Circle launches ‘bridged USDC standard’ for deploying to new networks

November 21, 2023 Coin Telegraph

Circle published a new standard that allows developers to launch an unofficial bridged version of USDC that can later become native and official.

Circle has launched a new standard to streamline the process of launching its stablecoin, USDC, on new networks, according to a Nov. 21 blog post.

The new “bridged USDC standard” allows developers to launch the token through a two-phase process. In the first phase, the third-party developer has control of the token contracts, and the token on the new network is backed by a native version on another network. In the second phase, Circle takes control of the contracts, and the token becomes backed directly by Circle’s reserves. The second phase may not occur with all deployments.

Introducing Bridged USDC Standard, a new way to expand access to $USDC & reduce fragmentation.

EVM blockchain & rollup teams can now deploy a bridged USDC token contract with optionality for Circle to seamlessly upgrade to native issuance in the future.https://t.co/suSgllMQoQ
— Circle (@circle) November 21, 2023

According to the post, the token produced in the first phase will be “unofficial and not issued nor redeemable by Circle,” but will serve “as a proxy to USDC that’s extensible to any ecosystem where bridging is made possible.” If Circle and the third-party developer later decide they want to make the token official, they can “seamlessly upgrade to native issuance in the future.”

Circle said it's releasing the standard to eliminate the need for “migrations,” where users must swap an unofficial version of USDC for an official version after it becomes available. If developers use the new standard, migrations should become unnecessary, as it allows the unofficial tokens already held in a user’s wallet to become official.

The standard’s Github documentation requires developers to use a bridge with upgrade functionality for specific functions and refrain from upgrading the bridge once the token is issued.

Once the developer and Circle decide to transition the token to an official version, the third-party developer can freeze new mints on the bridge and “reconcile in-flight bridging activity to harmonize the total supply of native USDC.” Ownership of the contract can then be transferred to Circle, at which point the native coins backing the tokens on the new network will be burnt, causing the new network’s tokens to be backed directly by Circle’s reserves.

In September, Circle launched a native Base network version of USDC. In October, it did the same for Polygon.

Connext founder proposes ‘Sovereign Bridged Token’ standard after Multichain incident

July 10, 2023 Coin Telegraph

Bridges

EIP-7281 will allow token issuers to list official bridges and limit the rate at which they can mint tokens, potentially limiting losses from bridge hacks.

An Ethereum Improvement Proposal (EIP) made on July 7 seeks to standardize how tokens are bridged between networks. The “Sovereign Bridged Token” standard, or EIP-7281, allows token issuers to create canonical bridges across multiple networks.

The proposal was co-authored by Arjun Bhuptani, founder of the Connext bridging protocol. In a July 7 social media post, Bhuptani claimed the protocol would help prevent issues like the July 6 Multichain incident, which some experts have described as a “hack.”

Today's @MultichainOrg hack is a sad reminder of the systemic risks tokens face from bridges.

We believe these risks stem from a single underlying problem:

✨Token Sovereignty✨

We're proposing ERC-7281 (aka xERC20) - an open standard to fix this.https://t.co/k9Vyd55Eb5

1/x
— Arjun | ERC-7281 arc (@arjunbhuptani) July 7, 2023

According to the proposal’s discussion page, it allows token issuers to designate a list of canonical bridges. Only bridges added to this list could mint an official version of the issuer’s token. Issuers can also limit the number of tokens a bridge is allowed to mint. These parameters can be changed at virtually any time by the issuer.

In Bhuptani’s view, this proposal will ensure that “ownership of tokens is shifted away from bridges (canonical or 3rd party) into the hands of token issuers themselves” and will limit losses if a bridge’s security comes into question:

“In the event of a hack or vulnerability for a given bridge (e.g. today’s Multichain hack), issuer risk is capped to the rate limit of that bridge and issuers can seamlessly delist a bridge without needing to go through a painful and time-intensive migration process with users.”

Bhuptani said the proposal would also help prevent user experience problems in decentralized finance, as all bridges will issue the same official token. Over time, this will eliminate the need for multiple versions of the same token, he claimed.

Stablecoin issuer Circle has already created the Cross-Chain Transfer Protocol (CCTP) to list official bridges for its token, US Dollar Coin (USDC). EIP-7281 intends to implement the basic concept behind CCTP but also tries to make this solution apply “more broadly to all tokens,” according to the proposal’s notes.

Both Circle and Tether have blacklisted some of the addresses used in the Multichain incident, preventing $65 million worth of USDC and Tether (USDT) from being moved out of these addresses.

Coinbase layer-2 network Base closes in on mainnet launch

June 30, 2023 Coin Telegraph

bounty

While a date for mainnet wasn’t announced, the Base team said it’s now fulfilled 4 out of 5 of their criteria for launch.

Base, a new layer 2 application-focused protocol by Coinbase has just one criteria left to fulfil before being ready for mainnet launch.

On June 29, the team said the Optimism-powered, Ethereum-secured network has been subject to six months of rigorous security audits — both internally and externally — its second-last criteria required for launch.

“With the completion of these audits, we’ve now fulfilled ⅘ of our criteria for mainnet launch,” Base said, adding that they feel confident after not finding any critical code bugs:

“Completing these in-depth security workstreams without discovering critical severity bugs gave the Base team confidence to proceed towards mainnet launch.”

