart contracts also need less code for cross-chain applications, which means fewer security risks and quicker development times. In summary, Milkomeda’s approach encourages smooth interactions between different blockchains and supports growth across multiple platforms.
Cross-Chain Smart Contract Usage
In their official documentation website, Milkomeda’s team provides the following statement in terms of interoperability between different blockchains through Wrapped Smart Contracts.
“Thanks to our new innovation called wrapped smart contracts, it will be possible for users on the Cardano mainnet to call and use contracts on the sidechain without having to leave mainnet at all. Users will submit a single Cardano transaction with the data and assets required to interact with the sidechain dApp and the sidechain bridge layer takes care of the rest. The assets/data are transferred over to the sidechain, the requested action is executed on the target dApp, and the results are deposited back to the user’s wallet in the end.”
Here’s an in-depth analysis of this statement:
Milkomeda’s innovation, Wrapped Smart Contracts, provides a mirroring system that simulates Ethereum smart contracts on the Cardano sidechain. This replication enables users to interact with the reflected contract as if they were directly engaging with the original Ethereum contract.
An integral component of this system is the Sidechain Bridge Layer, a sophisticated network of smart contracts or nodes. Its primary function is to interpret the data from the Cardano transaction and generate a corresponding transaction on the Ethereum sidechain, effectively serving as a bilingual mediator between the two disparate blockchain languages.
Following this, the execution of the requested action takes place on the Ethereum sidechain. The Sidechain Bridge Layer facilitates the transfer of assets and data to the Ethereum sidechain, where the original Ethereum smart contract executes the action.
The final stage in this process involves the return of results. Depending on the nature of the contract’s function, the results, which could be in the form of data or assets, are then transferred back to the user’s wallet on the Cardano mainnet via the Sidechain Bridge Layer.
To provide a more tangible example, consider a scenario where a developer has coded a smart contract using Solidity and deployed it on the Ethereum Blockchain. As it stands, this smart contract cannot be accessed from Milkomeda’s sidechain. To rectify this, the developer would need to replicate the code onto one of the Milkomeda’s sidechains, thus making it accessible for other chain users supported by Milkomeda. This process of replication is what Milkomeda refers to as a Wrapped Smart Contract.
Disclaimer: The preceding interpretation, while providing a comprehensive breakdown of the information released by Milkomeda, is largely based on the author’s understanding and perspective. It offers an insightful glimpse into the potential future of cross-chain interactions and the enhancements they could bring to the blockchain ecosystem’s functionality and user-friendliness. However, it’s crucial to note that this analysis may not be entirely accurate, as it is subject to the author’s interpretation of the available data. As such, readers are encouraged to review the original source material and engage with additional resources to ensure a well-rounded understanding.
If you would like to learn more about wrapped smart contracts, check out this article.
Milkomeda aims to provide non-EVM ecosystems with the ability to inherit key elements, such as rollups and Solidity support, from EVM-based ecosystems. This technology allows developers to access all of the tooling from the EVM ecosystem, making building, deploying, debugging, and auditing projects work the same as in Ethereum. The ability for developers to port projects from Ethereum will significantly broaden the selection of dApps available on supported L1 blockchains.
Security consistency across deployments ensures that multi-chain deployed code has the same security properties, eliminating the need for individual audits per chain. Future innovations in zero-knowledge technology will be implementable as L3+ solutions on top of Milkomeda, empowering startups to build on chains like Cardano, Algorand, and Solana while tapping into the talent and resources of the largest community for smart contracts (Solidity).
Milkomeda touts several critical features in their blockchain ecosystem, including scalability, security, user experience, interoperability, portability, and developer experience. The platform has been designed to support hundreds of transactions per second, ensuring swift operations without compromising long-term decentralization. The protocol capitalizes on the power of rollups across all chains and partners with various wallets to facilitate a frictionless user experience.
In terms of security, which is a paramount concern in any digital protocol, Milkomeda has taken robust measures. According to their official website, the platform has undergone rigorous auditing processes by three security firms: ArbitraryExecution, Certik, and Certora. These firms specialize in providing security audits for smart contracts and monitoring Web3 protocols, thereby enhancing the reliability and security of the ecosystem. By incorporating these audits, Milkomeda demonstrates a strong commitment to ensuring the safety of its users and the integrity of its platform.
Developers and end-users can get started with Milkomeda by following comprehensive guides provided for Cardano and Algorand, which offer valuable context on the underlying technology, benefits, and processes that enable the Milkomeda C1 EVM Sidechain and the Milkomeda A1 Rollup to operate.
The Milkomeda C1 EVM Sidechain is a layer 2 solution that brings EVM capabilities to Cardano. This solution exposes the Cardano ecosystem and its users to the hundreds of thousands of developers writing in Solidity, which is considered the world’s most popular smart contracting language. The sidechain uses MilkADA as its base asset for paying fees and gas, which can be obtained by converting ADA on the Milkomeda Asset Bridge.
Similarly, the Milkomeda A1 Rollup is another layer 2 solution that brings EVM capabilities to Algorand ecosystem. The rollup uses MilkALGO as its base asset for paying fees and gas, which can be obtained by converting ALGO on the Milkomeda Asset Bridge.
Rollups refer to a method that allows to process transactions on a separate, more efficient blockchain (referred to as Layer 2) and then transfer the transaction data back to the primary blockchain (Layer 1 or mainnet) at a reduced cost. As a result, users can take advantage of the enhanced speed and affordability of the rollup while still enjoying the security provided by the larger blockchain.
In conclusion, the Milkomeda network’s innovative approach to cross-chain interoperability and access to EVM smart contracts has the potential to reshape the blockchain industry. By leveraging the strengths of the Ethereum ecosystem and integrating them into non-EVM platforms like Cardano. Milkomeda is fostering collaboration, expanding the range of available dApps, and unlocking new opportunities for developers and users alike. As blockchain technology continues to evolve, initiatives like Milkomeda will play an essential role in driving innovation and promoting a more interconnected and accessible ecosystem.
Relevant Links: Official Milkomeda Website Official Milkomeda Twitter Account Official Milkomeda Medium Account Official Milkomeda Github Account
The Ethereum Virtual Machine (EVM) is a crucial component of the Ethereum ecosystem that powers the blockchain and enables smart contract functionality.EVM also serves as Ethereum’s computation engine, it manages the state of the blockchain, facilitates user adoption and decentralization, participates in block creation and transaction execution.
The EVM interprets smart contract code (bytecode) in Opcodes, which are low-level instructions for performing operations like arithmetic, logic, and data manipulation.
