1. Industry Trends and Current Situation
The emergence of blockchain technology has brought many advantages such as distributed ledgers and decentralization, but it also leads to each blockchain forming a relatively isolated ecosystem. Different blockchains cannot interact directly, which brings many limitations and challenges to the application of blockchain technology. Therefore, how to achieve interoperability between different blockchains has become an important issue.
In order to solve this problem, cross-chain bridge technology came into being. Cross-chain bridge is a technical means to establish connections between different blockchains to achieve cross-chain communication and asset transfer.
Through the cross-chain bridge, users can transfer assets from one blockchain to another, and can also realize the execution of cross-chain smart contracts, promoting the integration and development of the blockchain ecosystem.
Therefore, the cross-chain bridge is one of the key technologies to achieve interoperability between different blockchains, and it is of great significance for the practical application and promotion of blockchain technology.
1. Cross-chain bridge technology is becoming increasingly mature, and its demand and role are becoming more prominent
In the past, users generally completed cross-chain operations through centralized exchanges, such as transferring assets to a centralized exchange first and then withdrawing them to the target chain.
With the continuous improvement of the public chain ecosystem and the popularization and development of DeFi technology, digital assets have more and more usage scenarios and liquidity has been significantly enhanced.
For example, assets need to be transferred to DApps on different chains to participate in staking, financial management, etc. The demand for cross-chain asset transfer is increasing, which has given rise to the emergence of cross-chain bridge applications. Now people are increasingly inclined to directly use cross-chain bridge technology to complete the transfer of assets between different chains, rather than achieving cross-chain through centralized exchanges.
2. Rollup cross-chain bridge between different L2s
In the current public chain landscape, the development of the Ethereum ecosystem is still the most mature and complete, and more and more DApps choose to develop on the Ethereum ecosystem.
However, Ethereum is known as the "noble chain". Not only is the gas fee relatively expensive, but the speed cannot meet the needs of DApps with high requirements for immediacy. As a result, more and more Ethereum Layer2s have emerged. While improving performance, they also inherit the underlying security of Ethereum.
For example, Arbitrum, Optimism, Starknet and Zksync, known as the four kings of Ethereum Layer2, have developed very rapidly and formed their own ecosystems. Their respective Layer2 ecosystems have accumulated a large number of users and assets.
The prosperity of the Ethereum Layer2 ecosystem has also given rise to the demand for cross-chain Ethereum Layer2 assets, and Orbiter Finance emerged in this context.
In the previous Layer2 framework, rollups could not be transferred directly to each other.
If a user wants to transfer assets from Rollup A to Rollup B, he often has to wait for a long time.
1) Transfer assets from Rollup A to the mainnet;
2) Transfer the assets from the main network to Rollup B.
The mainnet acts as an intermediary. Both transfers must go through the Ethereum mainnet, which is not only slower, but also requires two gas fees. Both the time cost and the gas cost are relatively high.
However, the emergence of cross-chain bridges such as Orbiter has built a bridge between different Ethereum Layer2s, greatly improving the interaction efficiency between Ethereum Layer2s and promoting the flow of digital assets, which releases value.
2. What is Orbiter Finance?
Orbiter Finance is a decentralized cross-Rollup bridge that enables users to cross-chain assets between Ethereum mainnet, StarkNet, zkSync, Loopring, Arbitrum, Optimism, Polygon, Immutable X, and BNB Chain.
Through its unique market maker model, Orbiter Bridge allows users to enjoy excellent experiences such as low fees and fast speeds. It currently only supports transfers of four currencies: ETH, USDC, USDT, and DAI.
3. Financing
Orbiter completed its first round of financing in November 2022, with participation from Tiger Global, Matrixport, A&T Capital, StarkWare, Cobo, imToken, Mask Network, Zonff Partners and others, but the amount of financing was not disclosed.
In addition, Vitalik also donated 16 ETH to it.
IV. Orbiter Finance Features
1. Security
Based on the security of rollup technology, Orbiter does not have risks like Layer1<>Layer1 cross-chain bridge.
First of all, we must be clear that what Orbiter Finance wants to solve is the cross-rollup problem, not the cross-chain (heterogeneous chain) problem.
