Solana, the Ethereum challenger and home to Serum, FTX’s new decentralized exchange, has unveiled a cross-chain bridge that will allow users to turn ERC20 tokens into Solana’s SPL tokens for use in DeFi applications.
The company says the “trustless” bridge makes it possible for DeFi traders to take advantage of Solana’s higher speed and lower cost relative to Ethereum in a way that “still allows the value to settle back to the Ethereum network if so chosen.”
Wormhole was developed in collaboration with Certus.One, a startup that creates validator architecture for proof-of-stake blockchain networks.
The DeFi boom, which has drawn traders to Ethereum-based decentralized exchange platforms like Uniswap, has also led to congestion on Ethereum’s network. As a result, the cost of transacting on Ethereum has soared. Wormhole is intended to let traders sidestep that congestion — and, in the process, help Solana bootstrap its own DeFi market.
In August, FTX launched Serum, a Solana-based decentralized exchange. “However, bootstrapping a new ecosystem is hard and all foreign tokens currently traded on Serum are wrapped tokens issued by FTX,” Leopold Schabel, co-founder and CTO of Certus.One, wrote today in a Medium post announcing the project. He added: “The remaining hurdle for bringing more DeFi apps and value to Solana are truly decentralized cross-chain assets that do not rely on a single point of failure.”
Wormhole will let users lock ER20 tokens in an Ethereum smart contract and mint corresponding SPL tokens on Solana. To pull this off, it will rely on “cross-chain oracles” called guardians, which will be operated by “a set of node operators that include top Solana validators and other ecosystem stakeholders whose incentives are strongly aligned with Solana and Serum,” according to Shabel.
Guardians will securely “certify token lockups and burns on one chain in order to mint new tokens or release tokens on the other, and vice versa,” Shabel wrote.
The Solana foundation is now inviting developers to use Wormhole in a hackathon that will begin October 28.