PEP 11: Bridge to a multi-chain POKT

Attributes

Author(s): Nick Odio

Recipient(s): Ironworks BVI LTD (DBA Ferrum Network)

Category: Proposal

Asking Amount: $20K USDT/USDC/BUSD, $80K USD worth of POKT

Summary

Pocket Network has committed to launching a wPOKT product with the aim to bring liquidity from Ethereum ecosystem to and from the POKT ecosystem. The documentation for the initiative can be seen here and here. As part of this product, an inter-chain bridge is a key component to maintaining a 1:1 value between the wPOKT Erc20 token and the POKT native token. We propose to build a bridge in this vein, but in a more expansive manner with multiple chains that accurately reflects the current Multi-chain universe reality.

Abstract

Bridges are an important tool that allow assets to be ported from one ecosystem to another. At present, Pocket Network Foundation has worked on bringing POKT to the Ethereum ecosystem and for good reason: it frees up liquidity, taps into a larger set of applications, and brings additional legitimacy. Pocket Network has publicly declared this strategy and even has a live wPOKT website showing its commitment to the project.

Bridges are also an additional attack vector if done incorrectly. Users must rely upon bridges to utilize interoperability between different blockchain, and this will be no different than with POKT users. There have been multiple exploits of assets due to different bridges between blockchains and being reliant on a single bridge can make a blockchain vulnerable.

Ferrum Network has built bridges between Ethereum, BSC, and Polygon blockchains. They are currently building compatibility with Moonriver, Algorand, and Avalanche as well and will be continuing to integrate more chains in the coming months. With this expertise, we would like to do with Pocket Network for the POKT token and blockchain. The bridge would be beyond Ethereum and POKT, and would include other chains such as, but not limited to BSC, Polygon, Avalanche, Algorand, Moonriver, and more. It would also complement other bridges that Pocket Network Foundation have already started working on.

Motivation

Ferrum Network shares a similar ethos as Pocket Network and is deeply invested in a multi-chain universe. We plan to integrate Pocket Network service to support our own application and would like to use the distributed POKT to stake our apps. Ferrum Network and Pocket Network have been in talks to collaborate throughout the year, and we see this as a natural extension of our mission to help others become more cross-chain compatible today.

Budget

  • $80k USD worth of POKT token at date of proposal passing
    • The value of USD/POKT will be determined as the weighted average settled rate for the previous 7 days of completed transactions on the Thunderhead OTC market tracked here
  • $20k USDT/USDC/BUSD

Grant to be paid in 2 installations:

  • 20k USDT and $30k in POKT to be paid in advance
  • Remaining $50k in POKT to be paid upon completion of the integration

Rationale

This is the market rate for our service. Our white label solutions power crypto and traditional projects, enabling them to get their core products to market faster. The numbers speak for themselves as we handle and all time high TVL of over $100 million and >600 ETH protected against bot dumps. We are offering this service as a considerable discount given the interest we have from other projects that we have put in queue after Pocket Network.

Dissenting Opinions

Isn’t Pocket Network already building a bridge for wPOKT?

We are not privy to Pocket Network Foundations exact plans for a bridge in wPOKT. However, this bridge can be complementary to other bridges; doing so would only bring more resiliency to the ecosystem. Further, we believe that our bridge would be superior because of the following:

  • Speed- Currently the Ferrum bridge is able to bridge assets between BSC, Ethereum, and Polygon in under 3 minutes
  • Intuitiveness- The user experience is outlined in a simple 5 step process. This is an extremely simple UX and the UI is quite appealing aesthetically as well.
  • Architectural Advantages- Because of the fact that Ferrum used a 2-way bridge liquidity to pool as opposed to the standard “burn and mint” type of bridge, they are able to allow POKT to have control over the token contract that gets deployed on the other side. Any token that is being withdrawn on the destination chain will be one that is authorized by the POKT team.
  • Security- Ferrum’s bridge is quite a bit more secure than others on the market currently for 2 main reasons:
    • Architectural Security- Due to the fact that the Ferrum Cross-Chain Token Bridge runs on a two-way bridge liquidity system as opposed to a “Lock/Burn and Mint” protocol, the bridge contract never interacts directly with the token contract. Therefore, control over the token contract is never given to an outside smart contract, which is the case with many bridges on the market today.
    • Operational Security- From the OpSec point of view, the Ferrum bridge is quite a bit more secure as well. Projects are encouraged to keep only enough liquidity on the origin and destination chains to suffice for the volume that project anticipates to run through the bridge. With such a limited supply of liquidity, hackers are deterred from even attempting to exploit bridge liquidity pools as opposed to the AnySwaps and PolyNetworks on the market where millions of dollars in liquidity sits idle… basically begging to be exploited.
  • Token Utility - Ferrum designs white label products that add utility to tokens from their early stages and beyond. More often than not, when a project launches, their product is not fully complete. Oftentimes, this causes investors to grow impatient and sell the token prematurely. Unique to the Ferrum token bridge, they give projects the ability to become cross-chain compatible while adding additional token utility through their bridge swap fee mechanism. They can choose to burn these fees and become a deflationary asset, treat it as a revenue stream, consider them token buybacks, or use it as a reward mechanism for their community just to name a few.
  • Adoption - One of the other major challenges that non EVM compatible L1 chains face in regards to adoption is the difficulty in which interoperability is achieved. EVM compatible bridging solutions are a dime a dozen. However, the architectural differences between Ferrum’s bridge and the others on the market make bridging to non EVM compatible chains a reality.

