Wormhole
Wormhole is a cross-chain protocol enabling seamless asset transfers and interoperability among diverse blockchain networks. It facilitates efficient communication and exchange, bridging the gap between different ecosystems for enhanced decentralized finance (DeFi) functionality. Saeed Badreg, Anthony Ramirez, and Tony Jin are the co-founders of Wormhole and Wormhole Labs. [1]
History
Wormhole was initially launched by Jump Crypto as a bridge for transferring tokens between blockchains, especially Solana and Ethereum. With Wormhole V2, it evolved into a general messaging protocol, facilitating inter-blockchain communication. This technology supports various functions, such as token transfers, cross-chain governance, and NFT transfers for multi-chain applications. Wormhole V2 also expanded its services to include Terra and the BNB Smart Chain. In November 2023, Jump and Wormhole announced their separation. Following this, Wormhole raised $225 million, valuing the company at $2.5 billion, with investors including Brevan Howard, Coinbase Ventures, Multicoin Capital, and Jump Crypto. [2]
Wormhole Hack
On February 2nd, 2022, Wormhole experienced a significant security breach resulting in approximately $325 million theft. The attack exploited a vulnerability from a recent update in the project’s GitHub repository, which had not yet been deployed. The breach was noticed when Wormhole's Twitter account announced network maintenance due to a potential exploit investigation, and the team later offered the hacker a $10 million bounty to return the funds. [9]
The attacker managed to forge a valid signature for a transaction, allowing them to mint 120,000 wETH without depositing an equivalent amount. This was exchanged for about $250 million in Ethereum and sent to the hacker's account, depleting a significant portion of the platform’s Ethereum collateral. Code to fix this vulnerability had been written on January 13th and uploaded on the day of the attack, suggesting the updates had not been applied to the production application. A software developer on Twitter noted the code upload contained extensive changes, potentially alerting the attacker to the security fix. [9]
The attack created a deficit between the wrapped Ethereum and regular Ethereum held in the Wormhole bridge, causing a 10 percent drop in the value of the Solana cryptocurrency. The Wormhole team announced plans to replace the stolen collateral funds with more Ethereum, requiring the company to find $325 million in assets to cover the loss. [9]
Overview
Wormhole is a cross-chain protocol that bridges different blockchain networks, enabling seamless asset transfers and interoperability. Its architecture facilitates efficient communication between diverse blockchain ecosystems, allowing users to securely transfer tokens across platforms like Ethereum, Solana, and Binance Smart Chain. Through its decentralized Guardian nodes, Wormhole ensures network security and integrity, providing a foundation for developers to build cross-chain applications and services. Wormhole contributes to the broader adoption and advancement of decentralized technologies by promoting interoperability and facilitating decentralized finance functionalities. [2]
A Wormhole transaction starts at the Emitter, any contract that calls the publish message method on the Wormhole Core Contract. This creates an event in the Transaction Logs, recording details of the emitter and a sequence number. The Core Contract is monitored by validators known as Guardians, who process the message. Wormhole's security relies on a peer-to-peer network of Guardian nodes that sign and validate messages. If 13 of the 19 Guardians sign the same message, it becomes a Verified Action Approval (VAA). These VAAs are relayed to their destination protocol via the Relayer network, which cannot alter the VAA, maintaining security. The destination protocol then verifies the signatures to complete the transfer. [2]
Ecosystem
Guardian Network
The Guardian Network is Wormhole's oracle component, serving as the entire ecosystem's foundation. Understanding the technical aspects of the Guardian Network is crucial for a comprehensive understanding of Wormhole. Wormhole relies on distributed nodes, known as Guardians, which monitor state across multiple blockchains. Guardians observe messages and sign corresponding payloads independently, combining their signatures with others to form multisigs. These multisigs, called VAAs, represent a consensus of state agreed upon by most of the Wormhole network. [2][3]
There are 19 Guardians, including validator companies like Chorus One, P2P Validator, and Figment. Guardians also monitor chains for anomalies and smart contract data to ensure logical token movements across blockchains. [2]
Wormhole ZK
