Introduction of the TangleBridge
We are thrilled to announce that TangleSea in cooperation with the IOTA Foundation will build a bridge for the Shimmer and Assembly network.
With the TangleBridge you will be able to transfer ERC20 tokens from Ethereum and BEP20 tokens from the Binance Smart Chain to the Assembly network and Shimmer network and vice versa. The bridge will be a new service developed to support quick, secure, and low cost asset transfers between the different networks.
In general, the purpose of the TangleBridge is to create a peg-in/peg-out bridge that will allow users to lock their ERC20/BEP20 tokens into a smart contract on the Ethereum network/Binance Smart Chain and in turn receive an equal amount of wrapped ERC20/BEP20 tokens on the bridged networks.
Background: Why do we need wrapped tokens?
Tokens that exist on a given blockchain can’t be simply transferred to another. Wrapped tokens are a way to circumvent this limitation and use non-native assets on another blockchain.
A wrapped token is a tokenized version of another cryptocurrency. It’s pegged to the value of the asset it represents and can be redeemed for it (unwrapped) at any point. It represents an asset that doesn’t natively live on the blockchain that it’s issued on.
Let’s use Wrapped Bitcoin (WBTC) as our example, a tokenized version of Bitcoin on Ethereum. WBTC is an ERC-20 token that holds a one-to-one peg to the value of Bitcoin, allowing you to effectively use BTC on the Ethereum network.
Wrapped tokens typically require a custodian — an entity that holds an equivalent amount of the asset as the wrapped amount. This custodian can be a merchant, a multisig wallet, or a smart contract.
But how does the wrapping process work? A merchant sends BTC for the custodian to mint. The custodian then mints WBTC on Ethereum according to the amount of BTC sent. When the WBTC needs to be exchanged back to BTC, the merchant puts in a burn request to the custodian, and the BTC is released from the reserves. You can think of the custodian as the wrapper and unwrapper. In our case we will use smart contracts and validators as a custodian solution.
We are happy to build a bridge that provides a secure infrastructure with trusted partners to transfer tokens between the Shimmer, Assembly, BSC, and Ethereum network. We will start with BSC and Ethereum but we will look into other chains in the future. In addition we are testing add-ons for NFT transfer as well.
This medium article was, so to speak, the first general announcement of the bridge. In the coming months, more articles will follow that explain the functionality, architecture, security framework and the governance body of the TangleBridge in more detail. In the meantime, as always, we look forward to welcoming you to our socials.
Discord: http://discord.gg/RApAzVzw8A
Twitter: https://twitter.com/TangleBridge