Strictly speaking, Orbiter is a cross-Rollup bridge, not a cross-chain asset transfer between two completely independent (heterogeneous) blockchains (such as from the Bitcoin network to the Ethereum network).
When cross-chain assets are transferred between two independent heterogeneous blockchains (Layer1 <> Layer1), the security of the cross-chain protocol conforms to the bucket theory, that is, the upper limit of the security performance of the cross-chain protocol is determined by the chain with lower security.
Ethereum founder Vitalik wrote an article based on this topic. He proposed a concept called shared security, which is exactly what he meant.
For example, A and B are two heterogeneous chains, chain A has higher security, while chain B has lower security.
Then, when cross-chain assets are transferred between chains, security is determined by the security of chain B (the chain with lower security).
The main goal of the cross-chain project is to ensure the security of transactions between two unique chains and avoid 51% attacks.
However, cross-rollup projects use the same Ethereum data layer, and each rollup can prevent 51% attacks. Based on this, Orbiter proposed a cross-rollup mechanism that can inherit the security of Ethereum L2.
In other words, Orbiter conducts cross-chain asset transfers between different Ethereum Layer2s.
For example, Orbiter crosses chains between zkSync and Arbitrum, which are isomorphic chains.
Whether it is zkSync, Arbitrum, or Orbiter, all three are built on Ethereum and inherit the security of the Ethereum network, which can avoid 51% double-spending attacks.
In addition, Orbiter’s anti-malicious and excess margin mechanisms also ensure the security of users’ assets when performing cross-chain operations.
2. Low cost & instant
In the Orbiter cross-chain protocol, the transfer of assets is carried out between the EOA addresses of the Sender and Maker on the source and target networks, and the Sender does not interact with the contract address. This is a significant difference between Orbiter and other bridge protocols.
EOA, the full name of which is Externally Owned Account, literally translates to “externally owned account”, which is the type of account we most often come into contact with when using blockchain.
To put it more simply, EOA is actually our personal account, that is, our wallet address, which is different from the contract account with interactive functions.
What are the benefits of using EOA addresses in the Orbiter cross-chain protocol?
The biggest advantage is low cost and fast speed.
Because unnecessary contract interactions are eliminated, there is no need for a dedicated intermediary to mint/destroy assets. Transfers are made directly between the Sender (asset exchanger) and the Maker (market maker, who undertakes cross-chain exchange demand).
Most traditional cross-chain bridges take about 10 minutes or more to complete the cross-chain of assets, but with Orbiter, users can complete the cross-chain of assets in an average of 30 seconds.
3. Support Ethereum native assets
In the Orbiter cross-chain protocol, there is no need to mint assets.
As we all know, Bitcoin, as the cryptocurrency with the highest market value, has not fully realized its liquidity potential due to high gas fees and slow transmission speeds.
In order to introduce BTC, the cryptocurrency with the highest market value, into the Ethereum DeFi ecosystem and promote its liquidity, a common practice is to package BTC, such as packaging it into the ERC20 token WBTC on Ethereum, thereby releasing BTC's liquidity potential. This is actually also a cross-chain idea.
However, the Orbiter cross-chain protocol supports Ethereum native assets and does not require packaging or other operations.
How does Orbiter work across chains? Let’s take an example to make it clear.
For example, A wants to transfer its 0.1ETH from the zkSync chain to the Arbitrum chain.
The general process of using Orbiter to complete cross-chain (excluding fees) is as follows:
1) A, as a Sender, transfers 0.1ETH to the address of B (one of the Makers, which can be understood as a cross-chain contractor) on zkSync. This step only occurs on the zkSync chain.
2) B, as a Maker (cross-chain undertaker), receives 0.1ETH on zkSync.
3) After B receives 0.1ETH on the zkSync chain, he transfers 0.1ETH to A’s Arbitrum address on the Arbitrum chain. This step only occurs on the Arbitrum chain.
4) B receives 0.1ETH on the Arbitrum chain.
Looking at the entire cross-chain process, we can see that there is no need for steps such as asset packaging, but rather the transfer of native assets between different addresses.