Nodes on Ethereum keep copies of transaction data, which the EVM processes to update the distributed ledger. A distributed ledger is actually the backbone of the blockchain. It is a decentralized and synchronized database shared across multiple nodes which ensures data transparency and immutability.
The architecture of the EVM is based on a stack-based memory structure. Stack-based memory structures store and manage data in a last-in, first-out (LIFO) manner, enabling efficient memory usage and simplified program execution.
The EVM is considered Quasi-Turing complete because it is limited by the amount of gas provided with each transaction. Turing-complete means that a machine can simulate any computer algorithm given enough time and resources.
Finally, the EVM processes the Ethereum state transition function to ensure that transactions are technically valid, thereby maintaining the integrity of the distributed ledger.
Author: Emir Olgun
Date: 1 March 2023
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.
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.
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.
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.
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.
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.
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]]
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.
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.
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.
Author: Emir Olgun
Date: 29 September 2023
Wanchain is a cross-chain bridge. In the most basic terms, Wanchain transfers assets from one blockchain to another.
Wanchain is a layer 1 Blockchain that uses Proof of Stake and a blockchain interoperability solution. Wanchain is EVM compatible. Wanchain is uses a Proof of Stake consensus called Galaxy Consensus which is a continuation of Cardano’s Ouroboros Protocol. Wanchain currently connects 28 different Blockchains including Cardano and 45 assets.
Wanchain's architecture is designed to serve as a robust framework for a decentralized financial ecosystem. At its core, it features a distributed ledger that is compatible with smart contract virtual machines, similar to Ethereum. The native coin of Wanchain, known as WAN, serves as the fuel for transactions and smart contract execution.
The consensus mechanism initially employed by Wanchain was Proof-of-Stake (PoS), but it has transitioned to a Delegated Proof-of-Stake (DPoS) system for better scalability and performance. This consensus mechanism allows for quicker transaction validations and a more secure network.
Wanchain also supports intra-chain transactions, which are transactions within the Wanchain network. However, its unique selling point is its capability for cross-chain integration and transactions. This feature allows Wanchain to connect with other blockchains, be it public, private, or consortium chains, and facilitate asset transfers between them.
The Cross-Chain Communication Protocol is the backbone of Wanchain's interoperability feature. It consists of functional modules that handle the locking and unlocking of assets as they move across different blockchains. The protocol also outlines the data transmission process, which ensures that transactions are securely and accurately relayed between the participating blockchains.
Storeman nodes play a crucial role in this protocol. They act as the intermediaries responsible for locking assets in the originating blockchain and minting corresponding proxy assets on the Wanchain network. This ensures that the asset's value is preserved as it crosses from one chain to another.
Wanchain utilizes Storemen nodes in order to process cross-chain transactions. Storemen nodes work together to perform cross chain transactions without revealing the private keys of the accounts involved. Node operators must put up collateral which covers the value of transactions they process.
Wanchain employs Galaxy Consensus to ensure a secure and efficient network. Galaxy Consensus is one such technology, which is part of the DPoS system. It ensures that only verified nodes participate in the validation of transactions, thereby enhancing network security.
Incentive mechanisms are also in place for both verification and general nodes. These incentives encourage active participation in the network, which in turn increases network security and efficiency. The system is designed to be fully decentralized, with no need for a trusted third-party, thanks to cryptography-based security guarantees.
Galaxy consensus is explained in more detail later in this document.
The Locked Account Generation Scheme is a pivotal technology that enables the secure transfer of assets across chains. When an asset is to be transferred, it is first locked in the originating blockchain. A corresponding proxy asset is then minted on the Wanchain network. This locked account is generated through a secure cryptographic scheme, ensuring that the original asset can only be unlocked by the rightful owner.
Privacy is a significant concern in any financial transaction. Wanchain addresses this by incorporating smart contract token transaction anonymity features. It employs a one-time account system and a ring signature scheme to provide optional transaction privacy.
The one-time account system ensures that each transaction is linked to a unique account, making it difficult to trace back to the original sender. The ring signature scheme adds another layer of anonymity by allowing the sender to hide among a group of users, making it nearly impossible to identify the actual sender.
Galaxy Consensus is Wanchain's unique consensus algorithm designed to enhance the blockchain's security, scalability, and efficiency. It is a sophisticated mechanism that combines elements of randomness, stake rate, and cryptographic proof to ensure a fair and secure network. Here's how it works:
The Galaxy Consensus operates in epochs, which are time periods during which a group of nodes, known as the EL group, is responsible for block production. The EL group is a multiset, meaning a single node may appear in it more than once. The nodes in this group are selected based on their stake rate, ensuring that those with higher stakes have a better chance of being chosen.
Within each epoch, the actual block producer for each slot (a smaller time unit within an epoch) needs to be determined. This is where the slot leader selection process comes into play. The algorithm uses a combination of the current random number, the epoch number, and the slot number, hashes them together, and then takes the modulus of the number of EL group nodes to pick the slot leader.
For example, if the hash value is 2019 and there are 50 nodes in the EL group, the modulus result will be 19. The EL node with the number 19 in the order from the previous sorting step is then selected as the valid block producer, also known as the slot leader.
The slot leader selection process is designed to be fair, verifiable, and anonymous. It is fair because it considers the stake rate when selecting the EL group nodes, ensuring that the choice of the block producer is made in accordance with the ratio of stake held by consensus participants.
It is verifiable because the valid block producer must provide proof of its validity when proposing a block. This proof is publicly verifiable, guaranteeing the legitimacy of the block.
Lastly, it is anonymous because the secret message array used in the selection of the slot leader is shared only within the EL group. Other nodes have no knowledge of it, ensuring the anonymity of the selection process.
The underlying algorithm for this process is known as the ULS (Universal Leader Selection) algorithm. It is a design that fully considers fairness, verifiability, and anonymity. The ULS algorithm plays a crucial role in ensuring the safety and liveness of the Wanchain blockchain.
In summary, Galaxy Consensus is a robust and intricate system that aims to solve many of the challenges faced by traditional consensus algorithms. By incorporating elements of randomness, stake-based selection, and cryptographic proof, it offers a balanced approach to block production that is both secure and efficient.
The Wanchain-Cardano bridge signifies a pivotal moment in the realm of blockchain interoperability. While specific technical details are limited, the bridge aims to connect Cardano, a blockchain platform with a focus on sustainability and peer-reviewed research, with Wanchain's existing cross-chain infrastructure. This move brings Wanchain's vision of a fully interoperable blockchain ecosystem closer to reality.
