ALEX Governance Proposal to transition the ALEX Bridge into a separate entity

Proposal Summary

As we evolve towards the finance layer on Bitcoin, the ALEX LAB Foundation presents our community with a pivotal proposition: transitioning the ALEX Bridge into a distinct entity named XLink.

• Bridge evolution and independence from ALEX — Originally designed as a core connector between EVMs and Stacks, the Bridge will now extend its reach to Bitcoin and function autonomously as XLink, underscoring our growing commitment to the Bitcoin L1.
• Formation of XLinkDAO — This will serve as an independent governance body dedicated to overseeing the operations and evolution of XLink.

Governance Timeline

• Community feedback — Following the announcement of the proposal, ALEX has created a dedicated channel on our Discord to gather questions, and will hold AMAs to explain the proposal to our community and receive feedback before finalizing the proposal for a governance vote.
• Governance vote — Upon finalizing the proposal, a vote will take place on https://ballot.gg/alexlab.btc with $ALEX and $AutoALEX holders participating.

Proposal Rationale

What makes the bridge secure

Bridges are a critical infrastructure for Web3, and Bitcoin is no exception. Without a decentralized/composable bridge, the dApps building on Bitcoin cannot integrate cross-chain liquidity, limiting their growth potential.

As a gateway to move tokens from a source chain to a destination chain, decentralized bridges must ensure the tokens being transferred retain their value across the chains without relying on a centralized authority. To achieve this, bridges are therefore most often designed using smart contracts/multi-signature wallets on each of the source/destination chains (“end points”) and a cross-chain messaging system driving the consensus among these chains (“consensus engine”).

The ALEX Bridge also follows this design pattern and connects Bitcoin L1, L2s (for example, Stacks) and Ethereum, with the native tokens on the source chain custodied with multisigs (for Bitcoin L1) and smart contracts controlled by multisigs (for Stacks and Ethereum), and providing two-way bridging between source chain (lock/unlock) and destination chain (mint/burn). As for the consensus engine, the bridge operates on a federated model, whereby a minimum threshold among multiple pre-approved validators must agree before bridging happens.

The security of the bridge, therefore, depends on the multisigs that control the endpoints and the validators that validate cross-chain actions. Whoever controls these endpoints and validates the bridge operations controls its security, and hence its future.

Governance model to secure the Bridge

To ensure the integrity of the bridge, a governance model must be established that aligns with the interests of key stakeholders. This model should offer incentives for these stakeholders to diligently safeguard the bridge by highlighting the advantages of such actions and the repercussions of neglect. As ALEX shifts its focus toward expanding its ecosystem, the current governance framework must adapt to furnish robust governance instruments for this burgeoning network. Failure to enhance accountability could result in moral hazards among the primary stakeholders of ALEX-affiliated projects, potentially compromising the entire system.

In response, we suggest the formation of XLinkDAO, a dedicated body responsible for the bridge’s operational management. This new entity would incorporate $ALEX holders and validators in its governance structure, thereby integrating key stakeholders in the decision-making process. Such a step will not only affirm the bridge as a community-led initiative but also fortify its dedication to its core objective: to broaden Bitcoin’s connectivity to the global financial landscape.

XLink: Our Vision

XLink is poised to emerge as the foundational infrastructure bridging the divide between Bitcoin and its derivatives such as BRC20, with its integration of Bitcoin Oracle powered by ALEX facilitating the seamless and safe bridging of Bitcoin and Bitcoin L1 assets.

XLINK is not just another function, it’s an enabler. For example, XLINK makes it possible to offer “native-like” BRC20 AMM or other DeFi apps on Bitcoin in a safe and far less centralized way than currently possible, because Bitcoin dapp builders can now use XLINK to seamlessly integrate the Stacks smart contract layer.

Safety is not a feature, it’s a commitment. The bridge’s vault operation is guarded by a multi-signature wallet, reinforcing security. As the Stacks chain is poised for the sBTC release, the vault is transitioning towards a trust-minimized framework, secured through a broadly diversified network of validators.

Our vision is vast: XLink is designed to be the cross-chain bridge that securely binds Bitcoin assets with all chains, encompassing EVM chains. With Bitcoin constantly evolving, a diverse asset spectrum, including stablecoins, RWAs, and DeFi project governance tokens, is set to anchor itself onto the Bitcoin Chain, trusting in its security.

Conclusion

ALEX Lab Foundation proposes to our community that we spin-off ALEX Bridge into a separate entity called XLink, because the secure and efficient performance of a crypto bridge is best assured when the validators and others securing it are the key stakeholders that govern it.

Our goal is to fortify the bridge’s operations and governance, to ensure the ALEX ecosystem remains robust, adaptive, and primed for future challenges and opportunities.

The decision is up to our community of $ALEX and $atALEX holders. We have created a dedicated channel on our Discord to host the discussion and collect questions for an AMA to be held prior to voting commencing. Thank you for your support and participation.