In the field of encryption, as the types of public chains become more and more diverse, their relative independence is like isolated islands hanging overseas, which is not conducive to the development of their own ecology. Therefore, starting with cross-chain assets, more and more cross-chain technologies have been developed, and multi-chain has become the mainstream concept of the current blockchain. Many new concepts have also been proposed one after another: cross-chain bridge, chain interoperability, full chain, account abstraction, chain abstraction, and intention transaction.

Among them, Wormhole, with its unique role, connects many blockchain ecosystems, connects more than 25+ mainstream blockchains, supports multiple blockchain environments instead of just EVM compatibility, and this number is still increasing. By providing a seamless, secure and decentralized universal messaging protocol, it makes it possible for assets and information to flow between different blockchains.

1. What is Wormhole?

Originally incubated and supported by Jump, Wormhole aims to enable developers to build native cross-chain applications covering multiple chains. Wormhole started as a hackathon project with the goal of finding a solution that enables blockchains to "communicate with each other". As the project has evolved, Wormhole has evolved into a general messaging protocol that connects multiple chains in the ecosystem. This evolution is consistent with its broader vision of becoming a base layer for developers to build diverse cross-chain applications.

2. Wormhole Operation Mode

Wormhole's workflow is both simple and efficient. At its core is a cross-chain message format called VAA (Verifiable Action Approval). On each chain supported by Wormhole, a set of specific contracts, called Wormhole Core Contract, are deployed. These contracts are responsible for converting the application's cross-chain requests into VAA.

Request generation and VAA conversion

  • When a user or application wishes to transfer assets or information between blockchains supported by Wormhole, they first initiate a cross-chain request to Wormhole.

  • This request is then processed by the Wormhole system and converted into a specific cross-chain message format, the Verifiable Action Approval (VAA). VAA contains all the necessary information required to perform cross-chain operations, such as asset quantity, target address, timestamp, etc., and is designed to be verifiable to ensure its authenticity and integrity.

Guardians Signature Verification

  • The converted VAA is sent to a group of nodes called Guardians for signature verification. Guardians are carefully selected and highly responsible nodes that work together to maintain the security and stability of the Wormhole network.

  • Each Guardian will independently sign the VAA, indicating that they believe the VAA is valid and safe. These signatures are then combined into a multi-signature to increase the security and reliability of the entire process.

  • To ensure the authenticity of VAA, Wormhole requires at least two-thirds of Guardians to sign and approve VAA. This mechanism is called "threshold signature", which can improve the flexibility and scalability of the system while ensuring security.

Relayer Relay and Fee Payment

  • Once the VAA gets enough signatures, it is relayed to the target chain by a role called Relayer. The Relayer is responsible for submitting the signed VAA to the Wormhole Core Contract on the target chain.

  • In this process, the Relayer will incur certain Gas fees, which include the cost of submitting the message to the Wormhole Core Contract and the cost of the target application executing the message. Since Wormhole does not set up a public Relayer, these fees are usually paid by the Relayer itself and recovered through various incentive mechanisms (such as handling fees, rewards, etc.).

Target chain verification and execution

  • When the Wormhole Core Contract on the target chain receives the signed VAA, it first verifies the validity and integrity of these signatures. Only when the verification is passed will the message in the VAA be passed to the target application.

  • The target application will then perform the corresponding cross-chain operations according to the instructions in the VAA, such as transferring assets, updating status, etc. Once the operation is completed, the relevant information will be recorded on the target chain, thus realizing the closed loop of cross-chain communication.

Security and Scalability

  • Wormhole ensures the security and reliability of cross-chain communication by using Guardians' multi-signature mechanism and Relayer's relay service. At the same time, its flexible architecture and scalable design enable Wormhole to support more blockchain networks and cross-chain operations.

  • As the multi-chain ecosystem continues to develop, Wormhole will continue to play its important role as a universal cross-chain information transmission protocol, providing strong support for the interoperability of the blockchain world.

Through its unique organizational structure and workflow, Wormhole provides a secure and efficient bridge for cross-chain communication, ensuring seamless interoperability between various blockchains.

Wormhole Product Use Cases

Messaging

As one of Wormhole's core products, Messaging provides a secure and efficient cross-chain information delivery solution for different blockchain networks. It simplifies the process of cross-chain interaction and promotes the growth of users and liquidity.

Connect

Connect provides developers with a set of simplified integration tools that allow them to easily integrate Wormhole’s cross-chain functions into their own applications. This product lowers the threshold for cross-chain development and accelerates the popularization of cross-chain applications.

Gateway

Gateway is an application-specific blockchain based on the Cosmos SDK that connects liquidity and users of Ethereum and other blockchains to the Cosmos chain through the IBC liquidity router. This product provides a convenient bridge for non-native assets to enter the Cosmos ecosystem.

Queries

Queries provides application developers with real-time cross-chain data query capabilities, reducing latency and gas fees. It solves the problem of cross-chain digital identity fragmentation, supports a unified identity system, and improves user experience.

4. Wormhole team and financing information

In November 2023, the cross-chain protocol Wormhole completed a $225 million financing at a valuation of $2.5 billion and established Wormhole Labs. This makes it the largest crypto project financing in 2023. There is no lead investor in this round of financing, and the participating investors include Brevan Howard, Coinbase Ventures, Multicoin Capital, ParaFi, Dialectic, Borderless Capital, Arrington Capital and Jump Trading. Saeed Badreg, CEO of Wormhole Labs, said that technically, this is the company's first financing; and Jump Crypto, the encryption department of high-frequency trading company Jump Trading, has been incubating the project for many years.

5. Wormhole Token Economics

The native token of Wormhole is $W, with a total supply of 10 billion and an initial circulation of 1.8 billion, which will be distributed on Ethereum, Solana, Arbitrum, Optimism and Base networks. The distribution method is as follows:

Guardian Nodes: 5.1% tokens (510 million)

Community: 17% (1.7 billion)

Ecosystem and incubation: 31% (3.1 billion)

Core contributors: 12% (1.2 billion)

Strategic network participants: 11.6% (1.16 billion)

Foundation Treasury: 23.3% (2.33 billion)