As explained before Wanchain's cross-chain bridges rely on a set of decentralized nodes known as Storeman nodes. These nodes play a crucial role in facilitating asset transfers between different blockchains. In the context of the Wanchain-Cardano bridge, Storeman nodes are responsible for locking assets like ADA on the Cardano blockchain and minting corresponding proxy assets on the Wanchain network. This mechanism ensures the secure and seamless transfer of value between the two ecosystems.
Both Wanchain and Cardano have robust smart contract capabilities, which opens the door for more than just simple asset transfers. The bridge could potentially support complex decentralized applications that leverage smart contracts from both ecosystems. This would allow developers and users to engage in more intricate interactions, thereby enriching both the Wanchain and Cardano platforms.
The bridge also aims to foster a community of developers, users, and ambassadors who are interested in blockchain interoperability. By connecting Cardano to Wanchain's existing network of over 20 public blockchains, the bridge not only enhances the utility of both platforms but also creates opportunities for community members to collaborate on cross-chain solutions.
Wanchain is very easy to use. Wanchain supports multiple wallets including its own wallet. WanWallet can be used on Windows, Mac and Linux computers and iOS and Android Mobile Devices. Also users can use Metamask wallet with Wanchain. To use it with Cardano, users can use Nami wallet.
Cross-chain transactions can be costly depending on the chains the user chooses. For example, sending ADA from Cardano to Ethereum costs 50 ADA per transaction or sending BTC from Bitcoin to Ethereum can cost between 0.0005 BTC to 0.5 BTC($13,679). On the other hand, transactions from a blockchain to Wanchain is much cheaper or free. For example sending ADA from Cardano to Wanchain is free but sending ADA from Wanchain to Cardano costs 7.5 WAN($1.38).
The cross-chain transactions usually take around 30 minutes which is impressive compared to other bridge applications. Some bridges can take days to complete transactions.
Wanchain is an impressive project. The Wanchain cross-chain bridge opens new possibilities for a variety of blockchains and the tools on them. Users can transfer their assets easily to other blockchains to use different services like DeFi applications with Wanchain. The Wanchain-Cardano bridge is a significant milestone in the ongoing efforts to achieve full blockchain interoperability. By leveraging Wanchain's proven cross-chain mechanisms and Cardano's advanced blockchain technology, the bridge promises to offer a range of functionalities that go beyond mere asset transfers. While the specifics are yet to be fully disclosed, the bridge is poised to be a game-changer in how blockchains interact and share value.
Author: Emir Olgun
Date: 17 October 2023
Cross-chain refers to the interoperability between different blockchain networks, allowing assets and data to be transferred seamlessly from one blockchain to another. This is crucial for enhancing the utility and scalability of blockchain applications. Various technologies like atomic swaps, wrapped tokens, and blockchain bridges facilitate cross-chain transactions. The goal is to create a more interconnected and efficient ecosystem, where you're not limited by the capabilities or assets of a single blockchain.
Author: Frank Chukwurah
Date: 14/10/2023
Have you heard about Milkomeda? If you’ve not heard it about, don’t fret! I'm about to plug you into a game-changer. Milkomeda exists to be a groundbreaking protocol designed with the intent to power several leading blockchain's in the industry such as Algorand, Terra, Solana, and the likes of Cardano. This build will exponentially level-up and create a path for long-term scaling.
For the sake of clarity, Milkomeda fosters interoperability; enabling applications to work swiftly in multiple chains. Imagine that your favorite Android app could also work on your iPhone without any changes!
In this article, we will embark on an explorative journey, discussing what Milkomeda is and how it's contributing to the blossoming work of blockchain technology.
Milkomeda, a layer2 protocol pioneering both Cardano and Algorand. It’s dedicated to offering Ethereum Virtual Machine (EVM) compatibility. More so, we have a Milkomeda A1 (Algorand) and C1 (Cardano), these are the two of the most popular products that keeps the platform up and running whilst enabling individuals to interact with a wide variety of assets and blockchain's as well.
Milkomeda A1 is one of the promising EVM Rollup owing its existence to Algorand blockchain as a Layer2 solution. For greater benefits, Milkomeda a1 provides rapid and low-cost transactions, making it a center of attraction for DeFi applications and platforms. Milkomeda A1, at its core, seeks to empower developers by enabling them to leverage the full potential of the EVM ecosystem plus, Solidity smart contracts, ERC-20 tokens, and other DeFi protocols contributing to the public good.
The sole purpose of Milkomeda A1 is to provide faster and cheaper transactions on the Algorand network. We’ve all been there! Everyone is talking about Ethereum gas fees - I’ve been holding $15 worth of USDC in my Etherum wallet for 5 months now! I’d probably need around $20 worth of ETH for gas - This is where Algorand comes in, users can seamlessly transact with Ethereum-based assets and smart contracts in a permissionless and trustless manner whilst reducing gas fees and increasing yield.
On the other hand, we have Milkomeda C1. It is a layer 2 EVM Rollup solution for Cardano blockchain. The execution of this Rollup will allow Cardano to access the benefits of EVM, making the creation and execution of smart contracts with ease as you would on Ethereum.
Security is at the forefront of Milkomeda C1, it achieves this through a combination of technique known as a zkSNARK-based proof system. Just like Zcash - a digital currency that keeps transaction information private, Milkomeda C1 is no different - Zero-Knowledge helps to ensure that all transactions handled by Milkomeda C1 are valid and free of malicious activity. Furthermore, Milkomeda C1 smart contracts allow users to deposit funds with ease, and execute transactions in a trustless and decentralized manner.
At the moment, Milkomeda have not launched its own native token yet! However, the protocol leverages wrapped tokens from other popular blockchain networks to enable transactions.
There are currently two major wrapped tokens that are used on Milkomeda, they are:
MilkADA
MilkAlgo
MilkADA is a wrapped token that was coined from ADA - Cardano's native cryptocurrency. MilkADA will function as a settlement currency for transactions on the Milkomeda C1 EVM Rollup. Users can swiftly create the MilkADA wrapped token by depositing ADA into a smart contract on the Cardano blockchain.
Following that, MilkAlgo is a wrapped token that was coined from ALGO - of Algorand's native cryptocurrency, it would serve as a mean of Exchange and settlement of transactions on the milkomeda A1 ecosystem.
Scalability is very pivotal and it makes Milkomeda to be able to scale hundreds of transactions per second without sacrificing long-term decentralization.
In the paragraph above, we discussed the importance of zkSNARK. It handles the security and privacy side of things; Milkomeda aims to leverage the power of Rollups for all chains, it has also been audited by two of the biggest blockchain security technology companies - Certik and Certora, to ensure security of the protocol.
Here at Milkomeda, we prioritize user experience like our life depends on it, Milkomeda has joined forces with several wallets to ensure the movement of assets to Milkomeda is straightforward.