Pocket Network Foundation already budgeted for a bridge, why ask for more funds?

This offer is for a bridge that would be outside of the strict Ethereum to Pocket blockchain specifications. The mandate of this bridge is much wider and we feel it warrants its own PEP.

This is an expensive PEP.

As outlined in the rationale section above, this is market rate. Building bridges across assets is a risky endeavor and we propose investing in a secure solution up front rather than negotiating the cost of lost funds later on.

Deliverable(s)

Contingent on the speed of this proposal process, we believe we can have Pocket’s white label cross chain token bridge built by the end of Q4 on the aggressive side or sometime in Q1 on the more conservative side.

We like to give ourselves some leeway in terms of timelines since development can always have its unforeseen circumstances. Q1 of next year is very conservative. You can expect more along the lines of Q4.

Our methodology is outlined here and it is reasonable to expect the functionality of a bridge that is similar to this example.

We will deliver the capability for POKT to include (but not be limited to) the following chains as the destination chain:

  • BSC
  • Ethereum
  • Polygon
  • Algorand
  • Avalanche
  • Moonriver

Additional Resources:

Here are additional resources that help Pocket DAO learn about Ferrum Partners:

Contributor(s)

Nick Odio

Taha Abbasi

Copyright

Copyright and related rights waived via CC0.

2 Likes

Thanks, Nick

Can you be a little more specific on the roadmap for building this? Is December this year, or January next year feasible? And what are the variables that would push out the roadmap to the back end of your estimated time for delivery, eg end of Q1 2022?

In terms of the functionality, I presume it would just be Ethereum at launch? if so, how long would it take, broadly speaking, to add bridges to other chains?

FWIW, I think this is a great idea to have more than one bridge solution, particularly as it aligns very closely with Pocket’s vision of a multi-chain world.

2 Likes

A multi-chain bridge would be amazing. I think infrastructure crowdsourcing through wPOKT should be something any ecosystem community can participate in, and having a multi-chain bridge would make that possible. Requiring devs to go to potentially a competing ecosystem to get the POKT required for their app would be a lackluster user experience. I think it would be best if users had the ability to get and then stake POKT in the ecosystem they are working in.

I’m really like the idea of having a trusted bridge partner that is able to offer multi-chain bridges without requiring more resources from our own tech team. If we were required to build and maintain such a product, I feel it would split the attention of the Pocket team.

I think this is a great proposal to consider, and from what I’ve seen, Ferrum would be a great partner to make this happen.

2 Likes

Thanks for the questions Dermot!

So as far as the execution of the roadmap, it’s going to come down to what we conclude once the scoping of the integration is complete. That will allow us to provide a more definitive timeline.

In terms of the functionality, yes it would be to Ethereum at launch but not JUST Ethereum. If you choose to have POKT live on either BSC or Polygon those will also be available at the time of launch. By that time most of the other EVM compatible chains should be integrated as well. We are also working to integrate Algorand (who we just received a grant from as well) so yours and theirs would be launching around the same time.

I hope this answers your questions. Looking forward to discussing this more with you all!

Best,
Nick

1 Like

I think this is a great value add to the ecosystem. While the bridge in construction will get us to the point where we are at least two chains, we’ve always believed that the future is multi-chained. We need to be available and out on as many of these chains and their ecosystems as possible.

My only hesitation is the timeline. The ambiguity there could scare off some DAO voters. While I think that there is plenty of scoping to do that would clear this up, it may be worth the risk.

@FerrumNetwork, are you expecting the fee upfront, is this milestone-based, or is this a reimbursement after delivery?

A question for the protocol team: @luis or @Andrew does the introduction of changes coming in Pocket 1.0 affect how this bridge will work?

Couple of questions / concerns.

  1. I don’t fully see the point of a protocol like POKT being on various chains. I don’t fully know what the utility of wPOKT will be, but having multi-chain presence just for the sake of having more people be able to buy the token seems silly to me. Creating protocol revenue is a much better focus of expenditures and focus - that will drive its own demand, no matter which chain wPOKT sits on.

  2. Disregarding the utility point, there’s no proof that being multi-chain even helps in terms of adding demand is dubious. How can that be, you ask? Because you have to incentivize liquidity - which more often than not completely counteracts any positive benefit from increased demand. See Sushi vs. Uniswap - completely different strategies in terms of multichain - but no proof that one has benefitted over the other

  3. There’s no knowing what the landscape will look like in a year, let alone 6 months. We could see increased fractionalization between chains, or one of the ZK l2s could completely change the game and consolidate

  4. IF the community decides to go forward with a multi-chain bridge, would want to compare costs and providers. There are tons of bridge protocols popping up every week (Synapse, Celer, Anyswap) - I actually haven’t heard of any that have been built by Ferrum (I may have missed in the post above?)