The other three criteria passed included a “Regolith” hard fork in testnet, a successful infrastructure review with OP labs — the team behind Optimism — and Optimism’s “Bedrock” upgrade.

P.S. In case you’re keeping track, with the completion of these audits, we’ve now fulfilled ⅘ of our criteria for mainnet launch…https://t.co/eRarQ4R7zG https://t.co/9o3vNidNtE
— Base ️ (@BuildOnBase) June 29, 2023

Coinbase officially launched Base on February 23, which aims to be a low-cost, secure, developer-friendly network for building decentralized applications.

To “battle-test” Optimism’s tech stack, Coinbase’s protocol security team conducted its own internal audit to identify any vulnerabilities that may emerge on layer 1, layer 2 and on the bridges.

In addition to Coinbase's internal audit, Base invited the broader community to partake in a public smart contract audit test via Code4rena to report bugs found in the Optimism’s tech stack:

“We engaged over 100 security researchers as part of this contest, and are happy to report there were no significant vulnerabilities discovered.”

Among the audits investigated by the security researchers included Optimism’s node software, Ethereum Virtual Machine (EVM) equivalence vulnerabilities, bridge vulnerabilities and miscellaneous smart contract issues.

We’ve detailed…
How we’re secured by the OP stack
Our experience with both internal and external audits
The development of our open-source monitoring tool
What it means to launch mainnet with this security first mindset
— Base ️ (@BuildOnBase) June 29, 2023

The community audit ran from May 27 to June 10 with a maximum of $100,000 in rewards handed out to successful bounty hunters.

Demonstrating “testnet stability” is the final criteria that needs to be passed prior to mainnet launch, according to a previous post from Base.

*The five criteria required for Base to launch on mainnet. The timeline provided by Base was published on May 25. Source: Base*

While Base didn’t state how the final criteria would be fulfilled exactly, the team said that they’re still reviewing submissions from the 100 researchers that took part in the public smart contract audit in addition to reviews from past audit programs — namely “spearbit” and “sherlock.”

Base added that they’ve built Pessimism, an open source monitoring tool which aims to notify builders of any anomalies that may arise in the protocol, such as account balance irregularities, contract events, or disparities between L1 and L2 states.

In late March, Coinbase said they want to see an inflation-pegged “flatcoin,” an on-chain reputation system and an on-chain limit order book exchange built on Base.

Many considered the development of Base to be a “massive vote of confidence for Ethereum” when the news was first announced in late February.

Secured on Ethereum and powered by layer-2 network Optimism, Base aims to eventually become a network for building decentralized applications.

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‘New frontier’ of crypto laundering involves cross-chain bridges and DEXs: Elliptic

October 5, 2022 Coin Telegraph

Bridges

Curve, Uniswap, 1inch, and the Ren bridge were the top platforms of choice for laundering illicit crypto, according to Elliptic.

New research from blockchain analytics and crypto compliance firm Elliptic has revealed the extent to which cross-chain bridges and decentralized exchanges (DEXs) have removed barriers for cybercriminals.

In an Oct. 4 report titled “The state of cross-chain crime,” Elliptic researchers Eray Arda Akartuna and Thibaud Madelin took a deep dive into what they described as “the new frontier of crypto laundering.” The report summarized that the free flow of capital between crypto assets is now more unhindered due to the emergence of new technologies such as bridges and DEXs.

Cybercriminals have been using cross-chain bridges, DEXs, and coin swaps to obfuscate at least $4 billion worth of illicit crypto proceeds since the beginning of 2020, it reported.

Around a third of all stolen crypto, or roughly $1.2 billion, from the incidents surveyed, was swapped using decentralized exchanges.

Delving further into the details, the report noted that more than half of the illicit funds it identified were swapped directly through two DEXs — Curve and Uniswap, with the 1inch aggregator protocol coming a close third.

A similar amount (around $1.2 billion) has been laundered using coin swap services which allow users to swap assets within and across different networks without having an account.

“Many are advertised on Russian cybercrime forums and cater almost exclusively to a criminal audience,” it noted.

Sanctioned entities are increasingly turning to such technologies in order to move funds and carry out cyber-attacks, according to Elliptic.

“Wallets connected to groups eventually sanctioned by the United States – including those used by North Korea to perpetrate multi-million-dollar cyberattacks – have laundered more than $1.8 billion through such techniques.”

In a June report on virtual asset risks, global money laundering, and terrorist financing watchdog, the Financial Action Task Force (FATF), also fingered cross-chain bridges and “chain hopping” as a high risk.

The Ren bridge was mentioned as a top choice for crypto laundering with the vast majority of illicit assets, or more than $540 million, passing through it.

“Ren has become particularly popular with those seeking to launder the proceeds of theft,” it said.

One potential solution to mitigate crypto theft was proposed by Stanford researchers last month. It involves an opt-in token standard called ERC-20R that provides the option to reverse a transaction within a set time period.

Value Locked in Defi Drops to Lows Not Seen Since March, Ethereum Dominates TVL by 57%

September 24, 2022 Bitcoin.com

Bridges

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