Axelar Interchain Token Service: native tokens instead of wrapped assets
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Explains ITS: newly minted interchain tokens use burn-and-mint with the same address on every chain, removing wrapped-asset bridging risk, while existing tokens registered with ITS stay lock-and-mint when first leaving their native chain.
Key claims
New Interchain Tokens use burn-and-mint
Existing tokens remain lock-and-mint on first transfer
Token Managers can be Lock/Release or Mint/Burn
The future is modular.
The future is multi-chain.
The future needs an interchain token standard that removes bridging risk and unifies liquidity across the growing number of L1s and L2s.
Let me introduce you to the solution.
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1/ Solving interoperability will be a major narrative as we head into a multi-chain future powered by a maturing modular tech stack.
Today, liquidity is fragmented not only across chains but also across different forms of wrapped assets.
That's risky and it's a problem.
2/ Aside the fragmentation of liquidity, another issue that comes with wrapped assets is their inherent bridging risk.
If a bridge issuing a wrapped token is exploited, the asset is likely to plummet in value.
3/ This risk does not exist with native tokens.
However, it was never really feasible to seamlessly deploy fully fungible tokens across multiple chains and easily add native interchain functionality to existing tokens.
Such a solution would render wrapped assets obsolete.
4/ So what if I told you there actually is a way to make this happen?
Would be pretty big, right?
Well, there is. Enter @axelarnetwork and the Interchain Token Service (ITS).
5/ At its core, ITS preserves custom functionality & creates bridged versions that are fungible across multiple chains.
It allows teams to easily manage supply and features.
ITS is powered by @axelarnetwork, which I have previously covered in-depth. 馃憞
x.com/zerokn0wledge_/status/1674477862307631105
6/ ITS primarily addresses the systemic financial risks that arise from having wrapped tokens in circulation.
It removes dependencies on the issuing bridge's security models for the user, enabling more secure cross-chain liquidity.
7/
However, it's not like @axelarnetwork is getting rid of bridges altogether (yet).
Newly minted Interchain Tokens use burn-and-mint, bypassing bridges.
Existing tokens registered with ITS are still lock-and-mint when 1st moving from their "native" chain.
8/ So instead of having multiple bridges that mint their own wrapped versions of a token, ITS enables entirely fungible, native interchain tokens across major networks.
They deliver the same functionality across chains secured by @axelarnetwork's top-notch security model.
9/ They have the same address on any chain and are easily fungible with tokens on any connected chain.
10/ Interchain Tokens are created and managed by what is referred to as the Interchain Token Service.
It allows you to send tokens cross-chain, build your own asset bridges, build asset transfers into your interchain dApp, and take on many other use cases.
11/ In a nutshell, interchain tokens are ERC-20 tokens that are available on multiple blockchains.
They are created using the Interchain Token Service and can be used to transfer value between blockchains.
12/ New interchain tokens can be deployed through the Interchain Portal, or by building a custom ERC-20 token and deploying it with a Mint/Burn token manager on all chains.
These tokens are accessible on multiple chains, offering the same functionality as any ERC-20 token.
13/ However, tokens can also be customized to have more features than the standard Interchain Token.
With custom tokens, you can specify minting policies, ownership structures, rate limits, and other bespoke functionality.
14/ You can also turn existing ERC-20 tokens into an Interchain Token by deploying Token Managers.
Token Managers can be either Lock/Release or Mint/Burn.
15/ Few understand how big this is.
It's a major upgrade for cross-chain liquidity.
Badly needed in a time in which liquidity and users are increasingly fragmented across a growing number of L1s and L2s.
16/ Removing the bridging risk of wrapped assets from the picture further bolsters a securely interoperable multi-chain future.
Great move by @axelarnetwork that could turn into the security layer of the multi-chain token economy.
Wouldn't fade, anon.
That's a wrap! I hope you've found this thread helpful! 馃
Make sure to follow me @zerokn0wledge_ to stay ahead of the curve on cutting-edge interoperability tech! 馃寪
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