Bridging Stablecoins: Improving Day One Cross-Chain Liquidity by Angus Lamps

cool uh hi so I'm Angus or lams the foundation lead at the Stargate Foundation uh Stargate is a liquidity based Bridge built on top of the layer zero protocol hopefully most people know what layer zero is but it's an interoperability protocol allows you to send arbitrary messages between different blockchains Stargate was the first application and still is the largest application built on top of layer zero uh facilitates liquidity movement between 45 different blockchains today at least for the Stargate V2 protocol uh today I'm going to focus a lot on what Stargate V2 unlocks for bringing stable coins to new ecosystems uh I think what we've built with Stargate V2 and specifically with hydro which is our bridging as a uh service module is quite unique in what it unlocks for new ecosystems and we've seen this over the past couple weeks with uh ecosystem like bear chain abstract story uh and so just going to kind of talk through what that architecture actually looks like what it means for those ecosystems but what it also means for kind of liquidity movement of stable coins and also eth uh in uh generally with defi uh so to kind of set the stage of what Stargate V2 was built for and why we built it in the way that it was we built Stargate V1 three years ago with the idea that native stable coins as in the usdc issued by Circle was what everyone will want to hold we have seen a growing number of hacks within bridging I think most people have probably seen these headlines the top uh hacks up until at least last week when when bybit was unfortunately hacked uh have all been related to Bridges and the large amounts of capital that was held within them uh and a lot of people attribute these hacks to the fact that they were using wrapped assets uh and wrapped assets has now become kind of a a a word that nobody likes to hear nobody likes to say that they are using wrapped assets within the ecosystem um the truth is that a lot of native stable coin issuers will not expand to the number of chains that we see today the I think Circle today are probably on 15 to 20 chains similar to tether even less uh up until their recent USD Z launch but the fact of the matter is that we have enough chains today where wrapped assets will continue to proliferate uh and I think the bet that we took with Stargate V2 or the point that we are trying to make is that if raft wrapped assets continue to proliferate it is not the wrapped assets themselves that are the problem it was the underlying architectures that they were built upon that were the problem and that is what caused all of these hacks and so a lot of the um top five or top six hacks that had happen Ronin Network poly Network b b Bridge as well as Wormhole uh were built on top of upgradeable smart contracts and it is those underlying upgradeable smart contracts that were the problem it is not the actual wrapped assets themselves um and so as I said the idea with Stargate V2 is that wrapped assets will continue to perfer if they do exist then the best place for those to be issued is out of the Stargate V2 protocol um and so what is Stargate V2 it's kind of three different points a lot of people these days talk about interoperability and what do interoperability look like who's going to solve the bridging problem how do we actually fix the ux around it uh and so there are a lot of different kind of buzzwords uh that different particles fit within Stargate fits into a couple different ones so one Stargate is a liquidity pool based Bridge there are liquidity pools of usdc across the different chains that Circle have issued usdc on so we have a liquidity pool with $300 million of usdc on ethereum we have a liquidity pool of usdc and arbitr with $100 million in it uh and using those two you can transfer assets between the two of them I have a diagram on the next slide Stargate V2 is also one of the very few messaging based Bridges uh I think a lot of architectures that people think about when they think about bridges today are intense based Bridges there are very few messaging based Bridges which are left uh three of the panels debates that have been on this week have been intense versus messaging and Stargate is one of the few uh protocols that is kind of left on the side of messaging based bridging and I'll get to that in a second uh starget also uses of technology so of is the Omni chain fungible token on top of layer zero um and we used that of technology to expand day one stable coins to new ecosystems which I will get to in this diagram so as I said as part of the Stargate V2 protocol we have a bridging as a service module called Hydra which uh allows new ecosystems as I said that do not have native usdc or native usdt um to onboard liquidity in those assets into their ecosystems on day one and so as an example uh if you can see it's probably quite small but chain X in this uh we can use be chain as an example um we have arbitrum optimism 15 different chains 15 different pools of liquidity on the kind of native pool issuance side for Stargate and so from a user perspective if you are looking to move usdc from arbitrum or from optimism into chain X bar chain in this case then you can move your usdc from arbitr it gets locked into the liquidity pool and then a new asset is minted on be chain called bridged usdc doe Stargate built with the uh bridged usdc Circle compliant asset the idea being that Stargate issues this asset on day one if and when Circle wishes to take over asset we are able to hand it over to them in the future without the need of any kind of smart contract change anyone who is playing around in the arbitrum defi ecosystem over the past couple years will be very familiar with the idea of a usdc doe versus the native usdc um and ultimately what Hydra unlocks for a new ecosystem is the ability for users to bridge unlimited size from any of the chains that Stargate is connected to obviously in this diagram only with four chains but today Stargate V2 is on 45 different chains and so again what this meant for someone like bear chain or for story protocol is that the day that that chain launches main net the day that they go to market they have a canonical bridging front end where users can Bridge from any of those chains with unlimited size The Innovation with Stargate V2 and with Hydra is that when you bre no matter the source shap chain that you bridge from the asset that gets minted on the destination side is the same composable asset that you can use across all of the other ecosystems that we connect to previous wrapped asset bridges of kind of yester year of previous Cycles would always issue a unique stable coin depending on the route that you took so uh for example anyone who