1 Like

You very well could be right that the utility of being multi-chain could be dubious @bauwiwhdhh. People in the community and foundation are probably going to differ on to what extent Pocket liquidity/products/effort should be on many chains; I think it healthy to have that conversation.

I think what is unique about Ferrum’s proposal is that - first and foremost - it is a redundant measure to make sure wPOKT has an additional bridge between our native blockchain and Ethereum.

The DAO granted the Foundation monies to cover the first bridge which will be strictly POKT<>ETH. This Ferrum proposal aims to add resiliency to the POKT ecosystem and options to the community when they start bridging assets. Nothing precludes other bridge providers from giving the DAO similar proposals.

To Ferrum’s credit, they outlined a unique bridge architecture that happens to tap into different liquidity pools across different chains. That could be viewed as a icing on the cake. I personally don’t think it should get a demerit based on the fact that they bring additional functionality/optionality. They will still bring POKT<>ETH redundancy while adding to our diverse ecosystem which is pretty important in its own right.

Separately, I agree with @adam that a more detailed draft timeline could help make this more compelling to community members.

Hi Adam,

Thanks a bunch for the feedback.

We like to give ourselves some leeway in terms of timelines since development can always have its unforeseen circumstances. Q1 of next year is very conservative. You can expect more along the lines of Q4.

Whether grant is to be paid upfront or is milestone based hasn’t been discussed. If it helps with the approval we can discuss a milestone based approach. Our main goal here isn’t the money, its more about creating value for Pokt and bolstering the functionality of our bridge. I think 50% up front would allow us to dedicate the right resources. The only thing we’d like is to peg the value of $POKT at the time that the agreement is signed :wink:

2 Likes

Hey there @bauwiwhdhh!

Thanks for the feedback. Hopefully I can provide some insights that may alleviate some of your concerns.

  1. I agree. The main purpose of Pokt isn’t to be a DeFi play or to be multichain. That being said, at Ferrum we build products out for projects to empower them to get their core products to market faster and to focus on their specific value prop. Therefore, Pokt will not be dedicating expenditures and focus in terms of dev resources toward building out this bridge. And rest assured the 80k worth of POKT will be put to good use on your network to further align our relationship. We plan to use POKTs RPC infrastructure and stake the necessary amount of POKT to service our RPC needs.

While I understand being cross-chain isn’t part of the main value prop of Pokt, I will say that the future of any project in crypto relies to some degree on being cross chain. While POKT being available on CEX’s is important for one type of investor, its leaving a massive portion of the market untapped. Many of the more savvy investors do everything via DEXs these days. You want those investors. Now while wPOKT is great, having it available on only Ethereum excludes another couple types of investor; those who can’t afford ETH gas fees and those savvy enough to understand that its not scaleable.

  1. I don’t think that having to incentivize liquidity should be a determining factor in whether or not to be cross-chain. Furthermore, I don’t think a project like POKT will have to incentivize liquidity. I think there will be enough trading volume to incentivize liquidity without having to give rewards in POKT. Also, if it was necessary many DEXs will offset the investment from POKTs end by matching rewards in their native token. Those rewards can then be turned into more POKT and auto-compounded to increase liquidity. We have many solutions for that as well and would love to help you make those decisions when we reach that point.

  2. You’re absolutely correct! Who knows what the landscape will look like? Thats why we’re keeping our options open in terms of which chains to integrate with. But more importantly its crucial to choose which chains to map POKT too. I think there will be some winners regardless of the role that rollups play. Either way, I wouldn’t hold off on innovating out of skepticism of what the future might hold. Better to be ahead of the curve and have to adapt to changes than to be left behind on a network that, in its current status, isn’t scaleable.

  3. The main thing that separates Ferrum from the other solutions on the market were mentioned in the “Dissenting Opinions” section of the proposal. I’ll elaborate on one of these points though. In terms of how it compares to AnySwap , Synapse, or Celer, the architecture of our bridge is substantially different. It gives POKT control over which chains authorized tokens can exist on. No more unauthorized versions of tokens being deployed on destination chains with a standard ERC20 Open Zeppelin contract! This amongst many other benefits including speed, intuitiveness, security, the white label nature, and the layer of token utility that our bridge provides are what sold Michael, Shane, and Rich on the bridge. Its also what sold Algorand, Moonbeam, Polygon, and many other networks who are yet to be announced. So while I understand there are other more recognized solutions on the market, I’ll chalk that up to the short period of time in which this product of ours has been live. I expect that the Ferrum Cross Chain Token Bridge will soon become a household name in the world of cross chain tech and interoperability.

Thanks @FerrumNetwork. I think that a 50% up front, 50% upon completion style agreement could make sense. I’m curious to see how the DAO voters react to something like that.

I appreciate this mentality and I am fully aligned with this style of thinking.

1 Like

Hey folks! I just wanted to let everyone know that I have updated the proposal to reflect two things.

  1. updated language on roadmap.

  2. payment of 50% upfront, 50% upon completion.

Looking forward to moving things forward toward what we foresee as a super bright future between these two companies!

I’ve moved the proposal forward to voting! Snapshot