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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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CRYPTOCURRENCY

No retreat no surrender, Ethereum explodes

Ethereum was trading at $1,532.05 on the FTX exchange with a 24 daily trading volume of $26.6 Billion.

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Ethereum has been on a record buying spree amid its most recent price correction as institutional investors buy more at its dips.

At the time of drafting this report, Ethereum was trading at $1,532.05 on the FTX exchange with a 24 daily trading volume of $26.6 Billion. Ethereum is up 11.54% for the day.

Ether is the crypto asset that powers the Ethereum network. Crypto developers build apps on the Ethereum network, as it offers a unique type of decentralized software platform, which is different from the flagship crypto, which is designed to just be a currency or store of value.

Prakash Chand, Managing Director at FD7 Ventures also revealed also believes Ethereum would do far better than Bitcoin in the coming years;

“I’ve been lucky enough to spend lots of time with the brightest minds in crypto and I’m willing to bet that each of Ethereum, Cardano, and Polkadot will be more valuable than Bitcoin within the next few years,” he said.

That being said there has never been so much sustained activity of addresses interacting with Ethereum.

The 3-month average of aa’s has broken over its previous all-time high and it doesn’t look like it wants to go back!

In addition, Ethereum (ETH) miners seem to have an edge now over their arch-rivals, as they have surpassed Bitcoin (BTC) miners on transaction fees charged for some months now.

Crypto market data aggregator, Messari revealed key metrics showing that it is the longest period for which Ethereum’s transaction fee revenue has surpassed BTC in the crypto asset’s history.

This prevailing macro is positive for Ether miners whose turnovers have been increased by higher fees and more transactions. In fact, Ethereum’s network hash rate has been growing consistently, having reached a near two-year high.

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CRYPTOCURRENCY

Demand for Bitcoin is growing high amid tightened supply

The amount of illiquid Bitcoin supply in the network has grown more than the circulating supply since 2017.

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Crypto experts argue that such strong demand in the Bitcoin market is largely attributed to the fact institutions are coming.

The market liquidity is tightening at the flagship Crypto market, as there are less than 4 million BTCs in circulation available for upcoming investors including the likes of  Grayscale, Paypal, Microstrategy, hedge funds, and so on.

Only 21 million Bitcoins are ever going to be produced in total, and presently, there is about 18.9 million Bitcoin in circulation.

This shows a differential of about 2.1 million Bitcoin that are left to be produced, not forgetting about 4.5 million Bitcoins that have already been lost forever.

This also means that liquidity is drying up, as demand for the world’s most popular crypto hits record highs

The amount of illiquid Bitcoin supply in the network has grown more than the circulating supply since 2017.

Meanwhile, liquid supply continues to see a steep decrease.

According to Yann & Jan:

“Float in the network is drying up faster than ever.
“Currently, about 78% of issued bitcoin’s are either lost or being hodled, leaving less than 4 million bitcoins to be shared amongst future market entrants (incl. Paypal, Square, SP500 Companies, ETF’s, etc).

It’s also important to understand Institutional investors love transparency, regulation meaning the more regulated Bitcoin mechanisms such as regulating Crypto exchanges handling it, the more value major institutions will place in it, thus making Bitcoin a less volatile asset in the long term.

Glassnode also revealed that a million Bitcoins (BTC) or almost $30 billion in actual prices, disappeared from the liquid supply in 2020. This process even outperformed the inflow of new Bitcoins (BTC) into the network:

“Currently, we are at a stage in which the illiquid supply is growing more than the total circulating supply according to the report. A similar pattern presently played out again during the bullish rally of 2017.”

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Cryptocurrency News

VP Osinbajo disagrees with CBN, calls for crypto regulation

Vice President Yemi Osinbajo had recently called for Crypto regulation knowing fully well the role Crypto play in the global financial ecosystem.

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The Vice President of Nigeria, Prof. Yemi Osinbajo has recently called for Crypto regulation knowing fully well the role Crypto plays in the global financial ecosystem as he opined that such disruption often makes room for progress.

Osinbajo also advised the SEC, and Central Bank of Nigeria in creating a regulatory road map, while fully appreciating the stance of the CBN, Nigerian SEC, and law enforcement agencies on the possible abuses of crypto assets.

The vice president further stressed the importance Cryptocurrencies would play in the coming years as they will most likely challenge traditional banking, including reserve banking, in ways the world hasn’t yet imagine, stressing the need for Nigeria in being prepared for such a seismic shift.

He also called for scaling up of government-private sector interventions because, “the task of national development requires that we fire on all cylinders, after all at one stage China was building 1.9m housing units per year.”

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