Bancor, an on-chain liquidity protocol, today announced that work is now underway on a cross-chain bridge that would allow Bancor to expand its decentralized liquidity protocol to Polkadot.
The implementation would eventually give users the ability to create pools, provide liquidity and perform trustless cross-chain swaps on Bancor between Polkadot and ERC-20 tokens.
The Bancor protocol is designed to be chain agnostic. Since BNT is used in each of the protocol’s pools, it serves as the intermediary asset in every swap (e.g., LINK <> BNT <> USDC). The same holds true for cross-chain swaps, which can occur by burning BNT on the originating chain, and minting BNT on the destination chain.
Bridge operators, who listen for incoming transactions and relay transactions accordingly, may be compensated in BNT, and bonding collateral may be staked in BNT.
The bridge is being built with the LiquidApps team, whose involved in developing innovative cross-chain technology.
Bridge operators will utilize lightweight nodes to listen to and interact with both chains. Unlike existing cross-chain bridges where nodes can cost thousands or millions of dollars to run, these lightweights nodes can run within a simple web browser. This slashes the costs and setup time for new bridging agents and allows anyone to participate in securely setting up and maintaining the bridge.
The software underpinning the nodes is WASM-based, and could potentially be used to enable mesh networks across multiple ecosystems (e.g., a contract on Ethereum could be called to send tokens from a Solana account to a Polkadot account).
“Creation of the ETH-DOT bridge will be the first step towards making Bancor a multi-chain liquidity protocol. Once completed, Polkadot’s scalability and speed coupled with Bancor’s unique AMM features could unlock novel liquidity pool designs and DeFi interactions. We look forward to sharing further details and timelines as development progresses.”
– The Bancor Team