Understanding Token Denominations: Bridging and IBC Transfers
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Tokens may have multiple denominations. If you’ve used an exchange on Evmos, you might have noticed all the different types of USDC, like madUSDC, ceUSDC, mulUSDC! To understand why that is, we’ll need to talk a bit about what bridging is and how it works.
When you want to move tokens from one chain to another, you need to use some bridge or protocol. (Don’t just make a regular transfer from your wallet, or you may lose your tokens!) When moving assets between Ethereum/EVM chains to Evmos, you use a bridge, like Nomad. When moving assets between Cosmos chains, such as between Osmosis and Evmos, you make an IBC Transfer.
Token Denominations: Bridging
Generally speaking, most bridges work by “burning” or locking the token on one chain, and then “minting” or unlocking a token on the destination chain. For example, USDC that has been bridged from Ethereum is locked on Ethereum and then minted on Evmos by Nomad as madUSDC (or by MultiChain as mulUSDC). If you decide to bridge madUSDC back to Ethereum, Nomad will burn madUSDC on the Evmos side, and unlock native USDC on the Ethereum side.
Different denominations of an asset are not fungible with one another, meaning they can’t be used interchangeably. If an exchange on Evmos offers a madUSDC/wEVMOS liquidity pool, you can’t put in mulUSDC instead.
Token Denominations: IBC Transfers
In the Cosmos ecosystem, which includes chains like Osmosis, Cosmos Hub, and Evmos, denominations are also involved when transferring tokens from one chain to another — with some differences. Instead of needing bridging services, Cosmos blockchains use IBC to communicate (the Inter-Blockchain Communication Protocol, mentioned above). These transfers are called IBC Transfers, which is what you’re doing when you use Withdraw and Deposit on the Evmos dashboard.
However, similarly to bridging between EVM chains, IBC transfers also lock tokens on the original chain and mint tokens on the destination chain. Instead of keeping track of which bridge service was used, IBC denominations keep track of which chain the token was transferred from. If you transferred OSMO from Osmosis to Evmos, you would have OSMO(Osmosis) on Evmos. The token has been “hopped” once.
Then, if you transferred those same tokens to Cosmos Hub, you would have OSMO(Evmos) on Cosmos Hub: two hops. However, if you transferred these tokens to Osmosis again, you would get OSMO that’s been hopped three times: OSMO(Cosmos Hub), not native OSMO! Tokens with different denominations in this case are also not “fungible”, or interchangeable. But don’t worry — you can get OSMO back by unwinding these hops: send OSMO(Cosmos Hub) back to Cosmos Hub, and so on, until you get all the way back to Osmosis.
This won’t happen when you use IBC Transfers from the Evmos dashboard (Withdraw and Deposit) because you can only transfer between Evmos and the native chain of the IBC Coin you’re transferring, and only “unhopped” (native) or “single-hopped” (from the coin’s native chain to Evmos) are recognized.
Interested in learning more? Check out the Ethereum guide for more about bridges, and the Cosmos Network tutorial for information about IBC Denominations (the tutorial is for devs, but the introduction gives a great overview for anyone).
About Evmos
Evmos is an Ethereum Virtual Machine–based blockchain in the Cosmos ecosystem and enables developers to launch apps that run smart contracts across any number of EVM- and Cosmos-based blockchains. It makes that process as simple and seamless as possible by allowing developers to continue creating apps in Solidity and Vyper like they’re accustomed to in the Ethereum ecosystem. Evmos opens a new frontier for blockchain applications, expanding the functionality of the EVM by enabling cross-chain applications that tap the liquidity and user bases of multiple blockchain ecosystems to provide a more unified experience.
Follow our journey below
💻 Developer Documentation: https://evmos.dev/
👾 Official Discord: https://discord.gg/evmos
🐙 GitHub: https://github.com/tharsis/evmos
🕊 Twitter: https://twitter.com/EvmosOrg
📯 Telegram: @EvmosOrg
📄 Medium: https://evmos.blog/
🖥 Evmos Website: https://evmos.org
