Doge-Eth bridge past, present and future

Dogecoin is the 10th most valued coin, has 3.4M followers, and has a super strong community. We have Elon and Vitalik. The Dogecoin scripting language is limited by design, so it is hard to implement many decentralized protocols on top of Dogecoin.

A Dogecoin <-> Ethereum bridge would allow Doges to be moved from the Dogecoin blockchain to the Ethereum blockchain and back. Dogecoins on the Ethereum blockchain could be used in Turing-complete smart contracts, DeFi protocols, NFT marketplaces, wallets with fancy features, etc.

The bridge

Ross Nicoll, Vitalik, and the Solidity lead developer briefly evaluated solutions for different parts of the bridge.

Since 2017 we have been building a doge-eth bridge. The goal is to create a fully decentralized bi-directional bridge. We won’t create a new blockchain, we won’t create a new token and we don’t like doge burns. We aim the bridge to be inexpensive both for users and for bridge node operators. Development was funded by grants, we were awarded parts of the doge-eth bridge bounty.

Bridge design uses superblocks and collateralization. To understand the design you can read Ross’ blog post, watch Ross, Vitalik, and Oscar discussing the bridge, watch demo 1 and demo 2.

The problems

Building a dogecoin bridge is difficult because doge has no Turing-complete smart contracts, it produces lots of blocks per hour, the block header size is huge and it uses Scrypt hashing algorithm.

We knew all that when we started, but we then found these other issues:

• The bridge Solidity codebase is huge, there are lots of moving parts and things to take care of, the surface attack is big, and there are lots of race conditions. e.g. dealing with misbehaving operators that are also doing a DoS on the superblocks, dealing with attackers with some hashing power, and implementing a liquidation protocol.
• Decentralized bridges are very complex machines. It is hard to make sure there are no viable attacks. Top crypto hacks are no longer attacking exchanges but bridges. Vitalik is worried too.
• The rise of eth price and gas price in the last few years made everything more expensive. In particular, the possibility of challenge/response battles forces actors to have lots of eth ready to be used.
• The popularity of DeFi implies the required actors would seriously evaluate the opportunity cost before participating in the bridge. It may be hard to convince the required actors (relayers, operators, challengers) to participate.

Lots of new bridges emerged in the last few years. Many of them aren’t transparent about who controls locked coins, what parts of their design are not yet implemented, and what decentralization components are missing.

Developing the bridge is just half of the challenge. To make it useful, an ecosystem should be created on top of it. Doge whales should provide initial liquidity, it should be integrated with centralized exchanges (e.g. Binance), DEXs (e.g. Uniswap), and DeFi protocols (e.g. Compound).

Enter wDoge bridge

The Dogecoin community has been waiting for the bridge to be live for many years. We decided to implement a simpler solution while we keep developing our long-term vision.

We are working now on wDoge bridge and we expect it to be live in 2022. It is a new bridge design inspired by WBTC design. WBTC is the bridge with the highest Total Value Locked in the crypto ecosystem, it has been live for 4 years and has never been hacked.

The main actors of the bridge are:

• DAO: The DAO is the governing body and top authority of the protocol. The genesis members of the DAO will be BluePepper, BitGo, MyDoge, The Dogecoin Foundation, along with several other active members in the community spanning protocols to wallets. The DAO also has the means to upgrade the bridge contracts, add more Custodians and Merchants, and more.
• Custodian: BitGo will be the genesis custodian and protect all Doges used to mint wDoge. They currently safeguard all the BTC backing WBTC today. For providing the service, the Custodian charges a small fee to Merchants for minting and burning wDoge.
• Merchant: BluePepper will be the genesis merchant and the primary community member facilitating any and all minting and burning of wDoge. As wDoge demand continues to grow, we anticipate adding more Merchants to the community. For now, all users looking to hold wDoge can work directly with BluePepper to convert Doge to wDoge for a small fee. When wDoge becomes adopted by more of the DeFi community, we anticipate liquidity in CEXs, DEXs, and money markets to be a viable option as well.

Using a trusted custodian has an obvious drawback on centralization but makes the bridge simpler and reduces the surface attack.

A key part of the project is to keep full transparency. We will develop a dashboard that displays circulating supply of wDoge and proof of the underlying collateral (i.e. “reserve”). Alongside proof of collateralization, this dashboard will also display all orders for minting and burning wDoge as well as all merchants and custodians. For inspiration, please view the WBTC dashboard for a sense of what this might look like.

The Future

We are actively looking for alternative decentralized ways to bridge Dogecoin to Ethereum and other chains. We’ve just finished research analyzing the use of Zero Knowledge tech in the bridge. We are also investigating other technologies including FlyClient and Drivechains that might allow us to create a simple, robust, secure, and decentralized bridge.

Summary

After many years of working on the Dogecoin-Ethereum bridge, we expect to launch wDoge bridge in 2022 enabling doge users to use smart contracts, DeFi protocols, NFT marketplaces, etc.

We would like to receive feedback from the community and check if there are things we need to fix before the launch date.

Do only good everyday!

P.S.:

Special thanks to Coinfabrik and Truebit for contributing to the first phase of the bridge. Thanks to Bill Lee, Mishaboar and the Dogecoin Foundation for the constructive feedback provided so far.