Interoperability is crucial to the mainstream blockchain adoption; Milkomeda will support Solidity (EVM) and much more.
Milkomeda ensures portability; developers only to to write their code only once and they can deploy everywhere conveniently. All of the tooling and resources of Ethereum are open to all developers.
One of the key components of the Milkomeda protocol is the Milkomeda Bridge, it fosters cross-chain asset using a set of smart contracts that monitors, verifies the movement or transfers of assets between blockchain's that are connected. The Milkomeda Bridge works by creating a temporary wallet on the target chain when an individual initiates a transfer of digital asset from one blockchain to another.
In light of the Milkomeda C1 sidechain, it uses MilkADA as the base asest for incentivizes and gas,to get started, you should get a Cardano wallet with some ADA as well as the MetaMask browser extension.
Getting a Cardano Wallet (Flint)
Firstly, install the Flint wallet. The latest version of Flint wallet enables "Milkomeda mode" to initiate transactions to the Milkomeda C1 sidechain.
After you've successfully installed Flint, click "Lets Begin", choose your preferred language, agree to the terms and conditions. Once you land on the Network screen, select the Mainnet button. Confirm, follow the prompt and "Create New Wallet." Once that is done, you,ll need to fund your wallet with some ADA, next we need to configure MetaMask.
Setting up Milkomeda wallet (MetaMask)
Moving forward, we need to get a wallet address on the Milkomeda C1 sidechain for receiving our MilkADA, we'll use MetaMask for this step.
Install the MetaMask Chrome Extension and create a wallet address if you do not have one. Always keep your private key safe. Select the network drop down at the top right, then select "Add Network," and enter the following.
Once that is down, click "Save", by now you should see "Milkomeda Cardano C1" in the network drop down. Copy your C1 wallet address as we'll be needing it soon!
Wrapping Assets on Milkomeda C1
Launch your Flint wallet and navigate to the "Send" window. Toggle "Milkomeda mode", paste the C1 wallet address you copied a few minutes ago, enter the amount you wish to send and click ""Continue."
Enter your password and hit "Send". The takes around 5 minutes, once the transaction is confirmed, MilkADA will be visible in your C1 wallet in MetaMask.
The Milkomeda A1 Rollups leverages MilkALGO as a base asesst for transaction fees and gas - to access this Rollup, users need a Algorand native wallet holding some $ALGO token, and MetaMask wallet as well.
Configure Wallet & Obtain Test Algo
In other to interact with the Milkomeda Algorand Bridge, you should configure an Algorand wallet such as MyAlgo. Once you've successfully created your new wallet, you need to obtain Test ALGO. This will enable you to interact with the Bridge dApp. Visit the Test ALGO Explorer, paste your new created wallet address and click Dispense; you should be able to see some tALGO in your Algorand Testnet wallet.
Configure MetaMask
Wrapping Assets With Milkomeda Bridge
To transfer assets from the Algorand mainchain to Milkomeda A1 Rollup, you will use the desicated bridge - If you want to wrap your asset onto the A1 Rollup,goto the Milkomeda A1 Bridge navigate.
Next, connect MyAlgo wallet with MetaMask. Click connect on the Origin side and your MyAlgo wallet will require your password, confirm which account you'll connect to the dApp. On the Destination side, click connect wallet, confirm which network you're switching to (if you're not already connected to it to the Milkomeda A1 network).
After the transfer is done, the Bridge submits a request to the target chain's smart contract for minting a wrapped version of the asset. Once the transaction is verified and confirmed, these wrapped asset (MilkAlgo) can be freely transferred and utilized on the target chain.
Interoperability has been a pressing challenge for blockchain industries having known that different blockchain's have their own peculiar characteristics, such as consensus algorithms, smart contract languages, and network infrastructures. Milkomeda rose to prominence as a cutting-edge technology protocol that allows interoperability between blockchain's by providing an EVM-compatible layer 2 which will enable non-EVM blockchain's to access EVM capabilities.
Any individual looking to explore and witness how Milkomeda solves the problem of interoperability would need to determine the blockchain network he wants to connect to Milkomeda for getting started. Say you’re looking to connect Cardano to Milkomeda, you need Milkomeda C1, and if its Algorand you want to connect to Milkomeda, you’ll need Milkomeda A1. Once you’ve selected the Milkomeda Rollup that suit your needs, simply create a wallet address on the blockchain network you selected.
Lets cut to the chase, since the Milkomeda protocol is based on zkSNARKS, privacy and security cannot be compromised; it is also audited by two of the industry-leading blockchain autitors - Certik and Certora. Our token completely save from negative expliots, no loopholes and it's also very fast while carrying out transactions.
It is worth mentioning that users could create and deploy smart contracts easily on the EVM Rollup. Whatever your needs are, you can take full control of the Ethereum Virtual Machine. Users can create and deploy their own decentralized applications without worrying about the ETH gas fees or scalability limitations encountered by users while leveraging the Ethereum mainnet.
Lastly, stablecoins such as DJED usually play an essential role in the decentralized finance ecosystem because they offer a means of exchange without the volatility of cryptocurrencies. In that same light, the Milkomeda A1 and C1 EVM Rollups connects to the Algorand and Cardano blockchain's as layer 2s, individually, they will provide an excellent platform for stablecoin development and solve the problem of interoperability in the blockchain industry.
Additional Links
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Author: Emir Olgun
Date: 5 October 2023
Blockchains, by their nature, are isolated from the outside world. This isolation is an advantage in most cases such as security and predictability. This isolation also has some disadvantages. For example, interchain operations require different blockchains to communicate or services like DeFi need to access off-chain market data. To address this issue we have blockchain oracles. An oracle is a bridge between a blockchain and the outside world where this outside world can be another blockchain. It provides real-world data to smart contracts on the blockchain, enabling them to make decisions based on external information like stock prices, weather, or sports match scores.
On the top level, there are two types of oracles which are Software Oracles and Hardware Oracles. The difference between them is the way they interact with the outside world.
Software oracles are programs that connect smart contracts to online resources. They can pull informations like stock prices, weather forecats, or currency exchange rates from various online sources, usually through APIs or they can update online resources according to the outcome of smart contracts.
Hardware oracles connect blockchains to the actual real world. They can collect data from physical devices, such as sensors or RFID tags, and provide it to smart contracts on a blockchain. They can also interact with real world machines according to the information on blockchain, for example, a hardware oracle can unlock a rental car when a customer pays for the car on blockchain.
Oracles can also be categorized for the way they operate or their purpose. These are some important types of oracles:
Input Oracles
Output Oracles
Cross-Chain Oracles
Compute-Enabled Oracles
Human Oracles
Input oracles are one of the most popular oracles. They fetch data from the off-chain sources and deliver them onto a blockchain network to be used by smart contracts.
