The Wanchain Bridge connects Cardano to numerous major L1s and L2s in a decentralized, non-custodial, and permissionless manner. This allows for the transfer of BTC, ETH, stablecoins, and various other assets into Cardano or from Cardano to other networks. In this article, we will explain how the Wanchain Bridge operates.
Connecting Blockchains
There are numerous blockchain projects, each with its trade-offs. Teams often focus solely on their projects, paying little attention to interoperability. Despite nearly a decade of discussion, achieving decentralized, non-custodial, and permissionless blockchain connectivity remains challenging.
Currently, many blockchains and L2s boast significant user bases and liquidity. One method to connect these networks is through a bridge. A bridge can link two networks and, by supporting multiple network pairs, can create a network of blockchains. To accomplish this, the bridge must understand the transactions, consensus mechanisms, and execution environments of both networks it aims to connect. Wanchain Bridge can securely transfer assets from one network to another and back.
The Wanchain Bridge can transfer not only native coins and tokens but also NFTs. With the Wanchain Bridge, we can utilize wrapped versions of BTC, ETH, stablecoins USDC and USDT, ERC-20 tokens, and more within the Cardano ecosystem.
Wanchain blockchain’s consensus mechanism, known as Galaxy, is based on Ouroboros PoS. Wanchain blockchain uses an account-based model and EVM. Like Cardano, the Wanchain network utilizes WAN tokens for staking and node operation incentives.
WAN holders can choose to stake their tokens in either the blockchain’s PoS (5,24% APR) or the Wanchain Bridge (6,39% APR).
Wanchain Bridge consists of 25 nodes called Storeman nodes. Notably, none of these 25 nodes are operated by Wanchain.
The consensus mechanism relies on multiparty computation. Cross-chain transactions are deemed valid if 17 out of 25 nodes agree. As detailed below, cross-chain transactions consist of pairs of lock-mint or burn-unlock operations. Once 17 out of 25 nodes agree to the first operation, the second can proceed.
Wanchain Bridge can connect Cardano with Bitcoin, Ethereum, Avalanche, Polkadot, Solana, Arbitrum, Polygon, and other networks.
Cross-chain Bridge Operation
A bridge must ensure the preservation of asset value, preventing a single value from being represented by two tokens across different networks. When an asset is transferred from one network to another, its spendable value should only exist in one place.
Each asset originates from a specific network, referred to as the original network. The bridge must securely transfer the asset’s value to another network, known as the destination network, and ensure the asset can return to its original network.
Wanchain Bridge employs two distinct methods for facilitating cross-chain transactions:
- 1. Lock-Unlock Mechanism (called Wanchain XFlows): This is used for native-to-native cross-chain transactions.
- 2. Lock-Mint with Burn-Unlock Mechanism: This method is utilized for wrapping tokens.
Let’s delve into each mechanism in detail.
Lock-Unlock Mechanism
Wanchain Bridge utilizes a single pair of Lock and Unlock operations, known as Wanchain XFlows, for native-to-native cross-chain transfers. This ensures that only native tokens are used in both the original and destination networks.
Here’s how it works: In the original network, such as Ethereum, 1000 USDT is locked. Once this lock is confirmed, 1000 USDT is unlocked in the destination network, like Polygon.
Since this mechanism operates with native tokens, there is no need to mint or burn tokens. It is enough to have sufficiently large liquidity pools.
Lock-Mint and Burn-Unlock Mechanism
The Wanchain Bridge employs two pairs of operations: lock-mint and burn-unlock, which are atomic operations. It is used for native-to-wrapped token cross-chain transactions.
This mechanism facilitates the creation of a wrapped token from the original network on the destination network. These wrapped tokens can then be utilized within the DeFi ecosystem of the destination network.
For example, when transferring ETH from Ethereum to Cardano, the Wanchain Bridge first locks ETH on the original network. Once the lock is confirmed, it mints tokens equivalent to the locked ETH on the Cardano network under a unique ID, identified as wanETH (red color on the picture).
The reverse process occurs if the user decides to send wanETH back to Ethereum. wanETH is burned on the Cardano network, and once the burn is confirmed, the original ETH is unlocked on the Ethereum network.
If an asset is being cross-transferred for the first time, it must be registered first. Wanchain will utilize the transaction details to create a new asset smart contract from a template.
Validator nodes lock tokens on the original chains. Once this lock is confirmed, validators use the smart contract (or script) to mint equivalent tokens on the destination network. If a problem occurs during confirmation, the assets will be returned to the transaction initiator, and no new tokens will be minted on the destination network.
The process is similar when returning assets to the original network. If validators lack sufficient proof of asset burning in the destination network, the original assets cannot be returned to the original network.
Wanchain Bridge is Decentralized
The Wanchain Bridge operates automatically without the need for a central authority.
Wanchain employs several advanced cryptographic technologies, including secure multi-party computation (MPC), threshold secret-sharing, a ring signature scheme based on elliptic curve cryptography, and a one-time account generation mechanism. These technologies also address the privacy protection challenges of smart contract token transactions.
MPC allows multiple parties to collaboratively perform computations on private data without revealing their individual inputs, ensuring the confidentiality and integrity of sensitive information.
Wanchain utilizes private key splitting, where MPC wallets divide private keys into multiple shares, each held by a different party. This setup prevents any single individual from accessing and controlling the funds. A threshold is set, requiring a minimum number of parties (17 out of 25 entities) to authorize a transaction or computation.
Cardano Cross-Chain Bridges
Wanchain Bridges enable non-custodial, bidirectional cross-chain transactions with multiple networks. ADA and Cardano Native Assets can be transferred to EVM chains and vice versa. Similarly, ETH, ERC-20, and other assets can be transferred from EVM chains to Cardano.
The launch of a new Bridge between Cardano and Solana was recently announced. The community can look forward to the USDC direct bridge between Cardano and Solana. SOL on Cardano from Solana and ADA on Solana from Cardano.
Connecting Cardano to EVM chains posed a significant challenge for the Wanchain team due to Cardano’s incompatibility with EVM. Cardano utilizes Plutus scripts, the UTxO model instead of the account-based model, and different signature schemes, specifically supporting EdDSA and Curve25519.
To facilitate cross-chain transactions with both EVM and non-EVM chains, the Wanchain team developed a Haskell script.
It’s important to note that cross-chain transactions became feasible only after Cardano’s 2023 Valentine update, which introduced support for Schnorr signatures and the Secp256k1 curve. This made the connection with Bitcoin possible, as Bitcoin uses the Schnorr signatures scheme.
Wanchain will also enable the migration of NFTs between EVM chains and Cardano, marking another significant milestone for blockchain interoperability.
Stablecoins are a significant topic for the Cardano community, especially since Cardano lacks native USDC and USDT stablecoins. The Wanchain Bridge can facilitate the cross-chain transfer of USDC and USDT to Cardano using the Lock-Mint / Burn-Unlock method.
Last but not least, Wachain Bridge launched the Cardano Bridge in August 8th 2023 and have achieved quite a lot just in one year. As you can see on the infographic below.
If you like what you’ve learned about Wanchain Bridge, feel free to give it a try today.