Building Borderless DeFi: Our Journey to Bring IBC Everywhere
As the blockchain industry evolves with custom layer 1s and rollups, interoperability and cross-chain communication protocols have become crucial for the next generation of DeFi applications. In spite of this, as we move away from the monolithic blockchain architectures of the past, the initial iterations of bridging infrastructure are flawed because they are reliant on centralized methods. We must not accept any solution that enables interoperability at the expense of security and decentralization. Composable Finance is at the forefront of this transformation, working tirelessly to bring the Inter-blockchain Communication (IBC) protocol to various ecosystems and creating a truly interconnected, borderless DeFi future.
In this blog, we will explore how IBC avoids the missteps of other bridging solutions and cross-chain communication protocols. We will specifically focus on how we are extending IBC beyond the Cosmos ecosystem and building the first IBC-powered cross-ecosystem communication protocol, an effort we have named — Centauri — now live at app.trustless.zone.
Our Vision of a Borderless DeFi Future with IBC
At Composable Finance, we believe that the future of DeFi is one without borders, where any money can be used on any chain, anywhere. To achieve this, we’ve identified IBC as a fundamental building block for enabling seamless communication between different blockchain ecosystems in a trustless and decentralized manner. Our mission is to expand IBC to new ecosystems, unlocking limitless opportunities for developers and users alike.
Enabling IBC-Powered Cross-Ecosystem Connections
Through our efforts, for the first time, IBC has gained adoption beyond the Cosmos, via our KSM<>DOT connection. This is a groundbreaking connection that allows users to transfer assets such as $KSM, $DOT, and $USDT between Polkadot and Kusama in a fully trustless and non-custodial manner, showcasing the power of IBC and our team’s relentless efforts. We are extremely excited about the successful launch of Centauri and are actively exploring connections with other Parachain teams for novel use cases and functionalities for the DotSama ecosystem.
Notably, our work does not stop there, as we are also actively developing and testing our DotSama <> Cosmos, and NEAR connections, all powered by IBC. Furthermore, we are already exploring other promising ecosystems to expand IBC even further. All of our efforts are converging to fulfill our mission of Any Money, Any Chain, Anywhere. We are building the first cross-ecosystem DeFi hub such that users and developers alike benefit from unparalleled access to liquidity and opportunities from all of DeFi’s major chains.
The work we have put into Centauri up to this point will inevitably accelerate our development of further IBC connections. We have completed some major milestones with regard to Centauri’s development as showcased by the successful launch of the KSM <> DOT connection which utilizes:
- Hyperspace relayer — our custom relayer implementation that is compatible with any Rust-based or IBC-enabled blockchain.
- Pallet-IBC — our Substrate implementation of IBC which allows for parachains to interpret IBC packets.
- GRANDPA — a protocol built by Parity that facilitates verification of parachain headers. Combined with Pallet-IBC this allows for IBC communication between parachains and Cosmos-based chains.
You can read more about Centauri on our docs or in this blog post, which provides a summary of our DeFi bridging series along with some links to some of our Twitter Spaces where Centauri was discussed.
What is IBC? — A brief overview on IBC extension and light clients
IBC facilitates message passing between any blockchains housing the necessary light client implementations. If you are unfamiliar with light clients, light clients provide a method for blockchains to verify block headers produced by other sovereign blockchains. By relying on light clients for communication, IBC can be used to transfer assets between chains in a trustless manner. This means asset transfers and communication in general with IBC are secured by the underlying blockchains rather than relying on a third party.
In this way, IBC’s architecture minimizes the risks associated with traditional bridging architecture. In order to compromise an IBC connection, an attacker would need to take over one of the underlying blockchains themselves. Aside from offering the most robust security of any bridging protocol, IBC offers much more. As a communication protocol, IBC can be used for cross-chain function calls. When used with CosmWasm, this opens the door for the creation of cross-chain smart contracts capable of interacting across multiple chains through a single smart contract deployment. Stay tuned for XCVM.
The advantages of IBC are clear with the Cosmos implementation already supporting over 50 active chains, and boasting over 3.5 million cross-chain asset transfers in the past 30 days alone.
IBC has proven itself to be the most robust and well-tested bridging solution currently available. Since its inception in 2021, IBC has not suffered a single exploit while simultaneously exceeding the volume of other bridging solutions. In 2022, the total USD value of IBC transfers totaled $30.3 billion.
To summarize why we have chosen to extend IBC and utilize it as the transport layer for our XCVM:
- IBC is extensible — to any blockchain capable of hosting a light client.
- IBC is trustless — as it relies on the consensus of the underlying blockchains it is connecting rather than putting trust in a third party.
- IBC is battle-tested — having been in production for 3 years, connecting over 50 chains, and facilitating billions of dollars worth of transactions each month.
Thus, our goal to bring IBC to new ecosystems ultimately serves the needs of developers and users to achieve limitless opportunities with no ecosystem restrictions or barriers.
IBC everywhere — a trustless future for borderless DeFi
We are constantly researching and evaluating new ecosystems to which we can expand IBC in the future. While we are still in the development phase of some implementations, we have made significant progress on others and will continue to provide updates as these connections near their mainnet releases. If you are a protocol developer interested in bringing IBC to your chain, deploying on Picasso, or simply looking to collaborate, please feel free to reach out to one of our community managers on Discord or Telegram.