The output oracles are the exact opposite of input oracles. These oracles deliver the on-chain data from smart contracts to the off-chain sources. The example mentioned before of a rental car unlocking is an example of an output oracle.
Cross chain oracles deliver on-chain information from one chain to a completely different blockchain. They are very important because they are currently the only reliable way to conduct inter-chain operations.
Compute-Enabled Oracles allow smart contracts to use secure off-chain computation for services that are impractiocal to do on-chain due to technical or other constraints.
Human oracles are individuals who manually provide data to smart contracts on a blockchain. They are often used in decentralized prediction markets or voting systems where human judgment or expertise is required. While they add the element of human insight, they also introduce the risk of human error or manipulation.
Oracles can be seperated into two categories based on how they work, Centralized Oracles and Decentralized Oracles. For anyone who is familiar with the blockchain environment, decentralized oracles might seem to be the better solution and it usually is. Let's take a look at how they work.
Centralized oracles provide a single data provider for the on-chain contracts with a set of security features. These oracles are easier to set up and require not much resources to operate. They are as accurate as the reputation of the entity behind it. They always have the risk of single point of failure. They can be vulnerable to common issues centralized etities face like DDOS attacks, downtimes, hacks, accidental incompetence, and malicious intent of the entity.
Decentralized oracles basically use multiple data providers for on-chain smart contracts. Decentralized oracles operate a network of oracles to provide and verify the data provided. There are variety of mechanisms to verify accuracy and incentivize nodes, one popular mechanism is SchellingCoin Mechanism. Running decentralized oracles can be costly and slow.
The SchellingCoin mechanism is a game-theoretic model used to incentivize honest reporting in decentralized systems, like oracles. Participants are rewarded for submitting data that aligns with the majority consensus. The idea is that truthful reporting is the most rational strategy because individuals expect others to report truthfully to maximize their own rewards.
Participants independently and simultaneously report a value (e.g., the current temperature).
The reports are collected and sorted.
Rewards are distributed to those whose reports are close to the median or mean, assuming that the majority are honest. Advantages:
Encourages honest reporting.
Reduces the impact of outliers or malicious actors. Disadvantages:
Susceptible to "51% attacks" if a majority collude to report false information.
May not work well for subjective or complex data. Given your interest in building reliable systems, you might find the SchellingCoin mechanism interesting as a way to ensure data integrity in decentralized networks. It's a method to align individual incentives with collective honesty.
Blockchain oracles are essential for connecting smart contracts to real-world data, making them more versatile and useful across industries like finance and supply chain management. They enhance the trustworthiness of blockchain applications and facilitate interoperability between different networks. However, it's important to note that oracles can introduce risks, such as a single point of failure in centralized setups or potential data inaccuracies. These risks need to be carefully managed to maintain the integrity and security of the blockchain system.
Author: Emir Olgun
Date: 10 October 2023
Oracles are essential for blockchains. Blockchains can not interact with the outside world and only way to connect the blockchain and the outside world is through oracles. Blockchain projects can have actual impacts on the real world and can also bring real world assets to the blockchain.
Cardano for a long time, lacked an oracle service. Chainlink and Charli3 announced they were working on oracle projects on Cardano in recent years. Charli3 finally launched its oracle on Cardano mainnet this year. We will take a deep dive into Charli3 oracle in this document.
Charli3 currently offers an input oracle, which fetches off-chain data to on-chain smart contracts. Currently Charli3 offers an oracle that fetches ADA to USD exchange rate information to the Cardano mainnet. [Image1] This transaction is an Update Node transaction and it was done by one of the nodes recently with a Node NFT and a datum attached to the UTxO with information of ADA to USD exchange rate. [Image2] This is the datum of the Node UTxO with information of the exchange rate. [Image3] Here we can see the aggregate transaction that calculates the exhcange rate. This transaction updates the datum of Feed and Aggregate NFTs. [Image4] This is the datum of aggregate UTxO. It has the Public Key Hashes(PKH) of the wallets that can feed node UTxO to the contract. and the rewards for these wallets.
In order to understand how Charli3 Oracles work, we need to have a basic understanding of Cardano's Smart Contracts and Extended UTxO model.
A smart contract is, in the most basic terms, an executable program running on the blockchain. This program is a contract that checks for certain conditions, which are pre-determined, to execute a transaction. The importance of smart contracts is they provide trust between opposite parties of the transaction as the conditions of the contract can be seen by anyone and these conditions are not alterable. If the conditions of the smart contract cannot be met, the funds locked in the smart contract can never be accessed by anyone, it is absolutely impossible. Cardano smart contracts can access some information about transactions, which are:
Datum: Piece of data attached to the UTxO
Redeemer: Piece of data attached to the input.
Context: Piece of data representing information about the spending transaction.
UTxO Model
Cardano is using Unspent Transaction Model for its ledger on contrary to blockchains like Ethereum which they are Account-Based blockchains. In Cardano, each transaction has inputs and outputs. The transaction input is the unspent output of a previous transaction. Assets are stored on the ledger in unspent outputs, rather than in accounts.
A transaction output is made up of an address and a value. The address is the key to spend this unspent transaction output and the value is the amount of ADA in this output. So when you look inside your Cardano wallet, you are seeing different UTxOs that has your address inside them.
A transaction input is the output of a previous transaction. Transaction inputs are made up of a pointer and a cryptographic signature which acts as the unlocking key. The pointer inside the input points back to a previous transaction output, and the key unlocks this output. When that outpu is unlocked, it is marked as spent by the blockchain and new unspent outputs are created. Now we can learn the EUTxO or Extended UTxO model.
EUTxO Model
Extended UTxO model adds a bunch of different features to the UTxO Model. One important feature is addresses in the EUTxO model can contain arbitrary logic in the form of scripts. The transaction looks up the script provided by the output address and executes the script if the transaction is allowed to use the output as an input. Another fetaure of the EUTxO model is the outputs can also include an arbitrary data in addition to a value and an address so they can carry state information.
On the basic level, an oracle contract works with five different UTxOs. These UTxOs are:
Node UTxO: UTxO with datum that includes information about the wallet that can consume it and off-chain data. This UTxO also has a Node NFT to be identified by the contract accordingly.
Aggregate UTxO: UTxO with datum that includes information about contract settings, defining how information from the Node UTxOs is processed. This UTxO also has a Aggregate's NFT and a specific amount of C3 tokens. These tokens are used to reward for Node UTxO owners who are consistent.
Reward UTxO: This UTxO has individual records for each node's earned rewards, a Reward NFT, and C3 tokens.
