AP
Wormhole

Wormhole

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What is Wormhole?
  • A bridging protocol that enables assets to move across a variety of blockchain protocols
  • A user sends assets from one chain to another by locking the assets and minting a wrapped version on the destination chain
    • Supports blockchains including Terra, Solana, Ethereum, Binance, Avalanche, and Polygon
    • Ex: Bridging Ethereum tokens to Solana using Wormhole
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Problem
  • There isn’t a clear way to move token towards any two blockchains
    • Primary way to solve this in the past was to use centralized bridges or centralized exchanges to move the assets for you (which involves trust)
  • Smart contracts and applications also can’t communicate with each other
    • This has been an increasingly limiting situation over time

Interoperability between networks has become ever more important

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Solution
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Wormhole Core Layer (Backbone)
  • The backbone of the entire Wormhole ecosystem
  • This solves the blockchain communication problem while being decentralized
  • Works by deploying a contract on each blockchain called the Core Contract
    • This means other contracts can use these Core Contracts to send a message off-chain
    • It can be also be used verify the authenticity of a message they’ve received
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The Guardian Network (The more important Component)
  • Responsibility is to observe and sign messages which are sent from each chain via Core Contracts
  • There are 19 Guardians in the Guardian Network and they each observe every blockchain supported by Wormhole
  • A wormhole message is not valid into 2/3 of the Guardians have observed or signed it
    • It is the signatures which the core contract verifies when it assesses the authenticity of the message
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Wormhole Token Bridge (Built on top of the Core Layer)
  • The Token Bridge is built on top of the Core Layer, it is not part of the Core Layer itself
  • Version 1 token bridge was deprecated, now being Version 2 token bridge
    • A protocol built on top of the core layer to facilitate transferring tokens across chains in a manner that is composable with other core layer protocols
  • It is as decentralized as the Core Layer
  • Primary token bridge for Solana and becoming the primary bridge for Terra
  • >1 Billion Total Value of Assets (TVL)
    • One of the highest in any ecosystem
    • Also means there is a lot of liquidity in many markets
    • Supports NFTs
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Versions of Wormhole
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Wormhole V1
  • Wormhole was originally launched on Solana in October 2020 as a bi-directional bridge for transfers between Solana and Ethereum.
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Wormhole V2
  • In August 2021, they launched multi-chain functionality that supports transfers between Solana, Ethereum, Terra, and BSC
  • In November 2021, Wormhole V2 expanded its support to the Polygon platform
  • In December 2021, the protocol added Avalanche and Oasis to the list of supported blockchains
  • Following the upgrade to V2, Wormhole announced that some assets bridged to Solana in V1 are eligible for transfer to the new version
    • The assets that are not eligible for transfer may be sent back from Solana to Ethereum using the V1 portal. Wormhole has not provided definitive information with regard to which assets are considered eligible. You may only see the eligibility for migration of your V1 assets by logging into your Solana wallet. The assets eligible for migration will be highlighted accordingly in the wallet’s user interface.
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Application Approach
  • Protocol first design perspective
  • Chain Agnostic
    • It refers to a single platform that allows multiple different chains.
  • Can choose to leverage strengths of each chain individually
    • Ex: Offload transactions on Solana and use Ethereum as its final settlement layer
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Example Applications:
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The Hack on Feb 2, 2022
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A hacker was able to hack 120k wETH through an exploit through the network
  • 120k ETH ~ $320 million, the second largest hack to date
  • Wormhole tweeted that their network was exploited at 5:25 PM, Feb 2022 here
  • This address is involved within the Wormhole network exploit
  • 0x629e7Da20197a5429d30da36E77d06CdF796b71A
  • Here is the transaction of the exploit: https://t.co/8IcrrnzeWj
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Some twitter threads that go into detail for how the exploit happened
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tdlr:
  • Wormhole’s set of “guardians” had somehow signed off on an 80k ETH transfer as if it were 100% true
    • The hacker exploited a bug to trick Wormhole into minting a bunch of Wormhole ETH ($weETH) on Solana
  • They did this by minting Wormhole ETH on Solana, so they were able to withdraw or bridge it back to Ethereum
  • The attacker was able to mint Wormhole ETH on Solana due to a bug within the smart contract code itself
  • The attacker was able to effectively lie about the signature check program being executed when the signatures weren’t being checked at all
    • This is essentially using this “fake” system program
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Is this issue resolved?
  • This issue was resolved hours later
  • The ETH on Solana is not bridged, secured, and custodied by Wormhole, but by FTX
    • Wormhole team is covering the $300 million loss
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Some Terminology
  • Origin chain: The chain on which you currently have your funds that you want to bridge.
  • Target chain: The chain on which you want to receive tokens.
    • Example: If you want to send UST(wormhole) from Ethereum (origin chain) to Solana (target chain). You need to chose this tab: ETH -> SOL
  • Token (origin): The token on the origin chain, from which you are sending your funds (Full token list by origin here).
  • Token (target): The token that is minted on the target chain, on which you receive your funds (Full token list by target here).
  • Markets: Available, liquid markets on the target chain for swapping/pooling/staking/etc.
  • Contract address: The contract address of the token (target). You might need the contract address to manually add the token to your wallet (Phantom, Metamask, Terra Station, etc.)
  • Notes: additional information