Sirwin
Sirwin

Chainlink Releases CCIP (Cross-Chain Interoperability Protocol): All Functions


Chainlink's CCIP (Cross-Chain Interoperability Protocol) is officially live on the mainnet. Today, Web3 consists of hundreds of independent Layer1 chains, Layer2 rollups, sidechains and more that launch every week. To create a truly interoperable Web3 ecosystem, data must be able to move seamlessly between chains. This is where bridges are created.
While cross-chain bridges exist, security remains a big issue. Over $2.6 billion has been stolen in cross-chain bridge hacks: from Wormhole to Nomad to Multichain. Properly securing cross-chain interactions is an extremely difficult task.
CCIP (Cross-Chain Interoperability Protocol) is a cross-chain messaging solution from Chainlink that was designed from the ground up. Historically, Chainlink oracles have secured trillions of transactional value within the DeFi ecosystem. While best known for price feeds, Chainlink also provides secure randomness, decentralized automation, Proof Of Reserves, etc Every Chainlink service has a security approach that combines decentralized consensus, financial incentives, cryptographic verification, and tightly controlled code.

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It is no different with CCIP but there are some unique features and security measures to highlight. CCIP provides a plug-and-play solution for transferring any cross-chain token. Both burn-and-mint (native transfers) and lock-and-mint (encapsulated tokens) methods are supported.
When using CCIP to cross-chain token transfers, you can include additional instructions on the intended use on the target chain: for example, you can send USDT from Ethereum to Optimism, exchange it for ETH, and deposit it as collateral in a money market.
CCIP can be used to send any arbitrary data from one blockchain to another, enabling the creation of native cross-chain smart contracts. For example, it is possible to use a token as collateral on a blockchain to borrow stablecoins from another chain (cross-chain lending).

 

SAFETY
CCIP is not a single network but is composed of multiple decentralized oracle networks that work in combination to securely transfer cross-chai data and/or tokens. The Active Risk Management (ARM) network is an independent secondary network of nodes that monitor the behavior of the primary CCIP networks. It can "validate" transactions or vote "against" by shutting down the CCIP if malicious activity is detected. Importantly, the ARM network uses a distinct set of nodes separate from that of the primary CCIP networks.
Additionally CCIP supports configurable rate limits on the amount of tokens that can be transferred across multiple chains within a given period of time. This added protection means that, even in the worst case scenario, CCIP token pools are protected against full depletion.
A "locked" payment system of fees is also used which ensures the reliable execution of cross-chain transactions, even during gas peaks on the destination chain. CCIP automatically handles gas price bumping, ensuring messages/tokens don't get stuck in transit. All on-chain security-critical configuration changes and updates to CCIP must go through a timelock agreement (where a quorum of CCIP nodes can veto the change) or be explicitly approved by a quorum of non-timelocked nodes.

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PAYMENTS AND SUSTAINABILITY
The CCIP rates paid by users consist of the cost of gas incurred by the CCIP nodes plus a flat rate per message or a percentage-based rate for token transfers. CCIP supports the payment of fee in LINK and alternative assets (native tokens of the chain). An automated on-chain conversion system is being created where commissions in alternative assets are converted into LINK. Premium commissions paid in alternative tokens have a 10% surcharge over LINK payments. Additionally, as Chainlink Staking expands over time to support more oracle services, including CCIP, a portion of the user fees paid for those services will be directed to stakers in exchange for increasing the security of the service.
Both Synthetix Network and Aave have already adopted CCIP to meet their cross-chain needs. Synthetix uses CCIP for cross-chain token transfers using a burn-and-mint model, Aave uses CCIP for native cross-chain governance.

 

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