“The fundamental security limits of bridges are actually a key reason why while I am optimistic about a multi-chain blockchain ecosystem, I am pessimistic about cross-chain applications.
For example, suppose that you have 100 ETH on Ethereum, and Ethereum gets 51% attacked, so some transactions get censored and/or reverted. No matter what happens, you still have your 100 ETH. Now, imaging what happens if you move 100 ETH onto a bridge on Solana to get 100 Solana-WETH, and then Ethereum gets 51% attacked. The attacker deposited a bunch of their own ETH into Solana-WETH and then reverted that transaction on the Ethereum side as soon as the Solana side confirmed it. The Solana-WETH contract is now no longer fully backed, and perhaps your 100 Solana-WETH is now only worth 60 ETH. Even if there’s a perfect ZK-SNARK-based bridge that fully validates consensus, it’s still vulnerable to theft through 51% attacks like this.
For this reason, it’s always safer to hold Ethereum-native assets on Ethereum or Solana-native assets on Solana than it is to hold Ethereum-native assets on Solana or Solana-native assets on Ethereum. And in this context, “Ethereum” refers not just to the base chain, but also any proper L2 that is built on it. If Ethereum gets 51% attacked and reverts, Arbitrum and Optimism revert too, and so “cross-rollup” applications that hold state on Arbitrum and Optimism are guaranteed to remain consistent even if Ethereum gets 51% attacked.
The problem gets worse when you go beyond two chains. If there are 100 chains, then there will end up being dapps with many interdependencies between those chains, and 51% attacking even one chain would create a systemic contagion that threatens the economy on that entire ecosystem.
This is why I think zones of interdependency are likely to align closely to zones of sovereignty (so, lots of Ethereum-universe applications interfacing closely with each other, lots of Avax-universe applications interfacing with each other, etc etc, but NOT Ethereum-universe and Avax-universe applications interfacing closely with each other).
This incidentally is also why a rollup can’t just “go use another data layer”. If a rollup stores its data on Celestia or BCH or whatever else but deals with assets on Ethereum, if that layer gets 51% attacked you’re screwed. To be a rollup that provides security to applications using Ethereum-native assets, you have to use the Ethereum data layer (and likewise for any other ecosystem).
I don’t expect these problems to show up immediately. 51% attacking even one chain is difficult and expensive. However, the more usage of cross-chain bridges and apps there is, the worse the problem becomes. So cross-chain activity has an anti-network-effect: while there’s not much of it going on, it’s pretty safe, but the more of it is happening, the more the risks go up.“
- “Crypto crosses new ATHs and the total market cap reaches $5T. The bull run is not over.
- Eth2 merge happens. All the research is done, testnets are running, and it’s only a matter of debugging right now. Say goodbye to Ethereum PoW in 2022.
- Bitcoin gets adopted by another nation-state. Global fiat inflation is starting to hit countries and central banks will have to look for alternatives.
- Ethereum becomes a trillion-dollar network. The Merge, Proof of Stake, EIP 1559, all of this is brewing a storm for Ethereum to join Bitcoin as a trillion-dollar network.
- Layer 2 reaches $25B in total value locked.
- NFT sales hit $30B.
- DeFi will rebound this year and replace some of the weaker projects in the top 10.
- DAOs will make an 8-figure purchase for an IRL item.
- GameFi builds niche. Indie games on L2 have an exceptional building year with a few notable breakouts.
- “The Coming Bear Market” will be frequently discussed until it becomes a meme. The bear market will not come.“
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“The ecosystem now boasts over 1,000 project integrations, with 700 oracle networks securing over $75 billion in value—up tenfold from 2020—and accessing over one billion data points. While Chainlink’s data capabilities formed the focus of its scaling efforts in 2021, the past year has also seen the oracle provider launch additional capabilities for its networks—most notably random number generation and its smart contract service Keepers, which enables the automation of increasingly complex instructions. VRF has already received over 2.5 million randomness requests.
Nazarov says the team is now finally satisfied with the security and scalability of the consensus system they’ve designed, and is now ready to launch staking this year. But he declines to specify when in the year it might launch.
Chainlink is also set to launch CCIP, its global standard for messaging and communication between blockchains. CCIP seeks to do what TCP/IP did for the internet: connect all the blockchains into one “internet of blockchains,” Nazarov says, via cross-chain smart contracts.
In 2022, Nazarov predicts many more banks, insurance providers, and other institutions will embrace DeFi, but also build out their own systems to launch their own smart contracts. Chainlink can offer those enterprises an on-ramp into DeFi without them having to integrate with protocols.”
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“The One sits on a 3.5-acre estate and boasts a 50-car garage, 10,000-bottle wine cellar, 4,000-foot square guest house and stunning views of Los Angeles below.
But the lavish project suffered after its owner defaulted on over $165 million in loans and debt, placing it into receivership. The home was previously expected to go on the market for $500 million—making it one of the most expensive properties in the world. The developer wants to save it from auction by creating a cryptocurrency, The One Coin, that represents shares in the property.
Once the tokens are created and traded, it would transfer the value of the house to the coin, making this the first-ever asset-backed coin by a one-of-a-kind piece of real estate.
Niami’s idea is to tokenize the house, sell the tokens, then rent the house out for glitzy events and give the profits back to the token-holders. (It’s worth mentioning that the SEC, based on past guidance, may think tokens tied to home rental revenues look like a security.)”
The Disrupt 