{"id":19880,"date":"2023-07-10T20:03:11","date_gmt":"2023-07-10T20:03:11","guid":{"rendered":"https:\/\/nftandcrypto-news.com\/crypto\/connext-founder-proposes-sovereign-bridged-token-standard-after-multichain-incident\/"},"modified":"2023-07-10T20:03:13","modified_gmt":"2023-07-10T20:03:13","slug":"connext-founder-proposes-sovereign-bridged-token-standard-after-multichain-incident","status":"publish","type":"post","link":"https:\/\/nftandcrypto-news.com\/crypto\/connext-founder-proposes-sovereign-bridged-token-standard-after-multichain-incident\/","title":{"rendered":"Connext founder proposes ‘Sovereign Bridged Token’ standard after Multichain incident"},"content":{"rendered":"

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An Ethereum Improvement Proposal (EIP) made on July 7 seeks to standardize how tokens are bridged between networks. The \u201cSovereign Bridged Token\u201d standard, or EIP-7281, allows token issuers to create canonical bridges across multiple networks.\u00a0<\/p>\n

The proposal was co-authored by Arjun Bhuptani, founder of the Connext bridging protocol. In a July 7 social media post, Bhuptani claimed<\/a>\u00a0the protocol would help prevent issues like the July 6 Multichain incident, which some experts have described as a \u201chack.\u201d<\/p>\n

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Today’s @MultichainOrg<\/a> hack is a sad reminder of the systemic risks tokens face from bridges.<\/p>\n

We believe these risks stem from a single underlying problem:<\/p>\n

\u2728Token Sovereignty\u2728<\/p>\n

We’re proposing ERC-7281 (aka xERC20) – an open standard to fix this.https:\/\/t.co\/k9Vyd55Eb5<\/p>\n

1\/x<\/p>\n

\u2014 Arjun | ERC-7281 arc (@arjunbhuptani) July 7, 2023<\/a><\/p><\/blockquote>\n

According to the proposal\u2019s discussion page, it allows token issuers to designate a list of canonical bridges. Only bridges added to this list could mint an official version of the issuer\u2019s token. Issuers can also limit the number of tokens a bridge is allowed to mint. These parameters can be changed at virtually any time by the issuer.<\/p>\n

In Bhuptani\u2019s view, this proposal will ensure that \u201cownership of tokens is shifted away from bridges (canonical or 3rd party) into the hands of token issuers themselves\u201d and will limit losses if a bridge\u2019s security comes into question:<\/p>\n

\u201cIn the event of a hack or vulnerability for a given bridge (e.g. today\u2019s Multichain hack), issuer risk is capped to the rate limit of that bridge and issuers can seamlessly delist a bridge without needing to go through a painful and time-intensive migration process with users.\u201d<\/p><\/blockquote>\n

Related: <\/strong>$30B stolen from crypto ecosystem since 2012: Report<\/strong><\/em><\/p>\n

Bhuptani said the proposal would also help prevent user experience problems in decentralized finance, as all bridges will issue the same official token. Over time, this will eliminate the need for multiple versions of the same token, he claimed.<\/p>\n

Stablecoin issuer Circle has already created the Cross-Chain Transfer Protocol (CCTP) to list official bridges for its token, US Dollar Coin (USDC). EIP-7281 intends to implement the basic concept behind CCTP but also tries to make this solution apply \u201cmore broadly to all tokens,\u201d according to the proposal\u2019s notes.<\/p>\n

Both Circle and Tether have blacklisted some of the addresses used in the Multichain incident, preventing $65 million worth of USDC and Tether (USDT) from being moved out of these addresses.<\/p>\n<\/div>\n