XCMP enables staking derivatives, and Bifrost has opened multiple cross-chain channels
What is XCMP
In May 2022, Polkadot officially launched XCM (Cross-Consensus Message), which is a cross consensus message format. As a message format, XCM allows parachains to interact with other parachains and relay chains from their native state, and allows any asset to be transferred on the chain.
XCM is a format, and XCMP is the protocol that supports cross chain. Its full name is “Cross-Chain Message Passing”. As one of Polkadot’s cross chain messaging protocols, XCMP regulates the way of cross chain messaging between parachains of the same relay chain.
XCMP advantages
The island phenomenon of traditional blockchain has brought inconvenience to its own integration. Although Dapps on the chain can be connected with each other, they cannot interact with other chains, and cross-chain difficulties between blockchain chains are numerous.
To realize the transmission and communication of messages between chains, we must first have a cross chain protocol between parachains, which is used to regulate the whole process of message transmission, so that projects between ecosystems can interact efficiently and safely across the chain, just as there should be general trade rules in international trade. XCMP came into being as a protocol to solve cross chain problems.
The birth of XCMP is a milestone for Polkadot and its ecological Dapps and users. Its advantages and gains can be analyzed in detail from the following aspects.
Cross-chain combinations
We must make it clear that XCMP can span more than just assets. Therefore, XCMP can not only be used for token and asset transfer between parachains, but also support sending any type of data and messages. The most common is that smart contracts can be called across chains. In other words, similar to the composability between contracts in Ethereum, Polkadot’s parachains can also have chain level interoperability, that is, cross chain composability. Existing on chain contracts will be combined to show more product possibilities and innovations.
Polkadot milestone
After XCMP, Polkadot is realizing the cross chain future that it truly promises. The ecosystem will no longer be a loose collection of sporadic blockchains, but is becoming a huge ecosystem that maintains interaction, and its performance and security are much higher than Ethereum. Based on the Substrate development framework, XCMP makes Polkadot a leader in heterogeneous sharding. XCMP protocol can be implemented on Polkadot, which is also from Polkadot’s excellent underlying technology design, such as shared security model and bridge model. XCMP and Polkadot complement each other and achieve each other.
Decentralized Business
As mentioned above, Polkadot’s XCMP makes inter chain messaging safe and simple. This means that DAPP can choose to run on the parachain of independent computing resources to process business with high TPS, but at the same time enjoy the interconnection of the whole ecosystem and even the whole blockchain world. Information can be transferred between parachains through the hub of the relay chain. The whole process is constrained by consensus, resources are independent and communicate with each other. The normal competition between Dapps for underlying resources will no longer exist. Here we must point out that Ethereum is a huge and independent community, and the progress and insufficient performance of L1’s underlying resources are the root causes of underlying resource problems among Dapps. Polkadot with XCMP will not be bound by performance. Cross chain realizes the win-win of independent resources and on chain interconnection, which really brings dawn to the sustainable development of decentralized business and more business possibilities.
Sharing security
Parachains can send messages to another chain, and XCMP ensures that messages are delivered to destinations accurately in order. Polkadot creatively realizes the “shared security” between chains, which not only ensures the blocking and acceptance of parachains, but also maintains the consistency of the state of the whole network. On a network without shared security, any operation requires a lot of block confirmation time (just like a centralized exchange). Network certainty is the key to XCMP implementation.
XCMP progress
At the Polkadot annual conference Polkadot Decoded 2022 held last month, Gavin, the founder of Polkadot, focused on the content of XCM, XCMP, XCM V3 and higher versions in his speech in China. Gavin compares XCM to a language that can be used in a call, and XCMP is like a phone, and there can be many types or multiple phones.
