Mainnet, EVM compatibility, layer-2 solutions. All terms used in DeFi that clarify how diverse blockchain technology is and how fast we are creating multiple ways to achieve the same thing: transparent, secure, and trustless transactions.
With the increase of blockchain platforms upon which dApps could be created, users find themselves in need of new ways to move assets between the different variations without leaving DeFi. Here at Altitude, we strive to educate to enhance overall DeFi security for everyone, an that starts with education.
What is a bridge?
Just like a bridge in the real world, a bridge in DeFi refers to a pathway to transfer items from one point to another. However, in DeFi, those points are different chains or, in some specific cases, a way to move items from an off-chain platform to the on-chain application.
There are multiple similarities here with real life bridges. Just like an actual bridge, most bridges have a maximum capacity, they are multi-directional and they are only able to move between two pre–determined connection points.
What bridges are there?
In essence, every instance where assets move from one chain to another can be considered a bridging transaction. A very clear distinction is the transfer of FIAT to cryptocurrency. Though that is indeed the movement of assets from the well-known traditional banking system to DeFi, the mechanics behind it identify these as a swap.
So what type of bridges can we identify?
Bridging to a different L1
The most direct and most utilized bridge type. There are variations here rooted in whether or not the sending and receiving side have compatible technology, but it is a very straightforward transaction where a user sends their assets from one L1 to another. Depending on how congested both networks are, how much liquidity is being transferred and the composition of how the bridge is built, this is a rather fast and secure way to transfer funds between different L1’s
Bridging to a standalone L2
When moving assets from an L1 to a L2, a bridge is used. The reason why such a bridge is used is that a L2 is designed to process transactions and push these to mainnet in a bundle, effectively dealing with any scalability issues that are usually plaguing L1 chains.
Crosschain swapping
Swapping is the process where a user swaps the asset they have for an asset of their choice, getting the chosen asset for the same value of the asset that was swapped. We mention this for completeness purposes only because Altitude does NOT support swaps.
Potential issues with bridges
Like everything else in DeFi, bridges are prone to a variety of pitfalls and mishaps. Since bridges involve high-volume transactions, malicious actors find them irresistible and try to undermine them.
This could be by changing the destination of the bridge on one side to a personal wallet, rerouting some of the transactions passing through the bridge or by intercepting assets going and/or coming through the bridge.
Two examples of this are the Axie Infinity Ronin/ETH hack, where hackers took control of validators and rerouted funds sent through the bridge, and the exploitation of the Harmony bridge, which resulted in the draining of significant amounts of liquidity.
It goes to show that even robust platforms require the highest level of security.
Altitude’s solution
The team at Altitude have taken the time to learn from the problems facing existing cross-chain bridge design and have engineered a secure solution for DeFi users. With the creation of the HUB and taking advantage of LayerZero by creating chainpaths, Altitude has created a bridge that is versatile, fast and most of all secure.
Where most bridges rely on third party routers, volatile liquidity and the requirement of liquidity providers to risk Impermanent Losses, the Altitude bridge protocol relies on the following pillars to ensure safety and stability.
- All liquidity remains on their native chain, removing the risk of impermanent losses and isolating any risks, due to bad actors or market factors, to said chain.
- Chainpaths directly connect the pools per chain and per asset. This creates a very direct and easy to verify pathway enhancing both security and speed.
- The HUB routes all transactions, making it a transparent router, but also making it a clear review point for the Altitude team to scope out anything that could be out of order and creating a point where maleficent transactions can be stopped to decrease damages.
Refresher on the HUB
Altitude is introducing the HUB, an Ethereum-based router connecting each Chain Path to their respective chains.
To enhance security and stability, Altitude utilizes separate liquidity pools for each chain path. This renders each chain path independent of the others, making the entire system resilient to chain outages (as only one liquidity pool pair would be affected in such an event, instead of an entire unified liquidity pool system).
This comes with the drawback of dispersed liquidity between all chain paths. To mitigate that, Altitude utilizes the HUB to which each chain path is connected with only one liquidity pool. To bridge between two chains, of which neither is the HUB, users can always route through the HUB to reach their desired destination chain.
There are many other ways in which Altitude’s bridge protocol excels.
Curious? Keep an eye on our socials and drop your questions directly to the team.
We strive to become the go-to blue-chip altcoin omnichain bridge for Web3 users by introducing a consumer-friendly UI and transparent fee-system. Stay in touch and reach the top fast and secure.
Altitude is a composable, Blue-chip asset bridge, and one of the first dApp’s built on LayerZero, a cross-chain communication infrastructure designed to ease the current constraints of omnichain activity. DeFi users can transfer assets via Altitude with Secured Guaranteed Finality, leveraging enhanced infrastructure and security features, inexpensive bridging fees, and lightning fast transactions.
