Connext, the leading cross-chain bridging platform in Oakland, California, has rolled out a new token dubbed “xERC-20” to address any cyber-related crime, such as malicious attacks on bridges.
An announcement conveyed by Connext on July 24 outlines the features of the “xERC-20” token. The report illustrated that the token issuers of “xERC-20” can maintain a list of official bridges on the platform.
Connext Seeks to Address Bridge Attacks
Additionally, the token issuers can control the number of tokens minted on the network. The announcement revealed that the “xERC-20” token will be available on Alchemix Finance, a decentralized finance (DeFi) platform on the Connext protocol.
Initially, the Ethereum Improvement Proposal (EIP- 7281) was proposed by the founder of Connext, Arjuan Bhuptani, to prevent the recurrence of the Multichain hack.
On July 7, assets worth over $100 million were withdrawn from the Multichain bridging platform. After probing the matter, the Multichain team confessed that lousy actors had gained unauthorized access to the company system withdrawing funds worth millions.
Therefore to prevent bridge attacks, Bhuptani co-formulated the EIP- 7281 proposal outlining the process of standardizing tokens and improving the bridging on the network.
In his proposal, Bhuptani explained that launching “xERC-20” will help address the losses of assets caused by bridge hacks. The executive mentioned that the token issuer will be the only one affected in case of a bridge hack.
He added that each bridge will generate a unique version of the token on the network. The development led by Bhuptani outlines the new standards that tokens will be minted on their respective bridges.
Overview of the Ethereum Improvement Proposal
In the primary minting process, the token issuer is required to allow the minting of the token on the smart contract. The development of “xERC-20” mandates the token issuer to control the number of tokens minted on a specific bridge.
Beyond this, the EIP-7281 proposal stated that bridges would be allowed to mint their distinctive version of their token. This derivative token minted on the bridges will not be grouped as “canonical” coins.
However the proposed minting process on the bridges, aims to reduce the issuance of unofficial versions of tokens.
According to Bhuptani, the EIP-7281 development ensures the DeFi platforms remain safe and secure from bridge attacks. Describing the benefits of EIP-7281, Bhuptani confirmed that the token issuer is at risk of losses if a bridge attack occurs. He added that the bridge hack would not affect the end user.
Reflecting on the requirement for the approval of the EIP proposal, Bhuptani confirmed that the EIP editorial team had greenlighted the EIP-7281 project. He claimed that the approval process for EIP takes months.
In a recent update, the token issuer will launch Connext standard token before the final approval. At this stage, the user can provide valuable insights concerning the new token and any necessary development would be required on the EIP-7281.
Commenting on this, the Connext team announced that the token standard would be forward-compatible with the official coin version. This will prevent vulnerable bridges with security problems from being misused.
Furthermore, developing the new token creates a friendly environment to encourage the token issuers to upgrade their supported bridges according to their preference. This development aims to improve the bridge’s security and the quality of the services.