Since the launch of XCM in May, cross-chain channels have been opened between multiple parachains in just a few months. XCMP has also entered the transitional HRMP (Horizontal Relay-routed Message Passing) cross chain scheme period, which is also the cross chain scheme actually used at present. As a transitional scheme, HRMP can provide the same interface and functions as XCMP. But compared with real XCMP, message storage is different. HRMP needs to put all messages in the storage of the relay chain, while XCMP only stores the metadata hash associated with the message in the relay chain. The former will generate additional message load, while the latter fully meets the simple and high-performance requirements across the chain. Therefore, HRMP is only a temporary transition plan, which will be replaced by XCMP in the near future. The significance of HRMP transition period is that it not only ensures the practicality and effectiveness of XCMP, but also lays a foundation for the full realization of XCMP.
Bifrost has opened a number of cross chain cooperation. Bifrost Finance continues to launch innovative staking derivatives, provide effective liquidity solutions, and dare to be the first on the cross-chain. Bifrost can provide cross-chain flow pledge services for multiple chains by using cross consensus messages (XCM). At present, HRMP cross-chain channels have also been opened with many networks. The specific cooperation is as follows:
On February 18, 2022, the cross-chain channel between Bifrost and Statemine was opened, and the user asset use scenarios were expanded. Statemint is a parachain of public interests in Polkadot ecosystem. Its main role is to mint and manage some tokens and NFT assets. It is the only way for off chain assets (such as USDT) to enter Polkadot ecosystem. After opening the two-way HRMP channel with Statemint, the most direct behavior is to be able to transmit the USDT on statemint to each parachain. Users of Bifrost will get more diverse asset types, lower use thresholds and easier stable currency transfer.
On June 6, 2022, Phala asset cross chain routing SubBridge officially opened a two-way HRMP channel with Bifrost. Users can transfer BNC (Bifrost Token) and ZLK (Zenlink Network Token) from Bifrost to Khala through SubBridge, and also support the reverse transfer of related assets. This realizes the cross chain transfer between Khala and Bifrost, and expands the use cases of new scenarios.
Bifrost users can enjoy a variety of parachain asset use scenarios: quickly and easily realize one-stop asset exchange with Bifrost on SubBridge; Provide liquidity including PHA trading pairs for DEX of Bifrost and Zenlink, so as to become a liquidity provider; Users who choose to stake PHA on DEX of Bifrost and Zenlink can realize risk hedging, low interest lending and free liquidity of pledged assets while enjoying the pledge rights and interests.
On April 14, 2022, Bifrost’s BNC token can be integrated on Moonriver through XCM as xcBNC. Users can conduct asset extraction, purchase, storage and other transactions, and the use of derivative assets will be extended to Moonriver, enjoying more liquidity and investment options.
At present, the HRMP channels that Bifrost has opened include Karura, Khala, Crust, Mantagax, etc. in the initial stage, the use scenario is mainly around the cross chain transmission of assets. However, in the future, Bifrost will open more cross chain channels, realize more interoperability across parachains, make full use of the professional functions and fields of parachains, and connect Bifrost with DEX, derivatives, storage, privacy, identity management, etc., to create more possibilities, So as to truly play the potential of Staking derivatives.
XCMP and Staking derivatives
Staking derivatives, which are based on releasing the liquidity of the PoS public chain Staking module and providing users with more assets, have always been deeply combined with DeFi to produce richer DeFi scenes and gameplay. For users, without paying attention to the complex pledge and delegate process, they can directly obtain the interest bearing digital assets after synthesis in the secondary market for more investment behavior.
The launch of XCMP has brought two greater gains. Not only in the field of DeFi, Staking derivatives can be connected and combined through XCMP and other professional function chains, so as to create more products and trigger more diversified ecological prosperity. Users have more freedom, operability and sovereignty to use cross chain assets in various smart contracts and consensus mechanisms. For staking itself, opening more cross-chain channels means that more users enter. The user’s staking threshold will be reduced, the proportion of Multi Chain staking will increase, and the application interest foundation of the ecosystem will be improved. Realize the positive cycle of the StakeFi ecosystem through enabling users, multi chain and ecosystem applications.
