Introducing: ElkNet v2 (Overview, Token Migration & Governance)
ElkNet v2 goes live on April 9th, 2022. Read below for details about the release, an ELK token upgrade, and Elk’s first governance vote.
We’re thrilled to announce the first major upgrade to the ElkNet, officially launching on April 9th, 2022. ElkNet v2 features a brand new design based on a cross-chain “Reservoir” system, a new integrated messaging layer, and optimizations that make the ElkNet faster, more efficient, and more secure.
In this article, we’ll tell you everything you need to know about:
- ElkNet v2 — Overview
- The Reservoir System
- ELK Token Migration
- Revised Token Allocation & Governance Vote
ElkNet v2 — Overview
ElkNet is the powerful cross-chain engine that powers the Elk multi-chain ecosystem. With the initial beta release last July, we offered a proof-of-concept for our “value transfer” cross-chain model, which eliminates bridge tokens and bypasses the exit liquidity issues that create a critical liability for other bridges.
With ElkNet v2, we are launching the first complete version of the ElkNet protocol, built with entirely original code. The ElkNet v2 architecture reflects our guiding mission to create a seamless cross-chain experience for users, developers, and organizations. Since the code is new, ElkNet v2 will still be considered a beta product at launch.
Security and efficiency have been our leading priorities with ElkNet v2. The new design is also highly responsive to the practical lessons gained from 9 months of monitoring ElkNet v1, which processed over 250,000 transfers from 36,000 users.
Secure by design. We’ve built multiple security checks and fail-safes into the ElkNet code, while also implementing common-sense features like transfer limits and circuit breakers, which will minimize the damage in the case of an exploit.
Most importantly, as we explain below, we are also abandoning the commonplace “burn-and-mint” and “lock-and-release” bridge mechanics completely, which we see as inherently flawed from a security standpoint after witnessing multiple bridge exploits based on these functions over the past year.
Unmatched efficiency. Security, speed, and cost form the three points on the cross-chain triangle. The original ElkNet was already among the fastest and cheapest ways to move value between networks. With ElkNet v2, users gain an even more powerful cross-chain engine. Each step in the transfer process has been streamlined without sacrificing security, so fewer overall smart contract interactions are needed to process each end-to-end transfer, which means significantly less gas is required to complete transactions.
These changes are especially crucial for managing user fees networks known for higher gas costs, such as Ethereum. Our goal is to preserve ElkNet’s status as the fastest and most economical cross-chain bridging option anywhere.
Cross-chain messaging. One of the most exciting new features coming to ElkNet v2 is a generalized message-passing layer, which allows information and data packets to move between all supported blockchains. This feature will soon enable outside developers to leverage the ElkNet to deploy cross-chain smart contracts and innovative web3 applications. It can also be used for many other applications, which we’ll detail in a future article.
Coming soon: decentralization. We are targeting Q2 2022 for making ElkNet a trustless peer-to-peer network by giving users the ability to run their own ElkNet nodes. This “ElkNet v3” release will mark the transition to a mature, decentralized cross-chain protocol.
Introducing the ElkNet Reservoir System
ElkNet v2 features a groundbreaking cross-chain design built around a system of token “reservoirs,” which are deployed on each chain the ElkNet supports.
Each reservoir contains the total reserve supply of ELK tokens (~42 million) minus the circulating supply on the corresponding chain. The ElkNet controls and coordinates movements of ELK tokens into and out of these reservoirs. For cross-chain transfers, ELK tokens are deposited into a reservoir on one chain, which prompts the ElkNet sends a message to the reservoir on the destination chain to release ELK into the user’s wallet.
Reservoirs carry multiple advantages over the two prevailing methods for cross-chain bridging: burn-and-mint and lock-and-release. Let’s take a look at how it compares to each:
As you can see, ElkNet Reservoirs reduce overhead by delegating multiple smart contract interactions to the messaging layer. By pre-minting the total supply of ELK on each chain, we’ve removed the risk of a minting exploit. Additionally, since there are no bridge tokens locked on either end, individual users are not trusting a centralized bridge operator to look after their funds.
In sum, ElkNet Reservoirs increase transparency, eliminate custodial risk, and reduce smart contract vulnerabilities all at once.
ELK Token Migration
To deploy the ElkNet Reservoirs, we will be upgrading to a new ELK token contract. All users will be able to upgrade their existing ELK tokens to the new ELK token at a 1:1 ratio once ElkNet v2 is live.
