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A new Polkadot to Ethereum bridge could enable cross-chain DeFi composability

Smart contracts on Ethereum will be able to directly interact with Polkadot.

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A new project building on Polkadot wants to create a comprehensive bridge with Ethereum that would eventually relay direct smart contract instructions.

The bridge is being developed by Snowfork, a software development company. The initial implementation is fairly straightforward, only allowing Ether (ETH) and ERC-20 tokens to be transferred over to Polkadot. The bridge is also fully symmetric, as Aidan Musnitzky, Snowfork’s founder, told Cointelegraph. “Anything you can do in one direction, you can do it in the other,” he said.

But while moving tokens around is an important part of it, the vision for the bridge is to be as generalized as possible, including sharing small pieces of state from one chain to another. Put simply, the bridge will let Ethereum smart contracts send instructions and information to Polkadot, and the same in reverse.

Musnitzky explained that this will be implemented through a series of blockchain applications that abstract the communication protocol used in the bridge. He compared it with the traditional networking stack of TCP/IP and the application layer of HTTP, which greatly simplifies development of web infrastructure.

Such a bridge would open new possibilities for developers on both Ethereum and Polkadot. The initial focus is on populating the Polkadot blockchain, Musnitzky said:

“I think our primary set of customers and users is focused on existing Polkadot projects that want to bridge to Ethereum to allow Ethereum-based assets to work within their network.”

But Ethereum DApps may benefit from the bridge as well. “If you have a two-way fully trustless system, then it becomes quite easy to move both state and logic from one chain to the other,” Musnitzky explained. The bridge could thus make Polkadot an additional layer-two scaling solution for Ethereum DApps.

The generalized architecture would also allow for easy cross-chain composability for DeFi projects, Musnitzky added:

“If, for example, we wanted to integrate Uniswap with a Polkadot-based chain module, we have a way to do that rather than just focusing on asset transfer.”

But these implementations are still in the future. Musnitzky said that the initial launch as a proof-of-concept is set to occur by the end of September. But the bridge will not yet be trustless, as the team needs to develop on-chain light clients that would validate transactions from the other side of the bridge. The complete process is estimated to take about six to seven months, first by building an Ethereum verifier on Polkadot and then a light client for Polkadot on Ethereum.

The development process is somewhat limited by Polkadot’s integrations through. Until cross-shard messaging is fully implemented the bridge will need to exist as a set of applications on each shard, instead of its own parachain.

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U.S central bank has no plans to ban Bitcoin or crypto

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Jerome Powell, the United States’ Federal Reserve Chairman believes regulation of the cryptocurrency market is critical, but the bank has no intention to outrightly ban Bitcoin (BTC) or other digital currencies.

Powell clarified that a China-style ban on digital assets isn’t something he’s considering when he responded to a question from Republican Representative, Ted Budd. Rep. Budd asked about safety regulations for stablecoins and about the central bank’s ongoing discussions about a so-called “digital dollar” in response to Powell’s comments.

Despite being similar to money market funds and to bank deposits, stablecoins are outside the regulatory perimeter, “it is necessary for them to be regulated,” Powell said while adding that “the same rule applies to the same activity.”

Although the Fed has been considering a central bank digital currency for a while, policymakers are still undecided about its implementation. A number of studies have been commissioned by the central bank about the advantages and potential roadblocks of issuing a CBDC.

Powell is the chairman of the Federal Open Market Committee, which is responsible for determining US monetary policy.

The Committee decided earlier this month to leave existing stimulus programs intact while signalling a possible wind-down of the COVID-19-induced bond purchase program. Stocks and crypto assets are among the risk assets that appear to have been impacted by the warning.

Powell had earlier said the Fed wasn’t in a rush to join the trend, despite several central banks launching their own CBDCs.

Managing by getting things right, rather than speed, is the focus for the Fed Chair while noting that the US does not lag behind other OECD countries in CBDC innovation.

Government policymakers are pushing an anti-crypto narrative that features CBDCs at the forefront.

