This Cryptocurrency Achieves DeFi Milestone With Fully Decentralized Bridge, First of Its Kind To Be Run By DAO
Blockchain developers Broxus have announced the launch of their Bridge DAO on the heels of their network rebranding from FreeTON to Everscale. Once activated, the DAO will initiate a second phase for the Bridge as a truly decentralized and autonomous financial hub. The DAO will also boost second-layer ecosystem development, including expansion of the Bridge's multichain structure
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The key to cryptocurrency, in terms of its potential as a means of revolutionizing finance, is that it is decentralized. What decentralization here refers to is the quality inherent in many digital assets whereby they exist independent of a single controlling entity.
This is in contrast with traditional currencies whose printing and distribution are controlled by governments and banks. With cryptocurrency, assets can be minted, distributed and transacted in a trust-less fashion by means of networks, computers and nodes.
This trust-lessness opens the door for users of cryptocurrency to enjoy a certain level of privacy and financial freedom that is not available to them in traditional finance. Given the success and growth that has occurred in the cryptocurrency industry, many have thought to take that decentralized paradigm and apply it to other fields to see if it could have similar results.
The place where this decentralized approach has seen the most results would have to be DeFi, where decentralized principles are completely changing how we envision banking and finance to be done moving forward.
DAOs and their role in DeFi
At the heart of DeFi lies the DAO, or decentralized autonomous organization, construct. DAOs represent the transmutation of the traditional financial organization into a more egalitarian form, where authority is shared among peers.
Thanks to the structure of DAOs, smart contracts are used to authorize transactions rather than special groups of people. Generally speaking, in a DAO all that is necessary for one's voice to be heard is the possession of a certain amount of tokens tied to the platform.
These tokens allow their holders to influence the decisions that are made by the organization and present proposals for changes.
The DAO can be thought of as the final goal for most DeFi organizations. Ideally, a DeFi platform should be something that everyone with the inclination and means can participate in.
The more DAOs there are in the industry, the stronger it will become because, as is the case with the Bridge DAO on the Everscale network, they can serve as necessary junctions that connect the many independent networks.
The Bridge DAO
The TON Bridge is a multi-network, second-layer solution that links the Everscale blockchain with that of Ethereum, Polygon, Fantom, Binance Smart Chain and more. The unique value of the Bridge lies in its ability to offer users the opportunity to move assets bi-directionally between Everscale and Ethereum-based networks. This is significant because high gas fees, poor scalability and slow transaction times make it very difficult for regular users to make Ethereum transactions. Fees are fractional on the Everscale network, and transaction speeds are exponentially faster.
Due to the enhanced freedom that the Bridge gives users in comparison with the limitations inherent in original chains, it can be likened to a DeFi bank that offers clients autonomous control over their funds.
Now the management of that institution will be opened up as its governance structure is replaced by a DAO. The transition from the first iteration of the Bridge to the DAO will bring with it significant changes.
Typically in DAOs, there is a central set of smart contracts or one large smart contract (depending on the blockchain) that commands the other lesser contracts of the platform. In the Bridge economy, those contracts are primarily based on the Ethereum and Everscale blockchains.
Prior to being run by a DAO, when changes were made to smart contracts, an administrative key had to be used for authorization. Now, thanks to the structure of the DAO, changes can only be authorized collectively by members of the organization.
The activation of the DAO also means that participating members of the Bridge economy will now be able to vote on decisions that affect the community. The voting protocol is a real smart contract that is authorized to make changes to other smart contracts.
For example, if a user wants there to be support for new BRIDGE tokens on the platform, they can write a proposal, which is a special smart contract. If the community votes in favor of approving that proposal then the smart contract will be deployed and changes will be made to the configuration contracts that add support for particular tokens.
Unveiling of Bridge comes at a watershed moment for Everscale
The full unveiling of the Bridge is happening at a momentous time for the network. Earlier this month, the FreeTON DeFi Alliance announced that it would be rebranding from FreeTON to Everscale.
