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Luke Youngblood
@lukeyoungblood
Networks of computers have existed for decades, but they didn't reach billions of people and trillions of devices until we figured out how to interconnect them (the Internet). How can we bring decentralized networks like Ethereum to billions of people? A 🧵 about networks.
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Luke Youngblood
@lukeyoungblood
With Web3, the next generation of the Internet, we now have the ability to store value and digital property rights onchain, not just information and digital media. Onchain is rapidly becoming the new online, as web3 enables you to store and send value to any person or app.
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Luke Youngblood
@lukeyoungblood
Onchain is not yet as mature as online. In the early days of the Internet, it was difficult to email people who went to a different school or workplace. It was also difficult to chat with people on a different OS or device. In many ways, Ethereum faces this same challenge today.
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Luke Youngblood
@lukeyoungblood
The insatiable demand for blockspace, just like demand for bandwidth, has created dozens of networks, just like the early Internet. Bandwidth was expensive and constrained, so telephone companies, ISPs, and businesses connected private networks to the Internet backbone.
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Luke Youngblood
@lukeyoungblood
With web3, we can now send and receive value and digital property, however, in many ways we are still in the early days, because it is difficult to send value to a person or application on a different network. Some early mobile services like SMS and MMS faced similar challenges.
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Luke Youngblood
@lukeyoungblood
The early solutions to sending value between Ethereum networks have been less than ideal. @Chainalysis reports that over $2 billion in value has been stolen from bridges in the year 2022 alone. https://www.chainalysis.com/blog/2022-biggest-year-ever-for-crypto-hacking/
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Luke Youngblood
@lukeyoungblood
This is primarily due to their "lock and mint" architecture. Bridges typically require you to lock your tokens in a smart contract, then mint a different token on the network you are sending value to. This process is known as "wrapping." The wrapped token is issued by the bridge.
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Luke Youngblood
@lukeyoungblood
In this architecture, your original tokens will be stored in a smart contract for as long as you want to use the other network, potentially forever. During this entire time, your tokens are at risk of attack, and if any vulnerabilities are found, attackers can take them.
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Luke Youngblood
@lukeyoungblood
The solution to this was developed by @Circle, the creator of USDC, and is called CCTP. Just like TCP/IP enabled people on different home, school, or office networks to send email to each other, CCTP enables people on different Ethereum networks to send value to each other.
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Luke Youngblood
@lukeyoungblood
My prediction is that CCTP will become a core Internet protocol, just like TCP/IP, because it removes an entire category of security risks associated with bridges. With CCTP, your USDC is never at risk in a bridge smart contract, and only leaves your wallet for a few minutes.
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Ron Widha
@ronwidha
> Programmatic burning and minting This is such a deceivingly simple concept. If the economic allows for it (i.e. cheap enough), I can see how this could enable interesting cross-network use cases beyond bridging and swapping… maybe as a general interop layer?
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Luke Youngblood
@lukeyoungblood
Absolutely! Many general message passing (GMP) providers today offer this for data/information that needs to pass from one network to another. Some examples: Wormhole, LayerZero, Axelar, Chainlink's CCIP.
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