The wormhole is an uncentralized, universal message-passing technology that connects various blockchains. In simpler terms, wormhole lets different blockchains such as Ethereum, Binance Smart Chain, Terra, Solana, Polygon, Avalanche, and Oasis talk to each other. It solves two of the most significant issues that are affecting blockchains today.
DApps and smart contracts on different blockchains can’t communicate and are unable to communicate with each other, which makes the interaction between blockchains challenging to attain.
Wormhole solves this issue by checking various chains for messages sent by smart contracts on those chains. It is accomplished via Wormhole Core Layer. Wormhole Core Layer, a core contract deployed on every chain that forwards sent messages back to the targeted chain, is the primary function of the universal messaging protocol.
Working Procedure Of Wormhole
The most prominent and well-known characteristic that is a part of a wormhole, although it’s not the only one, can be the Wormhole Token Bridge. It allows the secure and unrestricted transfers of digital assets to the layer-one blockchains such as:
- Solana
- Ethereum
- Binance Smart Chain (BSC)
- Polygon
- Terra
- Avalanche
- Oasis
The described guardians protect token transactions, and validated nodes are carefully selected to monitor all activity within the chain. A few of the most significant stake providers around the globe are guardians for their clients, including the world’s biggest Staking service provider, Everstake, and Certus One, the developer of the wormhole.
Every bridging transaction is charged the payment of a small transaction cost, as you must pay the normal gas fees to the receiver and sender chains. While the gas charges for chains such as BSC, Solana, Polygon, and Avalanche are extremely low, costs on Ethereum could be as high as $50 or more.
The latest model of the Wormhole Token Bridge is the V2 bridge constructed on the Wormhole Core Layer but not considered a component of it. It’s not as decentralized as the core layer and Solana’s and Terra’s first token bridge, which is decentralized. In addition, it holds over $1billion worth of TVL and also supports NFTs.
Why Is Wormhole Unique?
One of them is the array of supported cryptocurrencies, which lets users use many Defi protocols without looking for centralized solutions. You can, for instance, move ERC-20 tokens from Ethereum to other chains and then use Defi protocols on them. In particular, for Ethereum users for whom the high cost of gas has hit, This is an excellent solution to a problem that will likely last. In the same way, token holders from other chains can access the vast Ethereum Defi ecosystem.
In addition to using the token bridge, the wormhole also supports decentralized and built applications on the top of the token bridge. With wormhole’s design, developers can approach applications from a protocol first design view. They can be chain-agnostic or use the advantages of every blockchain.
Effectively wormhole lets applications utilize different blockchains from layer one as layer-two solutions. Developers can develop decentralized exchanges, chains-agnostic digital wallets, or multi-chain DAOs.
While wormhole has a practical use scenario and a compelling price point, it was the one that received the most media attention due to a huge 320-million cyberattack that targeted the connection that connects Solana as well as Ethereum.
Based on Tom Robinson, the co-founder of the firm that provides blockchain analytics Elliptic This hack has demonstrated another time how vulnerable Defi services are and that their security hasn’t been elevated to the point that is sufficient to allow for the storage of vast amounts of money within their systems.
But, to their credit, investors of wormhole came forward and refunded the stolen funds. Jump Crypto, the crypto venture capital firm behind Certus One, the developer of Wormhole and Wormhole, has transferred the 120,000 wETH back into the smart contracts that were misused.
Final Words
In response to this vulnerability, wormhole launched a 10 million bug bounty on ImmuneFi that aims to give users greater security and reinforce its commitment to Defi. To protect your coin from hackers you need to use Bitcode Prime. The program will focus on stopping such attacks and tackle issues such as governance manipulation, disclosure of private keys, Sybil attack, and many more.
