blockworks.co
Few pieces of blockchain infrastructure have proven to be both more necessary and more fragile than cross-chain interoperability protocols, commonly known as bridges. Whether you favor Ethereum layer-2 rollups, or an app-chain thesis such as Cosmos or Avalanche subnets, a multichain future, requires data and value to flow between chains.
But so far no one has conclusively solved the engineering problems to make cross-chain communication safe, fast and cheap — to wit, estimates put the total value lost to hacks and exploits at upwards of $2 billion since 2021.
The latest startup to try is Orb Labs, which announced a $4.5M seed round Tuesday, led by Bain Capital Crypto, with participation from Shima Capital, 6th Man Ventures, Aves Lair, Newman Capital, Modular Capital, and SevenX Ventures.
Co-founders Richard Adjei and Felix Madutsa told Blockworks, exclusively, that their goal is “to make it possible for the everyday people to find Web3 to be a comfortable place to be.”
“We think fundamentally, messaging protocols are the last piece of Web3 scaleability,” Adjei said. Their primary use case is to help amortize block space demand.”
That entails moving some computation to chains which are cheaper to use, like layer-2s, while keeping assets safely secured on a trusted chain such as Ethereum.
Efficiency versus security
To date, there have been three main types of cross-chain protocols:
- Consensus light clients such as Cosmos’ IBC, which are highly secure and trust-minimized;
- Validator-based systems — the majority approach taken by Wormhole, LayerZero and Axelar — which have a set of validators verify messages off-chain; and
- Optimistic messaging systems — the Nomad bridge being the most prominent — that rely on off-chain validity checks during a dispute window, much like optimistic rollups.
Each have their pros and cons, balancing the tradeoffs between speed, cost and security. Wormhole and Nomad, for instance, suffered exploits to the tune of hundreds of millions of dollars in 2022.
Orb Labs “went back to the drawing board” as Adjei and Madutsa put it, and came up with Earlybird, which uses “different libraries that get to the peak in terms of usability and security,” Adjei said.
Of course, they had to have catchy names.
Thunderbird, the most gas-efficient, uses a validator scheme much like existing popular protocols, but the team claims their solution delivers a greater than 20x cost savings.
The Rukh library is an optimistic messaging system which side-steps the problem that confronted Nomad.
Caladrius is the most trust-minimized — a consensus light client-based that Adjei said will be cheap enough to work on Ethereum. By his estimate, an implementation of IBC on Ethereum would cost on the order of $500 million per year.
Finally, Griffin, a library that combines the previous three, gives developers maximum flexibility, according to Orb Labs.
The basic idea is to allow applications to switch between the libraries based on the nature of their particular needs, dialing down security to reduce costs, or upping security with a more trust-minimized solution, when required.
This new approach is a major part of why venture investor Yida Gao, general partner at Shima Capital, sees room in the bridge market for a new player
“We think that there’s a second-mover advantage when it comes to building cross-chain communications protocols,” Gao told Blockworks.”
None of these solutions is yet in production, but the team plans to use the new seed funding to bring the vision to reality. That means hiring, scaling the tech, conducting security audits, and finding launch partners.
“We’ve talked to a few [layer-1s] that are exploring ways to build really robust native bridges, partly because the thing they all need to solve is there are not good solutions other than multisigs,” Adjei said.
“Future-proof interoperability”
Other messaging protocols are moving in a similar direction. The team’s vision is similar to what Axelar co-founder Sergey Gorbunov calls “a concept of future-proof interoperability,” working towards a decoupling of the interoperability layers.
“Developers can build their dApps based on specific message semantics, while the underlying validation and transport layers can be adapted and improved over time,” Gorbunov said.
Gorbunov disputes the idea that validator-based systems are inherently less secure, noting that even the gold standard IBC encountered critical bugs last year. After “two bugs in the same week, the full Cosmos community was like on fire having to deal with those things — thankfully nobody lost money,” Gorbunov told Blockworks.
But he agreed that there’s still room for innovation in cross-chain architecture, writing on the Axelar blog that “Besides security and robustness challenges, the architecture of interchain dApps needs to be revisited from the ground up.”
Orb Labs’ first product, MagicLane, is a token wrapping feature to send tokens from one chain to another very easily, and is built on top of Earlybird.
“The whole idea behind messaging protocols is everything becomes a cross-chain message, because we’re sort of like moving computation, transactions and users to the most scalable chain at any given point in time,” Adjei said.
“That’s the only way we enter this world in Web3 where more every transaction is free.”