Feed UTxO: This UTxO stores processed data generated by the Node UTxOs and a Feed NFT.
Reference Script UTxO: This UTxO stores contract's scripts on blockchain in order to increase efficiency.
Consensus Algorithm
Charli3 oracles can be fed by a single node or multiple nodes. When the oracle contract executes the Aggregate transaction(transaction that takes in all oracle UTxOs and calculate new Feed UTxO's datum), the contract reads all Node UTxOs and their information is calculated into the final feed by taking the median value of the Node UTxO datums and fed into the Feed UTxO through the consensus algorithm. Nodes whose input datums do not exceed the Mean Absolute Deviation and Standard Deviation values of the contract are rewarded.
Writers Opinion on the Oracle Contract
Charli3 oracle is designed to only accept inputs from pre determined wallets. This is done by specific NFTs with the wallet information and the oracle settings. The security mechanism for the feeders have three checkpoints which are:
Node NFT with wallet information.
Oracle settings with authorized walelts.
Possession of the Node NFT.
With these multiple barriers, input from a non-authorized wallet is impossible. Charli3 oracle rewards the nodes that feed accurate data consistently and discards the data fed by corrupted nodes. A concern comes to mind is if the majority of nodes feed corrupted data, the consensus algorithm will probably process this corrupt data data just like a %51 attack on a blockchain. Blockchains avoid this issue with their almost infinite number of nodes. An oracle with a large number of nodes can be almost as safe as the blockchain but that creates another issue, running cost. When we checked the oracle transactions on a blockchain explorer, we found that the update node transaction cost is 0.21 ADA for each node operator. As these node operators are compensated for these expenses, these costs increase the running cost of the oracle. An oracle with 1000 nodes and if these nodes update information every 30 minutes, just the update Node transaction cost is around 2500 USD per day. Here is the basic equation that shows the relationship between number of nodes, the oracle settings and the cost:
$kNS=C$
k: constant N: number of nodes S: oracle settings, mainly the update frequency for the nodes.
Charli3 currently offers a very limited oracle service.
Charli3 Oracle Operation
https://docs.charli3.io/charli3s-documentation/oracles-operation
https://docs.charli3.io/charli3s-documentation/infrastructure
https://docs.charli3.io/charli3s-documentation/live-c3-networks
Author: Frank Chukwurah
Date: 15/10/2023
Let’s cut right to the chase, in this article, we’ll be exploring two different apps; these apps are Celer Network and Nu.fi — these apps use Milkomeda respectively.
From a bird’s-eye view, interoperability has been a stumbling block for many projects in the blockchain industry. But hey, the blockchain industry has taken a new turn since the introduction of bridges. Just like a bridge connects two physical locations together in the real world, bridges are also crucial for blockchains because they foster the connection of several distinct blockchains while enabling users to transfer data and assets across different blockchains.
Without further ado, let’s jump right in! First off, I’ll introduce Celer cBridge.
The Celer cBridge is known to be a decentralized and non-custodial asset bridge that supports over 170+ native tokens across 40+ blockchain networks and layer-2 Rollups.
There are two distinct models that facilitate the transfer of assets across different chains on cBridge, they are:
The Pool-Based Bridge works by creating two liquidity pools on the transfer and destination chains, respectively. Since Celer cBridge allows for the bridging of tokens across diverse chains, the StableSwap pricing curve will be implemented to dynamically alter the bridge rate based on the balances of the two liquidity pools that were created.
To facilitate token transfers on cBridge, cBridge uses a PeggedToken contract that mints pegged tokens for users or burns them on the destination chain. It works by transferring tokens from the transfer chain to the destination chain, these tokens will be locked on your transfer chain, but you will receive an equivalent amount of minted pegged tokens on the destination chain as well.
Thankfully, Celer cBridge supports a variety of wallets including but not limited to MetaMask, Coinbase Wallet, WalletConnect, Clover, and Coin98 Wallet, just to name a few. Select your desired wallet to start moving assets across multiple chains with a single click of a mouse (e.g. MetaMask). A prompt will be displayed, asking if you’d like to switch the network. To go forward, click on the switch network button.
After you’ve successfully switched to the preferred network, select your sending and receiving as well. For instance, let’s say we want to move an Ethereum token to the Aptos chain, simply select Ethereum on the “From” section and Aptos on the “To” section. You can also click the token drop-down to see more tokens that can be bridged.
Finally, click on the gear button, this will allow you to adjust the slippage tolerance after your preferred Aptos wallet has been connected. Next, review the transfer details and click on Transfer. Approve the transaction, confirm, and your transaction will be completed in a few minutes. It only takes around 5–20 minutes. To check if you have received your Ethereum token, you can switch to the Aptos chain.
That’s all for Celer cBridge, we now move to the second blockchain bridge which is called NuFi Bridge.
NuFi exists to be a non-custodial crypto wallet that was solely designed to make crypto staking secure and easy on multiple PoS blockchains including Cardano (ADA).
First things first, you should disable your MetaMask/Flint wallet extensions if you have them installed already! (Click Extensions icon > Manage extensions > Turn MetaMask/Flint off).
When connecting to any dApps, select connect with MetaMask/Flint, we just disabled that a few minutes ago right? Yes! Don’t fret! NuFi will open instead.
Thankfully, the wallet emulation mode will enable NuFi to connect in place of popular wallets on Cardano, Ethereum, Milkomeda C1 plus, and Solana blockchains (since other wallet extensions have been disabled).
Select connect with MetaMask/Flint and NuFi will open in place of MetaMask/Flint.
You will get a prompt asking you to connect your NuFi wallet, Cardano and Milkomeda C1 accounts.
You can now start bridging ADA from Cardano to Milkomeda C1, where it becomes MilkADA (the native asset used to pay gas fees).
N.B: Keep in mind that you may need to import a Milkomeda token’s information before it displays in your NuFi wallet. To do that, navigate to Manage Account on the Accounts screen, and click Import Token. Simply paste the token’s contract address or search for the token from the drop-down list.
Select connect with MetaMask/Flint and NuFi will open in place of MetaMask/Flint.
You will get a prompt asking you to connect your Nufi wallet, Cardano, and Milkomeda C1 accounts.
Finally, bridge assets between chains. Assets bridged to Milkomeda C1 can be swapped for MilkADA and other tokens.
N.B: Bridging assets from Ethereum or Cardano to Milkomeda C1, will require some amount of MilkADA to pay gas fees for every transaction (sending assets, farming, swaps, etc.) However, if you can’t trade for MilkADA with those assets that you bridged, clearly you don’t have MilkADA to pay swaps, simply bridge ADA from Cardano to Milkomeda C1 to create MilkADA — that’s it!
