Everything you want to know about the Peggy and Gravity bridges for Cosmos
Today, we’re having a look at a very recent development on the Cosmos and Ethereum ecosystems: the announcement of Peggy, a cross-chain bridge between both networks and Gravity, connecting the Cosmos Hub with Ethereum.
But before we dive into the specifics, let’s have a look at cross-chain bridges. As you might have noticed, throughout the Blockchain ecosystem, cross-chain bridges are introduced. Recently, we wrote about the Orbit Bridge for the ICON Network, and so, that poses the question: “why are cross-chain bridges important, and how do they help to develop blockchain?”.
Well, in a nutshell, cross-chain bridges help to pave the way towards interoperability or the internet of blockchains (not to be confused with Web 3.0). While blockchain technology gets more and more advanced and accepted, real-world adoptions aren’t moving that quickly. The main reasons for that are scalability and connectivity.
In the case of Ethereum, more and more DApps are building on top of this ecosystem. However, as more projects are created, the network becomes more and more overloaded and subjects users to high gas fees and slower block times. And even though other networks (such as Cosmos) are better performing and cheaper, the switching cost of migrating your project or assets from one network to another is excessively high. Furthermore, unless you can seamlessly move from one chain to another, you will likely get stuck and deal with performance issues and high fees.
That is where cross-chain bridges come in. Using a cross-chain bridge gives projects the freedom of choice and opens up the fair competition as assets can move freely. Cross-chain bridges enable the flow of value from one chain to another (and back), which lets side chains provide higher throughput for faster and cheaper transactions while staying connected with the desired Mainnet for liquidity or the ecosystem.
⛓ Peggy, the Cosmos-Ethereum Cross-Chain Bridge
The DeFi Cosmos Ethereum Bridge, called Peggy, allows digital asset holders to make arbitrary DeFi investments with liquid bridge capital.
Althea’s design for the Peggy bridge is centred around a highly efficient Ethereum smart contract, built for the dual challenge of high fees and the large validator set of the Cosmos Hub. The contract stores the full validator state and a Cosmos module run by the validators to produce updates and send transactions to Ethereum.
Peggy’s Ethereum contract is a multi-sig wallet controlled by the current Cosmos validator set with some added automation in a nutshell. The initial proposal of Althea was that the Peggy Cosmos module provides its own machine-readable and automatically actionable governance proposal format for the investment of bridge capital into arbitrary DeFi constructs (based on random choice or personal whim, rather than any reason or system).
In their first upgrade on the project’s development, Althea mentioned that the Althea Peggy Ethereum contract could validate a weighted powers vote from the complete set of 125 validators of the Cosmos Hub for a low cost ($1.20 per Cosmos to Ethereum transfer Ethereum ERC20 transfer @ 300gwei. For a total fee of $5.70 per ERC20 transfer). That means that 75% of your transfer price across the bridge is a simple state update in an ERC20 contract. Althea’s upgraded managed to fit all the hashing and verifications for 125 signatures into 25% of the previous costs.
In more recent developments, Peggy now correctly generates signs and relays batches of transactions for arbitrary ERC20 tokens to Ethereum. Additionally, the Stargate upgrade is complete, and many early bugs have been fixed. Mainnet will be launched on February 18th.
🎆 Gravity Bridge, Connecting The Cosmos Hub
Besides the Peggy Bridge, there is also the Gravity Bridge by Althea. Gravity is a further development or evolution — as the team behind it likes to call it — of the Peggy bridge and is designed specifically for Cosmos Hub. This bridge intends to pull as many transactions and as much value as possible into the orbit of Cosmos Hub by bridging it directly to Ethereum. Additionally, the bridge is engineered to use as little gas as possible and should enable frictionless, fast transactions from Ethereum to Cosmos (and the other way around).
Gravity will bring ERC20 assets from Ethereum into Cosmos, but it will also be able to get Cosmos assets to Ethereum. $ATOM and every other asset in the Cosmos ecosystem will trade on Uniswap and other Ethereum AMMs, bringing a tremendous amount of liquidity and value to these assets.
The design of the Gravity Bridge has three main aspects. First, the validators are fully trusted to manage the bridge. Validator powers and votes are replicated on the Ethereum side, so trust in bridge assets depends entirely on trust in the peg zone chain’s validator set. And while Althea mentioned that they are aware of the known problems with assets in the bridge exceeding the market cap of the native token, they feel that it is worth it in exchange for the dramatic design simplification combined with acceptable decentralization.
Furthermore, the Gravity Ethereum contract supports ERC20 assets only and not arbitrary data. Therefore, the contract maintains its simplicity, which allows for faster optimization and production quality. Lastly, peg zone validators must sustain a trusted Ethereum node, which removes all trust and game theory implications that arise from an independent relayer. That said, the Gravity bridge is under development and will be undergoing audits soon. For the latest updates, check Github.