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There are non-custodial bridge schemes that have been proposed (but afaik not yet proven). The idea being that the holding company you mention is replaced by an
by dboreham 3y ago
There are non-custodial bridge schemes that have been proposed (but afaik not yet proven). The idea being that the holding company you mention is replaced by an L1 escrow contract. This trust minimized approach is not trivial to implement but at least I think I see how it could work.
- phire 3y agoThe idea of non-custodial bridges runs straight into the oracle problem. How does the smart contract on one blockchain know the state of the smart contract on the other blockchain. One common workaround is to make the miners/validators of the trading blockchain cross-validate transaction on the other blockchains. But that's inherently one-way, the smart contracts on the other blockchains have no true visibility into the trading blockchain. It's still impossible to get 100% right. You still have a massive surface area for bugs and exploits. And even if it's free of exploits, people forget that blockchains are only "eventually consistent". Just because escrow validated that the two blockchains were constant at the time of the cross-chain swap doesn't guarantee both blockchains have reached their final consistent state. This will eventually result in the two blockchains getting out of sync. I've seen smaller blockchains do re-orgs over a week worth of blocks. Finally, many popular blockchains don't even have powerful enough smart contracts to even implement a bridge contract (bitcoin certainly doesn't).