All you need to know about Wormhole
Introduction
We recently published a 10,000-word document comparing seven of the most well-known arbitrary messaging bridges (AMBs). Today, we’re highlighting Wormhole.
This article will explore the design, security, and trust assumptions of Wormhole IM, an arbitrary messaging bridge (AMB) enabling users and developers to transfer both simple messages and complex data across chains.
You can also listen to our conversation about Wormhole via Twitter Spaces, where Wormhole developer Decentradev talks through Wormhole architecture, trust assumptions, and more.
Overview
Despite being best known for its token and NFT bridging solution, Wormhole is actually an arbitrary message-passing protocol allowing for cross-chain exchanges of data between fourteen chains and counting. In particular, it’s widely known for connecting Ethereum to the Solana and Terra ecosystems.
The simple message-passing mechanism allows for a plethora of cross-chain use cases enabled by dApps transferring assets and source chain data between networks to provide services on a destination chain. Wormhole’s design is founded on the idea that a decentralized set of “Guardians” (aka nodes/validators) can be trusted to verify cross-chain transactions being emitted from Core Bridge contracts deployed on all connected networks.
Some of Wormhole’s best features include:
- Non-EVM compatibility — Wormhole is one of the few messaging solutions that connects non-EVM compatible chains like Solana, Acala, Terra Classic, and Terra 2.0 to EVM-compatible chains like Ethereum and Polygon. Wormhole supports messaging across 14 blockchains, including Ethereum, Solana, Terra, Binance Smart Chain, Polygon, Avalanche, and Fantom, along with Oasis, etc.
- Top tier validators — Wormhole is a proof-of-authority network secured by 19 “Guardians” that ensures cross-chain messages are safely transmitted. Among the “Guardians” are major companies like FTX, Certus One, Everstake, Staked, and Chorus One.
- Seamless user experience — Wormhole charges exceedingly small fees (100 lamport, or less than a cent) when transacting from Solana. Furthermore, users simply need to create a transaction on the source chain and redeem it on the destination chain to execute a cross-chain transfer.
Additionally, the Wormhole team has the following network effects:
- High TVL — Wormhole’s Portal token bridge has amassed nearly $500M in total value-locked into the bridge, making it one of the biggest bridging mechanisms in crypto. At its peak, TVL was over $4.6B but has reduced drastically since the UST depeg.
- Go-to assets on Solana — Wormhole’s assets are the most widely used wrapped assets within the Solana ecosystem and have the most liquidity. For example, Wormhole ETH on Solana is simply listed as ETH on every dApp.
- Network connectivity — As of September 2022, Wormhole supports 14 chains: Solana, Ethereum, Terra Classic, BNB Chain, Polygon, Avalanche, Oasis, Aurora, Fantom, Karura, Acala, Klaytn, Celo, and Terra.
- Backed by Jump Crypto — Wormhole is one of the few bridges to have recovered from a major hack, such as the $326 million exploit in 2022. Furthermore, Wormhole’s backers, such as Jump Crypto, are some of the most ambitious and well-funded in the crypto space.
How It Works — Transaction Lifecycle
Wormhole’s design is simple. It is a proof-of-authority network governed by 19 validators. Each blockchain supported by Wormhole is home to a “Core Bridge” contract. The core contracts emit messages to Guardians who verify and sign (aka approve) the message. This verified message is then relayed to the destination chain, where the message is processed and the cross-chain transaction finalized.
It is the guardian’s sole role to monitor the state of each supported Wormhole blockchain. Each Guardian observes and signs messages in isolation, with the resulting collection of signatures representing proof that a certain message is agreed upon by the Wormhole network. A message is only authentic if 2/3rds+ of Guardians have signed it.
Security
Wormhole offers the following security features:
- Doxxed guardians — The proof-of-authority network design incentivizes Wormhole guardians to act in good faith, as any collusion or malicious attacks would be able to be traced back to only a group of 19 entities. In Wormhole’s case, the fact that companies like Jump Crypto and FTX are running Guardians is a social form of security, as these are multi-billion dollar firms that do not want to mar their reputation by signing transactions erroneously.
- Liveness assumptions — Since the Guardian system is run by some of the biggest validators in the crypto space, liveness can almost be guaranteed and could even be better than the chains they validate for.
- Additional security with the Governor feature — The Governor limits the amount of assets that can be transferred out of a particular chain within a given time period. This provides a passive security check against external risks such as smart contract bugs or runtime vulnerabilities. It is a security measure that reduces the potential and extent of user harm.
- Audits and bounty system — Wormhole has been audited by Neodyme and Kudelski (x2). It has audits by OtterSec, Certik, Halborn, Trail of Bits, and Coinspect scheduled for Q3 2022. Moreover, it has the largest bounty in the crypto space via a $10 million offer on Immunefi.
- Easy process for white-hat hackers to contribute — Wormhole has developed several strategies to make it easier for white-hat hackers to find security bugs in Wormhole, disclose them, and help secure the network. For instance, whitehats can review Wormhole’s existing unit and integration test and disclose vulnerabilities.
Trust Assumptions
Wormhole makes the following trust assumptions:
- Externally verified by Guardians — Wormhole’s proof-of-authority system inherently trusts that Guardians can be trusted to verify transactions and that over 2/3rd of Guardians will not collude at a certain time.
- Censorship risk — 1/3rd of Wormhole’s Guardians can collude to censor a message.
- Guardians care about reputation — Wormhole relies on the fact that the potential benefit of collusion is lesser than the reputational cost of collusion for its Guardians. However, this could become a major issue if the benefits for ⅓ of the guardians outweigh the reputational cost of collusion.
- Validators don’t have a bond — Guardians’ stake is not bonded, i.e., their stake won’t be slashed, or they won’t be penalized if they act maliciously. Thus, user funds are not protected by any bonding or slashing mechanism.
- Institutional backing — Wormhole has created deep partnerships with Jump Crypto, FTX, and the Solana ecosystem, and its growth (and recovery in the face of future exploits) is dependent on those relationships continuing to lead to network effects.
Community & Resources
You can learn more about Wormhole and stay updated about its community through the following:
Closing Thoughts
Wormhole aims to provide secure infrastructure for developers to build interoperable applications. We are super excited by what the team is building and can’t wait to see what the AMB structure unlocks for the crypto space.
And, of course, LI.FI is thankful for all the feedback and cooperation from the Wormhole team in creating this doc.
There is a whole ecosystem of AMBs, enabling complex cross-chain functionality for dApps. If you’re interested in learning more about the different types of AMBs, check out LI.FI’s comparison framework, which enables readers to quickly assess the pros and cons of an AMB.
Get Started with LI.FI Today
Enjoyed reading our research? Please clap for the blog and show us your support! To learn more about us:
- Head to our link portal at Link3.to/lifi
- Read our SDK ‘quick start’ at docs.li.fi
- Join the official Discord server
- Follow our Telegram Newsletter
- Follow us on Twitter & LinkedIn
or try our any-2-any swaps NOW at transferto.xyz
