CHAIN SIGNATURES
Emerging as a promising development to fill the gap of Open Web interoperability, Chain Signatures enable NEAR accounts to sign transactions on any blockchain by leveraging a decentralized MPC network, bolstered by NEAR-staking security.
Interoperability has always been part of the overarching crypto/blockchain ideal. The desire to scale (not just blockchains but Web3 as a whole), find a connective tissue between chains, develop new functionalities between dApps and chains, was met by challenges clustered around security, standardization and reliable compatibility between different chains.
- Bridges were the first material solutions, but they lack security.
- Chain agnostic protocols (think Chainlink) have reliability concerns when considered as large scale solutions
- L2s and side chains primarily scale the blockchains on which they live, and face their own inherent issues like user experience, finality, and scalability.
As Web3 is transitioning strongly towards the need for a connected space that can accommodate billions of users without failing in user experience, interoperability has evolved from ideal to a necessity. One of such areas of pronounced necessity is DeFi; in order to truly establish itself as the financial backbone for Web3, chains need robust cross-chain functionality to increase liquidity, create broader market access and resiliency of the ecosystem.
Chain Signatures, a novel DeFi primitive for interoperability, developed on NEAR, has emerged as a promising development to fill the necessity gap for true interoperability. Chain Signatures enable NEAR accounts to sign transactions for any blockchain by leveraging a decentralized MPC network, bolstered by NEAR-staking security. This first-of-a-kind solution not only addresses the longstanding challenges like security and reliability, but now sets a whole new standard for user experience and accessibility in ways not possible before.
CHAIN SIGNATURES, A DEEP DIVE
At the core of Chain Signatures is the complementary tandem of a decentralized Multi-Party Computation (MPC) network and the unique architecture of NEAR accounts. In this network, multiple nodes work together to sign a transaction without any single node ever having access to the complete signing key. This distribution of trust among the nodes enhances the security of the transaction process. NEAR’s innovative account model architecture is the enabler of two things:
- NEAR accounts being able to create and hold an infinite number of sub accounts that can each act as smart contracts. Each of these sub accounts can represent accounts from different chains, all aggregated under the parent NEAR account of the user.
- The ability of NEAR accounts to act as smart contracts. This enables the accounts to manage account-based programmable MPC calls, requesting MPC nodes (or validators) to sign arbitrary payloads, which in this instance are transactions from other chains.
This setup allows NEAR accounts to request the MPC network to sign transactions intended for different blockchains. The system design also means that the operations are handled behind the scenes, abstracting away the underlying complex technical processes from the user.
Adding a Multichain Gas Relayer
Alongside Chain Signatures, NEAR implements a Multichain Gas Relayer protocol, which plays a critical role by simplifying the management of blockchain-specific ‘gas’ fees for every cross-chain transaction. Traditionally, executing transactions on different blockchains requires using the native tokens of each chain to pay transaction fees, an inefficient and cumbersome process. The Gas Relayer addresses this by allowing transactions on various blockchains to be paid for with a single type of token, such as $NEAR or any other NEP-141 token.
Automatically the system handles the conversion and payment of necessary fees on the destination blockchain, significantly streamlining cross-chain interactions.
CHAIN SIGNATURES AT WORK — WHAT CAN BE ACHIEVED?
Chain Signatures unlock a new development space for cross-chain DeFi, enabling true interoperability. The technology significantly reduces the need for technical know-how for end users, i.e lower barrier to entry to Web3, delivers a more unified user experience across chains and Web3, and very importantly it dissolves liquidity fragmentation.
Here’s a closer look at what can be achieved:
- How to do P2P Bitcoin payments on NEAR without a bridge
1) Generate a locked Chain Signature key controlled by a smart contract
2) Deposit Bitcoin on that key
3) Declare the amount of Bitcoin
4) Send the right sign a message withdrawing some BTC with the key
5) Check any payments you receive to see if they have the correct declared value on the bitcoin chain
Send BTC claims for hundredths of a cent and sweep all of you claims to immediately withdraw. It’s a cashier’s check for Bitcoin.
Follow David Millar-Durrant for Chain Signatures alpha.
2. DeFi on Non-Smart Contract Chains
Chain Signatures enable DeFi to operate on blockchains that traditionally do not support smart contracts, such as Bitcoin. By allowing NEAR accounts to sign transactions on these chains, Chain Signatures facilitate new DeFi activities like borrowing, lending, and trading using the native assets of these chains. Already being explored by East Blue, on NEAR, this capability dramatically expands the liquidity and utility of assets across blockchains which previously was limited.
3. Cross-chain NFT Minting
Using Chain Signatures, a user could mint NFTs on Ethereum using metadata created and signed on NEAR, without relying on traditional bridging mechanisms. The process involves creating and signing NFT metadata on NEAR, transmitting the metadata and signature to Ethereum, and verifying the signature to mint the NFT.
See working example: https://github.com/mattlockyer/mpc-script
4. Bridgeless Cross-Chain DeFi
One of the major challenges in the current DeFi landscape is the reliance on bridges for asset transfers between chains, which often introduces security vulnerabilities and operational inefficiencies. Chain Signatures eliminate the need for bridges by enabling direct transactions across blockchains through MPC-signed protocols. This not only enhances security by reducing the attack surface but also streamlines transactions, making them faster and less prone to errors.
5. Instant Multichain Apps
Developers using Chain Signatures can deploy applications that are instantly capable of operating across multiple blockchains. This is particularly transformative for new projects that aim to reach a broad user base without the limitations imposed by single-chain ecosystems. Apps can integrate a variety of assets and interact with different blockchains from the outset, increasing their appeal and functionality.
See example of multichain transaction using Chain Signatures: https://github.com/Pessina/near-sandbox/tree/main
6. Multichain Account Abstraction
Chain Signatures provide a practical implementation of account abstraction, allowing users to manage identities and assets across multiple chains with a single NEAR account. This simplifies the user experience by reducing the complexity traditionally associated with managing separate wallets and accounts for different blockchains. Users can interact with various blockchains through a unified interface, streamlining their activities and reducing operational overhead.
7. Private Cross-Chain Voting
Chain Signatures can enable secure and private voting mechanisms that span multiple blockchain networks. By deploying voting smart contracts on NEAR and a connected blockchain, encrypted votes can be cast with a privacy-preserving technique (ex such as zk-SNARKs), and then transferred to NEAR where Chain Signatures validate the proofs.
These examples do not cover the entire scope of what Chain Signatures can deliver, but serve as an aperture into what is already being explored with the technology.
Example of private cross-chain voting from NEVO:
Chain Signatures are set to reshape the landscape of crypto and DeFi by simplifying the complex architecture of current blockchain interactions into an integrated and user-friendly experience. The technology feeds into the larger Chain Abstraction narrative, which seeks to to replace the current fragmented landscape of Web3 with a single user layer that packs the technical complexities of blockchain under the hoodd, leaving users with only a single-point user-friendly, interactive interface from which they can explore the whole of Web3.
The technology is still in its infancy and is yet to be battle tested, but the idea of the Open Web is becoming very real.
Interested in Chain Signatures and the world of Chain Abstraction?
Let’s get you started with some helpful resources:
Cross Chain without bridges:
Chain Signatures documentation:
Chain Abstraction Presentation at ETHDenver:
Chain Signatures for Builders:
DeFi RFQ
Interest form
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Written by B93 / @roninxnear
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