Again, if you don’t have any ADA, don’t fret! You can swap ETH (or 400+ other assets) for ADA directly in your NuFi wallet.
Atomic swaps are a groundbreaking technology that enables the direct, peer-to-peer exchange of cryptocurrencies between different blockchain networks. They offer a decentralized, secure, and efficient way to trade digital assets without relying on centralized exchanges or third-party intermediaries. This document aims to provide an in-depth understanding of atomic swaps, how they work, and how they compare to other methods like blockchain bridges. We will also delve into the onely atomic Swap service built on the Cardano blockchain which is also called .
Atomic swaps utilize smart contracts and cryptographic techniques to facilitate asset exchange. The core mechanism involves Hash Time-Locked Contracts (HTLCs), which lock the assets being swapped until certain conditions are met. Both parties create HTLCs on their respective blockchains, and the assets are released simultaneously once the conditions are fulfilled. This ensures that the swap is "atomic," meaning it either happens entirely or not at all.
HTLCs: Hash Time-Locked Contracts lock the assets and set conditions for the trade.
Multisig Transactions: Require multiple signatures to authorize a transaction.
Time Locks: Ensure that assets are returned if conditions are not met within a specified time.
Blockchain bridges are another solution for cross-chain interoperability. Unlike atomic swaps, bridges often involve third-party validators and are not always fully decentralized. Here are some key differences:
User Experience: Bridges can be more user-friendly but may require trust in third-party validators.
Complex Transactions: Bridges can support more complex transactions like transferring NFTs or executing smart contracts across chains.
Security: Bridges introduce potential points of failure, making them less secure than atomic swaps.
Pros
Decentralization: Atomic swaps are fully decentralized, eliminating the need for a trusted third party or centralized exchange.
Security: The use of cryptographic proofs and smart contracts like HTLCs ensures a secure transaction, minimizing the risk of fraud.
Privacy: Since transactions are peer-to-peer, there's no need to share personal information with an intermediary, enhancing privacy.
Reduced Costs: Without the need for third-party services, transaction fees can be significantly lower.
Interoperability: Atomic swaps facilitate seamless transactions between different blockchains, enhancing the utility of digital assets.
Transparency: All transactions are recorded on the blockchain, providing a transparent and immutable history.
Cons
Complexity: The underlying technology can be complex, making it less accessible for users who are not tech-savvy.
Limited Support: Not all blockchains support the features needed for atomic swaps, such as HTLCs, limiting the range of possible swaps.
Time Sensitivity: The use of time-locked contracts means that both parties need to be online and act within a specific timeframe, which may not always be convenient.
Liquidity Issues: In a decentralized setting, finding a matching party for a swap can be challenging, especially for less popular assets.
Risk of Code Flaws: While smart contracts aim to ensure security, they are only as reliable as the code they are written in. Bugs can introduce vulnerabilities.
The Atomic Swap service built on Cardano, as described in its whitepaper, allows for synchronous P2P trading of any number of assets, including tokens and NFTs. It eliminates the need for smart contracts and escrow services by using multisig transactions.
UTxO Model Cardano employs the Unspent Transaction Output (UTxO) model to represent assets electronically. Each UTxO can be thought of as a digital coin with a specific value, which can vary from fractions to millions. When you want to make a transaction, you have to use the entire UTxO and then send the change back to yourself. This ensures that the inputs and outputs of a transaction are always balanced.
Native Assets Cardano supports native assets that reside in UTxOs. These assets are identified by a policyID and an asset name, making them unique and easily tradable. The policyID is the hash of the script that defines the conditions under which the asset can be minted or burned.
Min ADA Amount Every UTxO on Cardano must contain a minimum amount of ADA to prevent network spam. The minimum ADA requirement is dependent on the size of the UTxO and increases with the number of distinct native assets.
Multi-Signature Transactions Multisig transactions require multiple keys to authorize a transaction. These keys can be controlled by different wallets, adding an extra layer of security.
The algorithm for executing a swap involves several steps, each serving a specific purpose:
Add Commission UTxO: The algorithm starts by adding a UTxO to cover the commission fees for the transaction.
Add Receiver UTxOs: UTxOs containing what each participant will receive are added next.
Estimate Fee: The network fee is estimated at this stage.
Add Sender Inputs: Inputs to cover what each participant will be sending are added, along with half of the estimated fee and half of the commission.
Calculate Change: The algorithm estimates the change that each participant will receive.
Balance Equation: The algorithm ensures that the equation inputB + inputA == commissionB + commissionA + fee + changeB + changeA + receiveA + receiveB holds true. If it doesn't, the algorithm adjusts the inputs and runs again.
The algorithm solves a "chicken and egg" problem related to transaction fees. The fee is based on the size of the transaction, which depends on the number of inputs and outputs. However, the size can't be known until all inputs and outputs are added, which in turn depends on the fee. This is resolved by running the algorithm multiple times until it reaches a fixed point.
Before finalizing the transaction, users can scrutinize the transaction sign screen to ensure that the transaction details match their expectations. This step is crucial for security and prevents any unauthorized or fraudulent activities.
The Atomic Swap service on Cardano offers a secure, efficient, and decentralized way to perform complex asset exchanges. It's particularly well-suited for trading low-liquidity assets like NFTs, as it minimizes counterparty risk and eliminates the need for a trusted third party. By understanding its underlying technology and algorithmic steps, users can confidently engage in asset swaps on the Cardano network.
This article is centered on two Cardano oracles namely, Orcfax and Chainlink. What do these oracles do? How do they work? Let’s find it.
A Blockchain oracle is a third-party service built to provide external information for smart contracts. Oracles serve as a bridge between different blockchains and the outside world. Since blockchain networks and smart contracts cannot access off-chain data (data that is outside of the network) they rely on oracles to enable them provide a link between off-chain and on-chain data.
It is necessary to know that oracles are not the data source instead, they act as a layer that queries, verifies, and authenticates external data sources. That brings us to .
Orcfax implements the open-source Cardano Open Oracle Protocol (COOP) and provides Cardano developers with well-structured tools and schemas to consume trustworthy off-chain data in their smart contracts. The goal of this oracle is to collect real-world data from various sources for each data point and is working on the principle of a distributed network of validator nodes to deliver truly decentralized oracle feeds.
With orcfax, all data are archived forever, they are stored on decentralized, lasting storage medium using a standards-compliant archival packaging format that gives permanent access and re-use of this data.
Orcfax is thoroughly auditable, it allows for permanent audit trails (in human readable format) for all data feed activity.