Announced in April 2024, Wormhole ZK represents a step forward in enhancing the trust assumptions of the protocol. Through the integration of zero-knowledge (ZK) technology, Wormhole ZK introduces several key improvements. Firstly, it enables trustless verification of messages, thereby enhancing security guarantees for multichain applications and users. Participation in verifying Wormhole messages is open to all, fostering a diverse and collaborative network of contributors. New blockchain networks can seamlessly join the Wormhole ecosystem without explicit consent, promoting broader connectivity. ZK also facilitates multichain applications by establishing a unified interface for accessing data across different blockchain networks. Moreover, ZK offers an alternative method for message verification, providing users with adaptable options tailored to their specific needs and preferences. [4]
Wormhole Gateway
Wormhole Gateway, a Cosmos-SDK chain, bridges non-native assets into the Cosmos ecosystem and consolidates liquidity across Cosmos chains. It links liquidity and users from Ethereum and beyond to Cosmos chains and apps through an IBC-based liquidity router. Leveraging Cosmos SDK and CosmWasm, Gateway facilitates seamless composability between the Wormhole Stack and the Cosmos Ecosystem. Its goal is to boost liquidity and expand the Cosmos ecosystem without imposing additional fees on users for asset transfers. By adhering to the ICS-20 standard for IBC-native token bridging, Gateway ensures asset fungibility, compliance with Cosmos protocols, and an enhanced user experience. [5]
Wormhole Gateway relies on the Guardian network to enforce a robust set of core trust assumptions. Global Accountant, a CosmWasm-based module on Wormhole Gateway, ensures the 1:1 parity of native and wrapped assets' fungibility. Operating as a smart contract guarantees that the number of wrapped assets does not exceed the native assets sent to a blockchain. This Cosmos-based solution enhances security across the crypto landscape. The Governor, another security measure, monitors asset outflows on connected blockchains, limiting asset volume to prevent potential cross-chain contagion in case of smart contract or blockchain vulnerabilities. [5]
Wormhole Queries
Wormhole Queries provides integrators with on-demand access to guardian-attested on-chain data. The current setup offers a straightforward REST endpoint for initiating off-chain requests via a proxy. This proxy forwards the request to guardians and gathers a quorum of responses. The result includes the encoded response, request details, and guardian signatures, which can be verified on-chain. [6]
Wormhole Connect
Wormhole Connect is a React widget enabling developers to integrate Wormhole-powered bridges into web applications directly. It supports various forms of bridging, including native asset bridges, Portal-wrapped asset bridges, CCTP USDC bridges, and more. Connect enhances each bridge with gas dropoff, providing users with extra native tokens for paying gas and facilitating gasless transactions, with Connect relayers covering gas costs for users. [7]
W Token
On March 6, 2024, Wormhole announced the airdrop of their governance token, W, along with an eligibility checker for users to verify their eligible wallets. The W token will have a maximum supply of 10 billion tokens, starting with an initial supply of 1.8 billion tokens, representing 18% of the total supply. [2]
Tokenomics
Of the 18% unlocked at the token generation event (TGE), they are allocated as follows: [2]
- Community and Launch (11%): This includes tokens for the airdrop, market making, and liquidity management.
- Ecosystem and Incubation (5%): Allocated to strategic contributors like community organizations and developers.
- Foundation Treasury (2%): Reserved for future protocol development initiatives like research and grants.
According to the token release schedule, the remaining 82% of the token supply will be unlocked over the next four years following the TGE, and the total token supply will be fully unlocked at the end of this period. [2]
Multichain Governance
Wormhole, Tally, and ScopeLift are collaborating to develop MultiGov, an industry-first multichain governance system that will soon be accessible to DAOs on Solana, Ethereum mainnet, and EVM L2s. The Wormhole DAO will adopt MultiGov, allowing W holders to propose, vote on, and execute governance decisions across any supported chain. This integration represents a significant move towards a decentralized and inclusive decision-making process that transcends multiple underlying chains. Multichain governance enables DAOs to engage with token holders regardless of their chain preferences. Members can participate in governance activities, such as proposing, delegating, and voting, from any chain where they hold tokens. MultiGov will cater to multichain DAOs across Solana, Ethereum mainnet, and EVM-compatible L2s. MultiGov will streamline DAO participation and extend user engagement across major ecosystems as more projects expand across multiple chains. [8]
