Location, July 19, 2023 – Connext founder, Arjun Bhuptani, has recently proposed a new standard for bridging tokens across multiple networks, following the much-discussed Multichain incident on July 6. Bhuptani’s Ethereum Improvement Proposal (EIP), titled ‘Sovereign Bridged Token’ and codenamed EIP-7281, aims to create a standardized framework for token issuers to limit potential losses from bridge hacks and ensure smoother cross-network token operations.
Under the proposed standard, token issuers can define an exclusive list of official bridges authorized to mint their tokens. This list can be modified by the issuer at any time, providing them with an increased level of control and flexibility. More importantly, EIP-7281 sets forth a mechanism to limit the number of tokens each bridge can mint, thus capping the risk in case of a bridge security breach.
“The protocol shifts the ownership of tokens away from bridges, be they canonical or third party, into the hands of token issuers themselves,” Bhuptani explained. “In the event of a hack or a vulnerability in a specific bridge, the issuer’s risk is confined to the bridge’s rate limit. It also enables issuers to delist a compromised bridge without having to go through an extensive and time-consuming migration process.”
The proposal, according to Bhuptani, is an effort to address and preempt common user experience problems in the DeFi ecosystem. EIP-7281 is envisioned to help ensure that all bridges issue the same official token, eliminating the necessity for multiple versions of the same token.
Stablecoin issuer Circle has previously adopted a similar approach, establishing the Cross-Chain Transfer Protocol (CCTP) to list official bridges for its token, USD Coin (USDC). However, Bhuptani’s EIP-7281 goes a step further, seeking to extend this concept beyond CCTP’s reach. The proposal, as per its documentation, aims to “make this solution apply more broadly to all tokens.”
In the aftermath of the Multichain incident, both Circle and Tether have taken measures to prevent further losses, blacklisting several addresses used in the incident. This move has effectively stopped $65 million worth of USDC and Tether (USDT) from being transferred out of these addresses.
Bhuptani’s proposal, EIP-7281, is currently under consideration and discussion within the Ethereum community. If approved and implemented, it may provide a significant improvement in securing cross-chain operations, potentially curbing the losses from bridge security incidents.
About Connext:
Connext is an innovative protocol that facilitates the development of Web3 applications, enabling them to interact securely with users, tokens, and other applications across multiple chains, akin to HTTP on the web. By prioritizing security and trust minimization, Connext responds effectively to the industry-wide issue of bridge hacks and offers a simple, easily integrable solution that is favored by developers. As a public good under active development by an open community, Connext embodies the collective vision of building a more secure and usable Web3 for all stakeholders.
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