Orcfax was built to easily fetch triangulated data without hurdles, all feed data collected from multiple primary sources. Additionally, Orcfax created and implements the Cardano Open Oracle Protocol as an open standard designed to support and enhance eUTXO publication and also reduce on-chain fees.
The Orcfax oracle is fine-tuned to boost and help Cardano developers as they deliver authentic and accurate oracle data on-chain. Thanks to the Orcfax utility token that enable their members join governance conversations, oracle data publications, and for rewarding node validators.
Chainlink is also a decentralized network of nodes deployed to provide data and information from off-blockchain sources to on-blockchain smart contracts via oracles. Chainlink’s blockchain is hosted on the Ethereum platform, it leverages the proof-of-stake operating protocol. Additionally, it is also an open-source blockchain project, that means anyone can view the project’s code and contribute anywhere around the world.
Chainlink was designed to support decentralized data feeds, meaning it securely collects and process data from many sources for hybrid smart contracts.
Applications such as games that require cryptographically secured randomness can make use of Chainlink. The chainlink smart contract can as well automate critical functions and event-driven tasks for enterprises.
Chainlink was designed to support cross-blockchain interoperability, because that is one of the major problems in the industry. When using chainlink, users can connect blockchain platforms to support the exchange of messages, tokens, and specific actions.
Just so you know, LINk token is the native cryptocurrency of the Chainlink network used to incentivize node operators so they can provide data to smart contracts and pay for the network’s oracle services. LINK can also be bought and sold on cryptocurrency exchanges like other cryptocurrencies.
How Does ChainLink Work?
The Chainlink oracle network comprises of multiple Node operators trustworthy for providing data to smart contracts.
Chainlink oracle is controlled by “Node operators.” These node operators are rewarded with the LINK tokens for providing data to smart contracts. If they keep providing more accurate and reliable data, the node operators will earn more LINK. To this effect, node operators are incentivized to offer high-quality data and help ensure the network’s security and reliability.
In other for smart contract developers and users to access the network’s oracle services, they will need to pay a small fee in LINK. The fees generated is used by Chainlink to compensate the node operators for providing the data and to cover the costs of maintaining the network.
One major advantage of using chainlink is that it undergoes regular security audits, several security measures are also carried out to make sure there’s a smooth flow of communication between blockchains, this protects against hackers and malicious attacks. Another interesting reason why I should root for Chainlink is because it handles many requests from smart contracts, providing fast and reliable responses, making it suitable for high-frequency trading.
Install MetaMask, once its up and running, Add Network from the dropdown list and enter the following and save:
To start wrapping your assets, Select Algorand to Milkomeda from the "Network Origin" menu then choose the token you want to wrap. For example, ALGO.
Input how many test ALGOs you want to transfer to the A1 Rollup. Following that, click "Next" to view the trasaction summaty - it includes "Estimated Fees" and "Estimated Wrapping Confirmation Time."
Hit "Sign and Send" confirm; you token will be sent to the bridge, wrapped, and also sent received by your MetaMask wallet on the Milkomeda Algorand A1 Rollup! It takes around 20 seconds to comfirm.
To start exploring the Celer Bridge transfer, you can , it is very straightforward and doesn’t require any technical know-how.
More so, you will also get insights into the amount you will receive by entering the quantity of Ethereum token you wish to send. Once you’ve input it, connect to Aptos wallet to receive the fund.
With the NuFi bridge, it’s easy to move assets between chains using permission-less bridges. Users do not need a centralized exchange like Binance to swap ETH for ADA. The NuFi wallet now supports Cardano, Milkomeda C1, and Ethereum blockchain as well. Having known that, you’ll also need to .
If you already have MetaMask/Flint wallets turned on or installed, kindly disable and have them turned off; then visit
Firstly, MetaMask should be disabled if you have them on already. Then, head over to .
Sidechains emerge as a fascinating innovation in the blockchain landscape, designed to augment the primary blockchain, or what we commonly refer to as the "mainchain." The inception of sidechains is rooted in the need to address inherent limitations in blockchain networks, such as scalability constraints and the rigidity in introducing new features. By facilitating the seamless transfer of assets and data between the mainchain and the sidechain, these auxiliary networks offer a robust solution for tasks that are either too resource-intensive or risky for the mainchain to handle.
At its core, a sidechain is an autonomous blockchain network with its distinct consensus algorithms, rules, and functionalities. It maintains a symbiotic relationship with a mainchain, allowing for a two-way transfer of assets and data. This bi-directional transfer is typically orchestrated through a "two-way peg," a system that ensures the secure locking and unlocking of assets during the transfer. When assets migrate to a sidechain, they are usually locked in the mainchain, and an equivalent amount is minted in the sidechain, thereby preserving the integrity of the asset.
The lifecycle of a sidechain commences with its creation, which necessitates the definition of its operational rules and its interaction protocols with the mainchain. Post-creation, assets can be transferred to the sidechain, a process that involves locking the assets in the mainchain and minting a corresponding amount in the sidechain. These assets are then free to be utilized within the sidechain as per its rules. Post-usage, these assets can be destroyed or "burned" in the sidechain, triggering the unlocking of the original assets in the mainchain. This cycle of locking, transferring, and unlocking is often referred to as "reconciliation," a process that can be either manual or automated based on the implementation.
Scalability stands out as a compelling advantage of sidechains. By diverting specific transactions or functionalities to a sidechain, the mainchain can operate with enhanced efficiency. For instance, a sidechain can be fine-tuned for high-frequency trading activities, thereby liberating the mainchain to manage other types of transactions. Additionally, sidechains serve as experimental sandboxes, enabling the testing of new features and functionalities without jeopardizing the mainchain's stability.
Sidechains also act as conduits for interoperability among diverse blockchains. They can function as bridges, facilitating the free flow of assets and data across multiple networks. This capability unlocks new avenues for cross-chain applications and services. On the security front, sidechains offer an additional layer of protection by isolating risks. In the event of a compromise in the sidechain, the mainchain remains insulated and secure.
Despite their advantages, sidechains are not devoid of challenges. Security measures of the mainchain not necessarily make a sidechain secure. Sidechains can also trade off some measure of decentralization and trustlesness for scalability.
There is recently an interesting sidechain project on Cardano which started in July 2023 called Midnight. Midnight will be a blockchain that focuses on sensitive data protection. More detailed research should be done on Midnight as it developed further in the future.
In essence, sidechains present a versatile and potent solution for scaling blockchain networks and fostering innovation. They hold the potential to mitigate some of the most pressing challenges that plague blockchain technology today. By delving into the architecture, advantages, and challenges of sidechains, we can gain a nuanced understanding of their transformative impact on the blockchain ecosystem.