In this process, the two token transfers occurred on Ethereum's Layer2 network, and the transfer fee of the Layer2 network is very low and the speed is faster.
Let me give you a less appropriate example.
This is like the communication between Chinese and Americans. Due to different languages, cultures, religious beliefs, etc., the communication between the two sides requires translation as an intermediary, and the cost of communication will of course be higher.
However, if people from Hunan and Hubei communicate with each other, since they have similar cultural backgrounds and beliefs, they do not need a translator as an intermediary, and the communication will be much smoother and the cost will of course be much lower.
V. Operation Mechanism
1. Two roles
In Orbiter Finance, there are two roles, Sender and Maker.
Sender is the person who initiates cross-chain transfers and the cross-chain demander, while Maker is the liquidity provider, Sender’s counterparty, and the party that undertakes cross-chain services.
When a Sender initiates a transfer, Maker provides liquidity, and the smart contract ensures the security of the entire process.
Before providing a cross-rollup to a Sender, Maker needs to deposit excess margin in Orbiter’s contract and set service fee rules in the protocol.
During execution, the Sender sends assets to the Maker on the Resource network, and the Maker sends assets back to the Sender on the target network.
If Maker has bad behavior, for example, after receiving the assets transferred by Sender, it does not transfer the funds to Sender on the target network.
At this time, the Sender can use the Maker's margin to initiate an arbitration request to the contract and then obtain excess compensation.
2. Maker operation process
In the Orbiter cross-chain protocol, a client will be provided to Maker. Of course, Maker can also deploy a client by itself, so that the collection process can be automated, that is, some operations on the Maker backend can be completed automatically.
In the Maker client, the user's cross-chain currency, amount, cross-chain network and other data will be monitored. Based on the monitored data, the client can perform corresponding automated operations. This is a normal process.
3. Decentralized anti-evil mechanism
However, Maker also has the potential to do evil.
In order to deal with the problem of Maker's malicious behavior, Orbiter adopted a solution of "early trust + dispute arbitration".
Orbiter trusts Makers by default, and assumes that these Makers will handle assets correctly and return the corresponding assets to users. However, there is a possibility that Makers may do evil. For example, after receiving assets from cross-chain users, they may deduct the users’ assets and not return the assets to users on the target chain.
Therefore, Orbiter adopts a decentralized mechanism, mainly through three contracts, namely MDC, EBC and SPV, to prevent Maker from doing evil.
1) MDC Contract
MDC is the abbreviation of Market Deposit Contract.
The MDC contract has two functions: keeping the Maker's deposit and processing the Sender's fund return and compensation.
2) EBC Contract
EBC is the abbreviation of Event Binding Contract.
This contract is used to prove the validity of transactions on both the source and destination networks.
3) SPV Contract
SPV is the abbreviation for Simple Payment Verification.
It is a simple transaction verification contract that is used to prove whether the transaction actually exists on the source network.
For example, Sender sends 0.1ETH from Arbitrum to Maker, and SPV is used to prove whether the transaction is real.
Then, a mechanism will be run through these three contracts, and Orbiter can ensure that when Maker acts maliciously, users will not suffer asset losses.
If Maker does not correctly send tokens to Sender after Sender transfers funds to Maker, the dispute resolution process will proceed as follows to help Sender get the tokens:
1) Sender needs to provide the SPV contract with relevant transactions on the source network.
2) Sender applies for arbitration through Orbiter’s MDC contract.
3) The MDC contract obtains the proof of existence of the transaction on the source network from the SPV contract and confirms that the transaction has occurred on the source network.
4) The MDC contract obtains the validity certificate of the transaction on the source network from the EBC contract. The MDC contract confirms that the transaction on the source network is legal according to the rules of Orbiter, and that the transaction is sent by the Sender to the Maker of Orbiter and has a legal identification code.
5) The MDC contract will set this arbitration as a pending case, and Maker needs to provide transactions on the target network within 0.5 to 3 hours.
If the Maker can provide the correct transaction on the target network within the specified time, the MDC contract can obtain the validity proof of the transaction on the target network from the EBC contract, confirming that the transaction on the target network matches the transaction on the source network, and the MDC contract will close this arbitration and display the transaction on the target network to the Sender;
On the contrary, if Maker fails to provide transactions on the relevant target network within the specified time, Sender can trigger the MDC contract for arbitration.
