Osmosis: Welcome to the Bridge-Off

How to Be Informed When Voting for the OSMO Canonical Bridge

A major step towards an interchain future has been taken with the recently submitted Osmosis proposals to decide on the Canonical Ethereum Bridge Service Provider (BSP). The BSP will enable Osmosis to integrate assets on the Ethereum network and hopefully other chains in the future. Although cross-chain bridges are a temporary solution until IBC functionality is more widely adopted, implementation of the BSP will give users an idea of what that will look like.

This image originally appeared on Osmosis Town Hall — Choosing a Bridge Provider.

Report from Osmosis Labs

In their Great Osmosis Bridge-Off post, the Osmosis team has released the following recommended considerations to guide analysis in line with the long-term vision for Osmosis:

1. UX — ideally, the BSP should be fast, reliable, inexpensive, and invisible;
2. Security — the BSP will be a point of interest for attackers, and should have high technical security as well as mitigation strategies like insurance funds and rate-limiting;
3. Execution — ability to execute more functionality (better cryptography, more chains, NFTs, interchain accounts, and IBC standardization), tooling/integration, and technical competence/focus on bridging; and
4. Reputation/Alignment — commitment to IBC/interchain, and perception of Osmosis/Cosmos communities’ ownership of the bridge.

Governance Framework for Selecting the BSP

After a long period of discussion, an on-chain proposal was submitted to formalize the BSP voting parameters. Proposal #205 set forth that:

1. Only “Yes” votes would count for selecting the BSP;
2. The BSP (or “do nothing”) with the highest amount of “Yes” votes at the end of the collective voting period will win if quorum is reached and there is no run-off;
3. “No,” “No With Veto,” and “Abstain” would not count for anything, so voters are encouraged to only vote for one or more bridges they support;
4. Quorum is determined by the total “Yes” votes across all 5 proposals, and reached if this total is 20% of all Osmosis voting power;
5. If a proposal is within 15% of the leading proposal’s total number of “Yes” votes, these proposals will be entered into a “run-off.” The 15% is measured as a percentage of the total voting power available on Osmosis for the full set of proposals, not just the leading proposer’s total.

Introducing: The Bridges

The contenders for the BSP are Wormhole, Nomad, Axelar, and Gravity Bridge. What’s interesting about the options is that they are quite varied in approaches and methods of securing cross-chain compatibility. They are as follows:

Axelar

UX: Deposit addresses allow bridging to be easily integrated into Osmosis front-end UX. Many-to-many bridge connections. Fees set at 0.1% currently, but plan to lower. Axelar adds around 20–30 seconds to finalize bridge transactions, but this will be lowered.

Security: Axelar runs on a PoS chain with many of the usual Cosmos validators. It has upgradeable smart contracts. The insurance fund is planned to contain 5% of AXL tokens.

Execution: Fast, focused team of 25 with world-class cryptographic experience. Multiple EVM chains already connected. Bitcoin and others being added.

Reputation/Alignment: Axelar is a Cosmos chain. Token distribution is relatively centralized: team (30%), foundation (40%), and investors (30%). Initial coin offering requires KYC through a third party (Coinlist). Pledged 1% of tokens to Osmosis for incentives if chosen.

Gravity Bridge

UX: Right now, users must transact on the bridge and cannot abstract the UX away, but this is being worked on. Batching has been implemented to reduce fees.

Security: Gravity is high security. It runs on a PoS bridge zone and has non-upgradeable contracts. Insurance can be added by governance.

Execution: The focus is on stability/security over speed of execution. Team splits time between Gravity and Althea. Timeline for adding more EVMs is end-of-year. NFT transfers available end-of-summer. Interchain accounts should be available sooner.

Reputation/Alignment: The most Cosmos-native bridge, developed by numerous parties within the ecosystem. Some in the community argue the ecosystem airdrop did not fully honor this alignment, instead consolidating ownership of the bridge chain with early investors and validators. Gravity has disputed this narrative.

Nomad

UX: Optimistic bridging takes roughly 30 minutes, but liquidity partner Connext can directly provide liquidity on the destination, provided that enough liquidity is available. For Connext-bridging, the UX could be easily abstracted. However, at this point it is difficult which transaction sizes will work for different chains and assets.

Security: There is no bridge chain, just an “Updater” run by Nomad. With Nomad’s optimistic bridging, transactions automatically succeed unless challenged by a Watcher. Watchers are currently run by Nomad, but the plan is to let chains select their own. (However, these custom Watcher sets will produce non-fungible asset representations.) Bridge chain risk is nonexistent; instead, the risk is that Nomad or an attacker could upgrade the Updater. Another attack vector is that any Watcher can stop transactions from going through by claiming fraud. Connext liquidity providers assume the risk of funds being lost from their contracts, though there might be spillover effects from an attack. There is no insurance planned.

Execution: They have shipped a novel bridging solution and gotten buy-in from some prominent projects. The team is focused only on bridging. Timeline for non-token transfers is unclear.

Reputation/Alignment: Evmos has selected Nomad as its canonical Ethereum bridge. They are active in the Polkadot ecosystem with Moonbeam. There is no token. Governance occurs through a multi-sig. The previous bridge project of some of the team members (Optics) had multi-sig issues.

Wormhole

UX: Bridging requires interaction with the Wormhole chain, but the code for moving the relaying and redeeming of bridged assets into the background (by paying independent relayers) is in audits. Bridge fees are to be determined. Wrapped assets on Wormhole are fungible.

Security: Wormhole is a Proof-of-Authority bridge with 19 Guardians, many of whom are Cosmos validators. Bridge contracts are upgradeable. Bridge hacks can be covered by Jump Crypto, as seen in the recent $320m Wormhole hack, but their willingness to do so again is unknown.

Execution: Wormhole is connected to 8 blockchains, with 15–16 expected by the end of the year. They have been active for about a year and a half and are the default bridge on Solana and Terra. Their NFT bridge is live, and there is a CosmWasm bridge for NFTs currently undergoing audits. They can pay a premium for audits, marketing, subsidies, and developers (when available).

Reputation/Alignment: Wormhole is backed by Jump, one of the best-funded firms in crypto. They aim for market-share first, decentralization second, as evidenced by their PoA bridge. They have written a module for minting Cosmos-native tokens with CW20s and are planning to launch a Proof of Stake chain on Cosmos for accounting and governance (not bridging).

Effective Veto: Proposal #210

In the event that all of the bridges are unsatisfactory, voters can opt to vote “Yes” on Proposal #210, which would lead the protocol to not adopt a BSP at this time. This proposal is subject to the same voting parameters set forth in Proposal #205. All proposals for voting are available to OSMO holders through the Keplr Wallet app.

Let me know what you think! Drop a comment here or reach out to me on Twitter @jmasonbump.