Grant Request: Connext - Cross Chain Bridge to Harmony

Funding Proposals Grants
1

Name of Project

Connext is the most secure interoperability protocol to connect multiple chains. Contrary to other solutions, we don’t add any new trust assumptions on top of the chains we connect.

Stats
$1.2B Total bridged value, 650K Total Transactions, $45M TVL
11 chains currently connected.

Proposal overview

Connext is a cross chain liquidity network that allows users to quickly and inexpensively transfer tokens and data across chains. It’s intended for high-frequency transfers and works by leveraging liquidity pools provided by routers on the sending and receiving chains without introducing any new trust assumption.
You can read more about our security model here.

The protocol has been live for more than 1 year with $1B+ in volume.

After an extraordinary engagement by the Harmony and Connext community (https://twitter.com/ConnextNetwork/status/1479054847131406337?s=20&t=izEPY-a8DWFastJP24kR1A), we are now ready to deploy on the Harmony mainnet.

Once a new chain is connected, the liquidity providers are free to add liquidity via their routers. This happens organically as the bridging fees that routers charge make the LP activity profitable, however it’s important to immediately bring some liquidity to the chain so the user experience is smooth directly at launch.

The team is coordinating the network of LP to bootstrap the initial liquidity, and we are requesting a grant to incentivize this action as soon as possible. All tokens received will be assigned to the routers that provide liquidity for the first months.

As mentioned, once the liquidity is there and the bridging flow starts, new routers tend to spontaneously add their liquidity if there is activity on the destination chain.

For this reason, it would also be beneficial if we could connect with any infrastructure/liquidity provider that wants to join our Network and add extra liquidity on Harmony. (Any intro appreciated)

We are also keen to run joint campaigns aimed at incentivizing builders to create cross chain applications that run on Harmony. The advantage that Connext provides is that you can not only bridge tokens but also execute calldata on the receiving chain, all in a single, trust minimized, transaction.
This means projects might want to build a UI directly into their their dApp to execute cross chain transactions, for example a “bridge and deposit” or “bridge and swap” into their app, abstracting the bridging activity from the user.
This is a win situation for the user, the dApp, Harmony, and Connext, so we propose to co-grant new applications introducing this mechanism.

Proposal ask

A) $50k for deployment to mainnet
B) $70k (in 2 tranches for volume related tranches)

All tokens will be distributed to our routers that provide liquidity.

C) $35k for joint campaigns directed at builders that can create Harmony-based cross chain applications using Connext.

Metrics for success

A) Deployment on Mainnet
B1) 2 million liquidity bridged to/from Harmony
B2) 5 million total liquidity bridged to/from Harmony

C) New projects requesting grants to Connext that deploy on Harmony Mainnet

External links

https://bridge.connext.network - one of the existing bridging UIs
connextscan .io - Dashboard and stats

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2

Thanks for your proposal, it has been assigned and the team will review and respond shortly :blue_heart:

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3

As a frequent user of the Connext bridge I can say with certainty " you want this bridge on your network! "

Low fees, great liquidity and no technical problems. I am also part of the dao (1Hive) that created this bridge, before they spun off into a separate protocol.

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4

Amazing guys! Do you have any update on this?
We are keen to launch as soon as we can.

5

Thanks, appreciate the kind words!
Also glad to find someone from 1Hive :smiley:

6

Thanks for the proposal. We have been waiting for connext deployment to harmony for a long time. Very happy to see this move forward. I fully support this proposal. I have some clarifying questions.

  1. Is the LP bootstrap incentives paid in ONE?

  2. Can the LPs who are supporting other networks can also LP for harmony?

  3. How many LPs required for bootstrapping and will there be a competition for LP during the first month (due to incentives)? in such case, how do you plan to distribute the incentives?

  4. What makes the system self sustain after the first month (without incentives)? ofc, LPs earn fee. will that be sufficient?

  5. What is the maximum liquidity that connext is currently seeing for any chain pair?

  6. Can you also highlight the infrastructure & technical expertise required for LPs? I know this can be found in your doc, but just a brief summary would be helpful here.

  7. I remember that we had some github PRs made to connext repo for integrating harmony previously. Will the mainnet deployment requires more work? and what kind of support you will need from harmony (any tooling/partner dependencies)?

  8. What kind of dapps currently utilize the connext bridging in other ecosystems?

7

Thanks Ganesha for your reply.
We have also been keen to deploy on Harmony for a while, so glad it’s finally happening!

Let me answer your points.

  1. Yes that works

  2. Yes. The network of routers/LPs can provide liquidity on any chain of the network, allocating capital where they feel it will be more profitable/strategic for their interests. Obviously that means they have to move the liquidity from somewhere else, so we are keen to onboard new LPs when possible.

  3. 1 is the technical minimum, at least 4/5 is what we aim for the initial phase so if any of them goes offline, there’s backup. We will distribute the incentives to routers that open paths towards harmony, proportioned to their TVL on Harmony during the monitored period. We can spread the rewards across the first 6 months, and make it clear that it’s dependent on reaching the KPIs.