6) The MDC contract starts to compensate the Sender.
7) The MDC contract will send tokens and compensation (about $15) back to the Sender on the MDC contract deployment domain. The tokens returned and compensated to the Sender are deducted from the Maker's mortgage deposit.
4. Excess Margin Mechanism
In addition, in order to prevent Maker from doing evil, Orbiter Finance has also introduced an excess margin mechanism.
In the Orbiter protocol, Maker needs to provide two parts of funds, one part is used for liquidity, that is, the funds exchanged to users, and the other part is excess margin.
If Maker is dishonest and Sender fails to receive tokens on the target network as expected, all losses of Sender will be paid from the excess margin, and Sender will also receive compensation, which also comes from Maker's excess margin.
So, in the Orbiter protocol, does Maker have enough motivation to provide better services?
First, in Orbiter’s mechanism, Maker can earn substantial income from each cross-chain service (without the risk of impermanent loss).
Secondly, if the Maker fails to send the correct information to the Sender in a timely manner, Orbiter’s MDC contract will send it back and compensate the Sender with the Maker’s margin.
Therefore, the design of Orbiter can not only prevent Makers from doing evil, but also motivate Makers to provide better services.
5. Cost
For senders, Orbiter's fees include transaction fees and withholding fees.
Transaction Fee: Fees paid to the platform and Maker, charged as a percentage of the transfer amount.
Withholding Fee: A fee prepaid to the Maker, used by the Maker to pay the Gas fee when transferring money to the destination network.
Since gas fees are unstable, Orbiter adjusts fees based on the destination network's Gwei to ensure that Orbiter's fees are lower than average, but this adjustment is not frequent.
6. Orbiter Advantages
1. Cross-chain speed and cost
Through https://chaineye.tools/bridge we can query the speed and fee of some cross-chain bridges of Ethereum L2.
Suppose we transfer 1000USDC from OP chain/ARB chain to ZK chain, let’s take a look at the fees and speeds of these cross-chain bridges:
As you can see, Orbiter is the fastest, basically completing the cross-chain within 20-45 seconds, while Meson, which ranks second, takes 1-4 minutes.
If ranked by transaction fees, Orbiter ranks second, but Meson, which ranks first, has a fee of 0. Meson has a daily quota of 5 transactions/$5,000 without transaction fees.
In the same scenario, let’s look at the time required for other cross-chain bridges:
Layerswap: 2–5 minutes, fee: 2.44U
bungee: 2–10 minutes, cost: 4.77U
cBridge: 5–20 minutes, cost: 4.62U
When performing cross-chain operations, speed and cost are factors that we value. Through comparison, we can see that in terms of comprehensive speed and transaction fees, Orbiter is still very good, especially the cross-chain speed is much faster than other cross-chain bridges.
In the Orbiter cross-chain bridge, the time required for cross-chain is basically around 30 seconds. The slowest is the Ethereum mainnet, that is, from the Ethereum mainnet to the second-layer network, or from the second-layer network to the Ethereum mainnet, which takes about 45 seconds. The fastest is the cross-chain between the BNB chain and the ZK chain, which can complete the asset cross-chain in as fast as 5 seconds. Other Ethereum Layer2 cross-chain bridges generally take more than 2 minutes.
2. Security
In the Orbiter cross-chain protocol, the decentralized anti-malice and excess margin mechanisms avoid the risk of inaction by market makers after receiving funds, ensure the safety of users’ funds, and enhance the security of the protocol.
In addition, Orbiter is built on Ethereum and inherits the security of Ethereum, so Orbiter still has great advantages in ensuring the security of funds.
3. Active users
You can view some active users of cross-chain bridges at https://www.orbiter.finance/data.
According to data statistics from the Orditer L2 Data platform, Orbiter has advantages in terms of active users and user breadth.
4. Official endorsement and recommendation
The StarkNET official website recommends the Orbiter cross-chain bridge, and it is ranked first.
The Zksync official website recommends Orbiter in the cross-chain bridge.