An “Upgrade” tab will appear in the Elk dApp, which you can use to upgrade your tokens with two easy clicks. This upgrade can be done at any time, but we recommend upgrading as soon as possible to benefit from the new features and network functions.
ElkNet v1 will remain active for transfers for two weeks, until April 24. Once ElkNet v1 is deactivated, you will need to upgrade your tokens in order to bridge to other networks.
Farms and single-sided pools will open on the new token contracts at launch. ElkNet v1 farms and single-staking pools will continue to emit ELK for 3 days after the April 9 launch to ease the migration. During the two-week upgrade promotion, all penalties will be waived for users exiting single-stake ELK pools. New deposits into the old ELK single stake pools will no longer be possible.
Our first annual halving of ELK emissions will take place on April 24th, 2022, two weeks after the release of ElkNet v2.
Users opting to upgrade their ELK between April 9th and April 24th will gain automatic entry to an ELK lottery. Two-hundred (200) randomly selected users who complete the upgrade to the new ELK will be eligible to receive 100 ELK each.
Revised Token Allocation & Governance Vote
With the release of ElkNet v2, Elk moves one step closer to becoming a community-governed peer-to-peer network. To start that process, we are holding the first official governance vote. Users will be asked to approve a slightly revamped ELK tokenomics structure.
The first vote will occur as part of the token upgrade process. The token upgrade will be accompanied by a poll regarding each of the new token contracts, with answers recorded on-chain. In the event that any of the votes fails, funds will revert to the community treasury until further action is taken through future governance.
Here’s what you will be able to vote on:
ELK Minting Process
ELK will be minted directly to hard-coded Reservoir addresses on every chain except Avalanche, which will serve as the governance chain. On the governance chain (Avalanche), ELK will be minted to the following contracts and in the following amounts (changes to litepaper marked with **):
- 10M ELK: directly minted to the Exploit Insurance contract**
- 5M ELK: directly minted to the ElkLabs Treasury contract**
- 2M ELK: directly minted to Team Vesting contract
- 10M ELK: directly minted to Farming + ILP Reserve contract
- The remaining ELK (minus current circulating supply) will be directly minted to the Community Treasury contract
Exploit Insurance Contract
We can never provide a 100% guarantee that no exploit will take place. This contract stores 10M ELK to be used for insurance against any unforeseen exploits of the ElkNet. It is subject to Elk governance. The proposed reserve is equivalent to more than 3 days of transfers based on current ElkNet limits per chain. In the event of a double-spend attack, ELK will be burned from this fund to ensure that the circulation of ELK never reaches more than 42M. In the event of attacks involving other tokens interacting with ElkNet, these funds can cover the losses incurred by third parties.
A treasury contract controlled by the ElkLabs multisig. The contract releases a maximum of 10k ELK per week up to a total of 5M ELK. These funds are intended to cover the development and operating expenses of ElkLabs and promote the growth of the Elk ecosystem. Claims will not begin until ElkLabs becomes an incorporated entity.
Team Vesting Contract
This contract releases a maximum of 1k ELK per day up to a maximum of 2M ELK. These funds can be claimed without restriction by the developers, per the original litepaper, and are used for team compensation and regular operating expenses. Neither ElkLabs nor the Elk governance has oversight over the use of the funds.
Farm+ILP Reserve Contract
A unified contract storing emissions reserves until farming ends. This contract releases the agreed-upon daily emissions of 6.75k ELK + 6.75k ILP coverage (subject to annual halving). Note that the decrease in allocation compared to the litepaper is principally due to emissions over the first year.
The Community Treasury is controlled by Elk governance. The contract places a hard cap of 2M ELK to be spent by governance per year on proposals achieving a simple voting majority. A 2/3rds majority governance vote can lift the hard cap.
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See below for the list changes users will be able to vote on for Elk’s inaugural governance vote.
On Friday, April 8, we will be hosting a special pre-launch Community AMA with Baal and other team members to field questions about ElkNet v2, the new token contracts, the token halving, and governance. Expect some exciting launch announcements after April 9th, too.
Hope to see you there as we start this incredible new chapter!
Questions for Governance Vote
Users upgrading their ELK tokens will be asked to answer the following questions and recording the answers on-chain, as part of the upgrade:
- Do you accept the creation of an insurance fund against attacks?
- Do you accept the funding terms for ElkLabs?
- Do you agree to start the vesting clock for developers?
- Do you wish to participate in the upgrade lottery (100 ELK sent randomly to 200 wallets upgrading)?