has used kind of the the portal Bridge of of two or three years ago when you bridge usdc from base into salana for example you would get like a usdc from base that would only have liquidity which you could swap into the native stable coin um the idea with Hydra is that no matter the source chain that you're bridging from you actually receive the same canonical stable coin of that ecosystem um and so again the best example of this is bar chain today which has about $750 million of usdc issued within that ecosystem a lot of that us then defile locked within different Boco volts um and the the the unlock for the ecosystem is again you kind of get access to the users and the liquidity across the 45 chains that sarget is on today the unlock from the user is that you can Bridge from any of the chains that you started so again for the ecosystem you're actually accessing the users where they are today they don't need to bridge down to main net in order to access your canonical bridge this canonical Bridge Hydra works from any of the chains that that we are on and then simultaneously any of the assets that we've ised so for example chain X being be chain chain y being story protocol um those usdc assets are composable and uh extend the layer zero oft standard and so again you can burn and mint an unlimited amount of usdc between those ecosystems which help helps a lot of different parts of the stack not only does it help the user experience where again the liquidity is always available you can burn and mint an unlimited amount of size it also helps all of the different bridging architectures that are out there so as I said at the start many architectures today uh look like an intense based model ultimately with an intense based model the solvers that participate in the ecosystem still need to do rebalancing having something like this where the native usdc or the canonical usdc within the ecosystem can be burned and minted at an unlimited rate uh for basically free uh makes the user experience a lot cheaper and also makes a solver's life a lot easier uh if there are any solvers in the room and so the the three things that I think are very important to remember about Stargate and about Hydra uh are are these three things if there's one takeaway that you're going to take away compatible composable and canonical so compatible what does that mean as I said Stargate is built with the bridge usdc standard the usdc that we are issuing on those in the ecosystems can be hand over and so it is not a asset that is owned and will forever be owned by Stargate it is the idea is that if the the usdc asset grows to become large enough or there's some agreement made with circle that that can be taken over again if if that is the um the case if that agreement uh happens composable as I said means that between chain X and chain Y and again all of the other 45 chains that were on that same asset can be moved burned and minted between the canonical assets within those ecosystems and so there's a never a case where you start with the usdc that is you know the native ethereum usdc and then you end up in in uh some random bridged asset these are not wrapped assets that are issued out of uh kind of any random bridge this is like the canonical bridge for the ecosystem and this is the canonical asset that you're that you're um that you're using within or that all of the D5 protocols within that ecosystem you're using um and so again knowing that you can always go to the same protocol and that other actors Within the space solvers can go to the same protocol and always be receiving the canonical asset uh is quite important so compatible composable canonical uh and the this is a diagram from the first couple days of um the story launch the story's new L1 the blockchain for IP Stargate launched uh Hydra on story and I think this diagram as well as the next one quite accurately represents what uh something like uh Hydra offers to a new ecosystem you can see that the flow of liquidity it's probably a little bit small but this is basically the flow of liquidity from Source chains into Story the top obviously being ethereum this is where most liquidity often comes from next being uh arbitrum base optimism BC they're actually not completely ranked in volume order but the the point being that you can now onboard users from every single other ecosystem and again you access those users where they have liquidity and so there are very few um protocols today that could offer something like a superposition to story route at unlimited size or even like a DJ chain to story route or the bar chain to story route but you can now do that at unlimited size um both at the like user level but also at the developer and like the application Level uh and similarly this is outflows from story and so you see again lots of assets moving down to ethereum but also to arbitrum to base to BSC into optimism Etc the point here again being that ultimately if we're going to solve interoperability moving liquidity at unlimited size and low fees between these ecosystems is how we're going to get there um there are not many architectures that enable you to do that and we think that it's very important that Hydra and its architecture is kind of understood um and this is just a screenshot from def Lama showing that uh what saret can enable this was can't remember when I made these slides but a couple days ago when uh one of the chains that we had launched hydron um was onboarding a bunch of liquidity into their ecosystem uh the second in line there being layer zero which represents all of the kind of ofs that are issues on top of layer zero as I said the the usdc assets or the the Stargates Hydra also works for USD and rapde those assets are also built to extend the kind of of standard I think again when people think about interoperability and how to solve interoperability understanding that moving an unlimited amount of assets using burn and Min technology between these chains is actually the way to go and any other architectures are kind of a stop Gap solution to really solving the underlying problem so again if you're going to remember anything anical composable compatible sarg V2 and uh the hydro bridging as a service module is important for new ecosystems that are looking to onboard liquidity um and kind of underlying point of all of this is that I think interoperability and bridging is an infrastructural problem and the infrastructure exists today all of it all of the technology that you need to unlock interoperability for your ecosystem or for your application exists today um and so something that we've been saying a lot is that introp is solved and we need to let application developers know that it is solved uh and we should move on to the next problem so thank you