Optimism also recommended the Orbiter cross-chain bridge in the cross-chain bridge sub-project of the ecosystem.
With official endorsement, the credibility of the Orbiter cross-chain bridge will naturally increase. Moreover, the official recommendation will also bring a lot of users to Orbiter.
5、L2 Data
In addition to cross-chain functions, Orbiter also launched an L2 Data (data dashboard).
L2 Data supports Arbitrum, Optimism, Starknet and zkSync data. Indicators include accounts and transactions, TVL, users and user age, active user ratio, new user ratio, interactions, new contracts, etc.
Orbiter L2 Data is committed to providing more comprehensive, scientific and effective Rollups ecosystem on-chain data to individual investors, institutions and developers.
L2 Data is also a unique feature that distinguishes Orbiter from other cross-chain bridges.
VII. Future Outlook
1. Cancun upgrade, L2 explosion, and increased cross-chain demand
According to statistics from the Orbiter L2 Data (https://www.orbiter.finance/data) platform, since the end of last year, the total number of transactions on Ethereum L2 has begun to surpass the number of transactions on the Ethereum mainnet.
At present, the total number of transactions on Ethereum L2 is more than three times the number of transactions on the Ethereum mainnet. Of course, this also includes a large number of interactions conducted for the purpose of airdrops.
However, even if some transactions are for the purpose of airdrops, the data at least illustrates the current development status of the Ethereum L2 ecosystem. After all, the Layer2 network has low fees and higher scalability. More and more project parties choose to build their own projects on Ethereum Layer2, or migrate from other chains to Ethereum Layer2.
With the completion of the Ethereum Cancun upgrade (possibly by the end of the year, there is no exact time yet), the transaction fees of the Ethereum Layer2 network will be greatly reduced. When the transaction fees of the Layer2 network get closer and closer to 0, it is likely to bring about a huge explosion in the Ethereum Layer2 ecosystem.
As the Ethereum Layer2 ecosystem develops more and more prosperously, the demand for cross-chain bridges will of course increase significantly. With the advantages of cross-chain bridge Orbiter, it will definitely gain a larger market.
2. The huge potential of Orbiter X and Orbiter Protocol
According to Orbiter's Roadmap, Maker System and Orbiter X will be released in Q2-Q3, but the specific date has not yet been determined.
Orbiter X is an enhanced version of Orbiter that provides a simple and secure platform for performing cross-chain and cross-asset transfers. Powered by the powerful Maker system and a decentralized cross-Rollup bridge, these features make Orbiter X an ideal choice for anyone who wants to transfer assets between different networks in a fast, secure, and cost-effective way.
According to the official Orbiter Medium introduction, Orbiter's goal is not only to serve as an L2 cross-chain bridge, but also to serve as the infrastructure for Ethereum expansion. Orbiter aims to become a general Ethereum protocol.
The Orbiter Protocol is centered around Ethereum scaling and is driven by a range of cutting-edge features such as zero-knowledge algorithms, EIP-4337 (account abstraction), recursive proofs, and message synchronization, which are designed to promote better scalability, interoperability, and security, thereby improving the overall usability and adoption of the Ethereum network.
Orbiter’s transition to Orbiter Protocol reflects the platform’s commitment to strengthening the Ethereum ecosystem.
By then, Orbiter will not only be a cross-chain bridge protocol, but also a general Ethereum base protocol, which undoubtedly raises our imagination about the future of Orbiter.
3. Expectations for issuing platform tokens
As we all know, although Orbiter has been online for more than two years and the project has developed quite well, Orbiter has not yet issued the project's native token, and the official has not disclosed any news about the coin issuance.
However, there have always been rumors that Orbiter is going to issue native tokens. Due to the project’s expectation of issuing tokens, many users use Orbiter to take advantage of airdrops.
In short, with the explosion of Ethereum Layer2, the demand for cross-chain bridges will also surge. As a leader in the Layer2 cross-chain bridge segment, coupled with the project's grand vision (to become the Ethereum basic protocol), Orbiter will surely develop better and better in the future. It is likely to become a leader and standard setter in Ethereum L2 cross-chain bridges. In addition, the project has not yet issued a native token, so Orbiter is a project that deserves our continued attention.