  4. Yes, the basic APR on high volume routes is around 10-15% on stablecoins without risk of impermanent loss. This will increase as more transactions flow through the network. Our architecture with low capital locks allows for up to 37% APR (before compounding the returns). So once there is a sustained use of the bridge for a chain, liquidity naturally flows there.

  5. It depends on the period. There is currently 9m as exit liquidity on Optimism.

  6. Familiarity with running and maintaining containers (Docker), interacting with smart contracts (to deploy router contracts), private key management, and ability to query REST APIs for day-to-day operations. We are simplifying this with a partner soon.

  7. No technical support needed, you are well integrated with our technological partners. We are ready :blush:

  8. We believe we have just started to scratch the possibilities of what cross chain dApps (xapps) can do. Cool use cases we have seen so far: any to any swaps, best trade on any chain, stake-from-any-chain. We are looking forward to the next wave of innovation for use cases like cross chain lending, cross chain governance, cross chain NFTs, …

Leaving here the link to the routers page in case someone wants to have a look at our docs: Become a Connext Router and Liquidity Provider — Connext Network

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@maxlomu we can pre-approve for A) and B) … but for C) joint campaigns, instead we can offer AMAs and co-branded marketing in our social media channels to an audience of over 500K users, enthusiasts, investors, influencers, etc.

Will that work?

9

Yes!
I love the idea, let’s do it!

10

For A) Based on our grant guidelines for Mainnet launches, it has to be audited and provide a demo to the audience.

For B) can we do, what does “volume” here mean, and how do we ensure that it’s sustainable, and not just values transferred back and forth? Would TVL on each side make sense better, such as $5M TVL on both sides of the bridge, sustained over 1 month’s time?

12

Hello frens, Connext is officially live on Harmony! Try it now:

13

Very nice! Saw the tweet on the day of the launch.

To help market the bridge and boost user confidence, can you help point us to the audit for the bridge and a video tutorial on how to use this bridge?

14

What about Thorchain Rune Liquidity network? It is first and only truly cross-chain of native assets without wrappings.

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15

They’re audited by Consensys

The way you are handling the grants and due analysing project applications… do you need someone to do due diligence for you?

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16

Hi thanks for raising a good point.

Thorchain architecture to execute cross chain transfers is to have a set of validators that monitors what happens on one chain (check tokens have been received), come to an agreement, and then execute an action on another chain (give tokens to the user)

These validators are then acting as a 3rd party that needs to be trusted for the transfer to be successful and avoid having your assets stolen.

How is this system kept secure? The validators have to stake their tokens and these get slashed if they behave maliciously.

This is a very risky and weak assumption: if the amount of money that needs to be bridged is more than the tokens they would get slashed, they have all the incentives to actually fraud the system!

Let’s also say that a small government or a big corporation wants to screw the system. What’s a few millions of $ in tokens for them? These systems are not resilient to those types of actors. Those system are not trustless/trust minimized.

I’d recommend you to read this deep dive here: The Interoperability Trilemma. AKA Why Bridging Ethereum Domains is So… | by Arjun Bhuptani | Connext

Let me know what you think!

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17

Thanks for pointing out our recent audit @Sbae.
Can you please elaborate more on your questions? Not sure I understood it.

18

I had no questions, I basically answered the question from Jack for you :sunglasses:

19

And maybe just to add, I wish for a project like this one to have been funded rather than dozens of others with money basically thrown away. But NOW Harmony halted all new funding. It’s so frustratingly backwards.

20

Interesting to hear something new about thorcain. Will ask the community what they think about it.
First time hearing about weak assumption.Thanks

21

Here it is.
All the NOs bond more value in Rune than they secure and if funds are missing/stolen (intentionality is not part of this equation really) the amount is deducted from their bond, making LPs solvent and the protocol solvent. If it’s a nefarious attempt at stealing, then they lose 1.5x the stolen assets from their bond, so bad actors are economically incentivised to behave.

To describe Thorchain has having a 3rd party is completely inaccurate as well. Thorchain is completely in-house with no outside dependencies, like oracles or anything else. To call NOs or validors as “third parties” is merely a game of semantics with no meaningful distinction or significance.

For a government to take over thorchain, they would have to Bond an enormous amount of Rune, and the price action functions as an exponential due to arbitrage as NO bonded rune is not accessible, so the price increase to acquire Rune is not (current price) * #ofrunies----constant arbitrage and slip fees make a “small” sum take over of Thorchain impossible. It would be hellish to take over Thorchain that way.
For your second last paragraph:

Nodes secure the LPs (with 2x bonded RUNE vs pooled RUNE).

If someone tried to “bridge” a large amount relative to LPs, they would suffer from high slippage. Nodes (and pools) will happily earn those slippage fees without resorting to malice.
For your last point:

  • that is way anonymous and constantly churning nodes is designed since Day 1
    Invite anyone from Harmony protocol here and we will happily clear up any misconceptions they have.
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