The reasoning behind the change lies in the strides that the network has made technologically since beginning as a continuation of the now-defunct TON Telegram project. The Everscale network is a completely different animal now compared to when it started. In terms of technical specifics, the network has switched from the old nodes written in C++ to newer, more stable and efficient Rust nodes. The new nodes and other innovations have changed the manner in which the protocol operates, necessitating a new image for the network.
According to Broxus founder Sergey Shashev, "The rebranding was planned 2-3 months ago. It is happening because we have gone way beyond the limitations of the original TON technology. Plus, there are a lot of "TON" tokens around and people are confused. We are more than just a token, and in terms of ecosystem offerings, what we have is on par with Near, Solana and Polkadot. Despite the rebranding, however, our roadmap is still the same. The main difference is the network's transition to Rust nodes."
BRIDGE tokens, proposal voting and relays
The Bridge DAO is able to operate thanks to BRIDGE tokens. In the Bridge economy, BRIDGE tokens act in the role of governance tokens. There has been a total of 14 million BRIDGE tokens issued with no plans for further issuances.
BRIDGE tokens provide the means for the Bridge to function by generating the necessary liquidity and opening up its governing structure to users. Any user who wants to participate in Bridge governance just has to hold a certain number of BRIDGE tokens.
While there is a minimum amount of tokens necessary for participation, there are expanded governance roles in the ecosystem that are available to those who have more tokens. If you acquire 2% of the total amount of BRIDGE tokens, you can enter governing proposals of your own for the community to vote upon.
Proposals generally serve a few functions. They are often used to add support for assets from other networks, make changes to the configuration of Bridge settings and to appropriately deal with Relays that are not functioning properly.
Relays, or Bridge validators, have special importance in the Bridge DAO structure. Any user with at least 100k BRIDGE tokens is eligible to become a Relay.
Relays are so important because, by locking in the liquidity necessary to ensure that the platform can function without issues, they perform an essential service for the community. As a result, Relays are rewarded for the work that they do.
If, however, a Relay fails to function in line with what is expected of it, they are dealt with via a proposal.
Other types of proposals, like changes to liquidity protocols and management, are possible as well. Interested users will find all the different proposals and discussions related to their implementation on the Everscale forum and the project's Github.
Bridge DAO unique in DeFi
The Bridge DAO offers a number of unique features that will both stimulate growth for the Everscale network and benefit members of the DeFi community at large.
- With the DAO established, no single person or entity is in control of the Bridge. The Bridge DAO by design limits the power of developers and prevents centralization.
- As the first Bridge DAO of its kind, the Bridge ensures that authority over all associated assets and transfers is held firmly in the side of the DAO.
- The technology underlying the Bridge DAO allows participants to manage Ethereum contracts from the Everscale blockchain and vice versa. This will broaden the userbase substantially and allow for liquidity to flow from larger chains where it is expensive to move to Everscale where it is cheap, and back again.
- The Bridge DAO will allow the Everscale Bridge's multichain structure, in which it is possible to switch from Everscale to Binance Smart Chain, Polygon, etc. and vice versa, to expand and truly flourish. The enhanced interconnectivity will lead to an influx of new funds from other networks and help solve the microtransaction problem in which users cannot withdraw funds from Everscale without paying exorbitant gas prices on Ethereum.
A much-needed solution
What the Bridge DAO offers is a sorely needed solution in the fractured world of DeFi. This can be clearly understood if we look at what it can do for a platform operating on Ethereum with its own liquidity pools and farming protocols.
The Bridge DAO enables that platform to transfer all of its liquidity over to Everscale, where transactions will be 1000 times cheaper than any made on Ethereum. At the same time, end-users will still be able to just use the Ethereum interface.
The reason that this kind of operation is feasible is that Everscale has unbeatable scaling capabilities, and, unlike other bridging services, Everscale charges no fees on Bridge transactions.
Those fees are covered by the profits that the network makes off of reserves and the interest generated by the liquidity locked in by users. This is exactly the kind of connecting platform that, by benefitting the individual user as well as larger platforms, the industry sorely needs.
By acquiring BRIDGE tokens users not only open numerous avenues of potential profit for themselves and make transferring assets across different blockchains infinitely easier and cheaper, they also gain a voice in the DAO governance model and can help enact the changes they deem necessary for the platform and industry to grow.