Metaverse and Ethereum Cross Chain Token Swap
Currently, there are 1960 coins and cryptocurrency tokens globally, according to CoinMarketCap. While projects based on Bitcoin and Ethereum make up the core of these tokens, there are many projects who designed their own main public chains that run their own infrastructure technology layers. Ethereum is the key public blockchain that comes to mind when we think about the sheer number of ERC20 tokens out there in the marketplace. Studies by ICO Watchlist show that Ethereum based tokens accounted for more than 82% of all tokens in the marketplace. Many projects choose ERC20 due to the token standard’s flexibility in creating smart contracts and solutions. Due to the token standard’s popularity, many exchanges list ERC20 tokens quickly and efficiently, meaning developers take less time in developing an ERC20 wallet than a non-ERC wallet. While the Ethereum token standard remains popular, there are a few flaws in the construction and design of Ethereum one should notice.
Problem
Let us take a layered look at how the Ethereum system is set up. The consensus and security network layer is at the bottom, then you have the Ethereum Virtual Machine at the top of this consensus layer. Then the layer on top of the EVM consists of the smart contract, the golden feature of Ethereum. On top of the smart contract layer you have the coins, assets, and identities. Then at the very top, you have the application layer. Let us think about this construction for a minute. If you were a hacker, which layer would you attack? Certainly not the consensus or security base layer, as this is the most difficult to break through. Maybe you could attack the EVM, but again this would be very costly and resource intensive. The vulnerability lies in the smart contract layer, and we have seen many errors or hacks penetrating this layer. The reason hackers would want to attack this layer is because right on top of this layer are the tokens, assets, and identities. If hackers break through the smart contract layer, then they will compromise the tokens, assets, and applications. Indeed, there are many types of attacks on the smart contract layer. Although Ethereum is still the go to platform for many new projects, there are vulnerabilities like the ones mentioned above.
When we look at the various multitudes of blockchain projects, the word interoperability seemingly does not apply. For example, there are countless ERC20 tokens and projects out there, but how many actually are able to interconnect with another? Meaning if we use Civic Digital Identity, can we connect with the interface in OmiseGo? The answer is no. These are tokens that are all ERC based, yet they are unable to interface with each other. Not to mention tokens that are based on different blockchains, as interoperability in this context is even more difficult. Why would tokens from the same public chain or even tokens from different public chains want to interoperate? The reason is because for blockchain technology to be truly widely adopted, these projects need to be connected together in the same overall ecosystem. If a user was to register different accounts in each separate ecosystem, that would be too much of a hassle and would not improve upon the systems we have today. These are all problems facing the blockchain industry that are yet to be solved. One public blockchain, however, is working on innovative ways to ease the pain points described above, both in terms of security and in terms of interoperability.
Solution
Metaverse is a public blockchain based in China that strives to solve security issues and interoperability pain points for enterprises and individuals. Firstly, Metaverse is a very simple to use system that does not require Solidity programming knowledge. The user interface consists of forms to fill out that create Digital Identities and Digital Assets. Smart contracts are built into the system, and businessmen do not need to learn how to code to create Digital Assets. In terms of security, the team behind Metaverse designed the infrastructure in a safer way compared to Ethereum’s infrastructure. At the very bottom resides the core, the consensus security network. The next layer is where Metaverse differs: right above the consensus layer is where the coins, tokens, and identities layer lay. Then on top of this layer we have the smart contracts, and finally the top most layer consists of the applications. Therefore, if hackers were to infiltrate the smart contract layer, they can only compromise the smart contracts and applications layers. The coins, tokens, and identities are all safe. In effect, Metaverse, in the event of an attack, is able to protect users’ digital identities and digital assets. Unlike Ethereum, where attackers can hack into the smart contract layer and steal the digital assets above this layer, Metaverse’s infrastructure is better equipped at dealing with potential threats and is able to provide a safer environment for users.
Interoperability is a problem between different blockchain ecosystems, and Metaverse has recently come up with an idea that may solve this issue. This idea is called cross chain token swap. What does this mean? Essentially token swaps allow a token based in one public blockchain to swap into another token based in a different public blockchain. For example, a token based on the Ethereum ERC20 token standard can swap into a token based on the Metaverse MST token standard and vice versa. Why do projects want to switch token standards and their blockchain infrastructure? There are multiple reasons to consider, such as security and interoperability. Perhaps faster transaction speed and more robust network features can also lure a project from one blockchain to another. One common reason for a token swap is the fact that many projects fundraise through the Ethereum blockchain to distribute their tokens. These tokens act as “placeholders” while the project team continues to develop their native token, allowing investors some form of liquidity. This is very similar to futures trading in the financial vernacular. Nowadays, the ERC20 token standard is widely used and adopted, so there is some form of trust and familiarity with this Ethereum token. Due to the susceptibility to attacks, however, the ERC20 token may not be the best for some projects. Also, Ethereum’s network does not have the interoperability between different projects. Even though there are digital identity solutions, they are all separate from each other. Therefore, established projects on the Ethereum blockchain may consider swapping their ERC20 tokens to MST, because Metaverse provides an ecosystem that connects digital identities to digital assets. KYC, verification, and a digital identity’s reputation all play a role in the world we live in today, not to mention the many use cases for the digital future.
When the Metaverse developers designed the token bridge between ERC20 and MST, they thought about the functional applications and reasons why some ERC20 tokens would want to token swap onto MST and then swap back to Ethereum. One of the key reasons is the low cost of transactions on the Metaverse ecosystem compared to the Ethereum ecosystem. Currently, the standard transaction mining fee is 0.0001 ETP (~$0.0003), which is very low in comparison to the Ethereum network’s standard transaction mining fee of 0.0008 ETH (~$0.17) as of this writing. Once the transaction totals add up, the delta between the fees becomes sizable to the point where projects may want to implement cost saving mechanisms. A token swap to Metaverse MST may be the solution. Here is how the token swap actually works.
How It Works
What we will go through here is a simple description of the token swap process. For a more in depth guide and manual, please check out this link to the Metaverse page. To begin the cross-chain token swap, the user needs to link the Ethereum and Metaverse addresses by copying the generated raw data into the Metaverse wallet. This in effect executes a smart contract on the Ethereum chain. Once the link is active, the user can then swap the ERC20 token into MST, by way of a token swap intermediary center. After the ETP-Swap center creates the MST token, the swap is complete, and the user will see the MST token under his Metaverse address or Avatar. To swap from MST to ERC20 is even simpler. The user fills in the swap amount and Ethereum recipient address, and by way through the swap center, the ERC20 tokens will be available on the Ethereum network.
In effect we can imagine this scenario: both Ethereum and Metaverse are two parallel highways with different features. The Metaverse team has built a bridge that connects these two highways, so traffic or in this case assets can be moved between the two networks. If a project fundraises in Ethereum due to the widespread adoption of ERC20, the project can switch to Metaverse MST to find innovative features that are not available on the Ethereum network. Of if established projects find limitations in the ERC20 standard, they can switch to the MST standard to find a network that can provide functionalities like the interoperability of digital identities and digital assets (both fungible and non-fungible). Add in Metaverse’s enhanced security features and overall effectiveness in relation to simplicity and speed, we believe Metaverse is well prepared to take our users and fans into the New Reality.
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