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Ripple launches $250 million fund for NFT creators

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Ripple, the creator of the XRP token, is launching a fund for creators, marketplaces and brands to explore new use cases for non-fungible tokens (NFTs) on its ledger, XRPL.

The announcement stated, “Announced as part of Apex, the XRP Ledger (XRPL) Developer Summit, this fund fosters innovation in tokenization, with a focus on non-fungible tokens (NFTs). The fund will provide targeted support for creators, brands and marketplaces to explore new use cases for NFTs on the XRPL leveraging its innate advantages of speed, cost and sustainability.”

The announcement was made yesterday on the Ripple website where the firm stated that the $250 million fund would be focused on accelerating adoption in the cryptocurrency space by working with NFTs. The platform said it wants to address growing concerns relating to the minting of the tokenized artwork, which includes clunky user experiences, high transaction fees and the possible environmental concerns relating to minting.

What the announcement said

Ripple stated, We believe NFTs embody the promise of tokenization and represent a tipping point for its embrace by the mainstream. Through the Creator Fund and the XRPL, we’re excited to unleash new utility for NFTs and accelerate the broader shift to tokenization.”

According to Ripple, NFT marketplaces, including MintNFT and Mintable and creative agencies, would be among the first to have access to the fund. Any proposed NFT use case would be built on the XRP Ledger, giving creators an opportunity to monetize their work.

It stated, “As part of today’s announcement, we are teaming up with NFT marketplaces and creative agencies that will have early access to the fund to unlock new tokenization use cases. NFT marketplaces mintNFT and Mintable will integrate with the XRPL to deliver a seamless NFT experience for developers. Our premiere agency partner, VSA Partners, has also signed on to the initiative to help their creator and brand clients create and sell their NFTs.”

Ripple CTO David Schwartz has previously cited the ledger’s low cost, high speed and payments features to “streamline NFT creation at scale.”

In July, Mintable announced it was planning to integrate the XRP Ledger as it was “ideally suited to deliver a seamless experience for NFTs.” The platform has minted more than 700,000 items since 2020. Both Ripple and the NFT marketplace have made public statements on the environmental concerns in the crypto space. While Ripple has pledged to become carbon net-zero by 2030, the company has also said that its XRP ledger is already carbon neutral.

 

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Tether scores win in class action lawsuit

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The judge in the class-action lawsuit filed against Tether, the issuer of the most capitalized stablecoin USDT and crypto exchange Bitfinex, has granted motions to dismiss many of the claims in the case.

Court documents filed on Tuesday in the Southern District of New York reveals that District Judge Katherine Polk Failla has granted motions from Tether’s and Bitfinex’s parent company iFinex to dismiss key claims in the plaintiffs’ case that the two firms manipulated the cryptocurrency market. Altogether, Judge Failla granted motions to dismiss five complete claims and part of one, while denying six others.

The judge stated that she would not allow investors to bring claims against Tether and Bitfinex under the Racketeer Influenced and Corrupt Organizations Act (RICO), nor allegations related to racketeering or using the proceeds of racketeering for investments. She also stated that Tether and Bifinex investors could not “inadequately allege” the companies’ monopoly power in the stablecoin market.

Backstory

The initial complaint against iFinex was in October 2019 where the plaintiffs alleged that the firm manipulated the cryptocurrency market by issuing ‘unbacked’ USDT, “in an effort to signal to the market that there was enormous, organic demand for cryptocommodities.” The plaintiffs also alleged that the firm wanted to inflate the price of cryptocurrencies like Bitcoin (BTC), “thereby creating and sustaining a ‘bubble’ in the cryptocommodity market.”

While Bitfinex and Tether had settled the case with the Office of the New York Attorney General in February over mismanagement of USDT reserve funds, the civil action with a group of aggrieved cryptocurrency investors continues. In the former case, Bitfinex and Tether agreed to pay $18.5 million for damages to New York and submit to periodic reporting of their reserves in addition to stopping service to customers in the state.

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