Sifchain is proud to announce that it has successfully deployed a Peggy (Cosmos <> Ethereum bridge) on its Merry-Go-Round testnet. Sifchain is a cryptocurrency exchange protocol built on Cosmos SDK and will target 20–25 blockchains (such as Ethereum and Stellar) for cross-chain integration. It will also simplify the process of blockchain integration, lowering the development process for the Cosmos community so that additional cross-chain integrations will be cost minimized in terms of money and developer resources.
Sifchain’s goal is for new blockchains to consider cross-chain integration as essential as a wallet or block explorer. Liquidity from all cryptocurrencies can then be accessed on-chain, allowing the coordinated deployment of capital from all cryptocurrencies by DAOs.
Sifchain has deployed a persistent deployment of Peggy on a standing testnet, in parallel with Althea’s version of Peggy. Sifchain leverages the power of the Cosmos SDK to deploy a Peggy chain on mainnet. Sifchain uses Cosmos’ master branch Peggy with work created by a Swish Labs team under an Interchain Foundation grant. Like Althea Peggy, Sifchain’s approach to Peggy allows users of ETH and ERC-20 tokens on Ethereum to create pegged tokens on a Cosmos Network chain.
In both systems, an Ethereum user can send tokens from their Ethereum wallet to a Peggy smart contract running on Ethereum. Peggy validators observing the Peggy smart contract keep those Ethereum tokens in a lockup group and mint a corresponding allocation of pegged tokens to a user’s Cosmos Network wallet address.
The difference in the two lies in their cryptoeconomic security model. Althea Peggy uses the validators of its destination chain as signatories of the Peggy smart contract, meaning it relies on the destination chain’s consensus when minting pegged Ethereum tokens. The original vision of a peg zone is to use a different set of validators on a different blockchain that is connected the Cosmos Hub via IBC.
You start at the Cosmos Hub. You move Photons via IBC to the peg zone. The peg zone receives an incoming IBC packet: a message containing a transaction for sending Photons.
A reason to have a separate blockchain is that it allows a unique validator set with its own separate staking collateral to provide cryptoeconomic security for the funds being pegged that is separate from the validator set of the destination chain and the collateral it staked for transactions internal to the destination chain.
In short, in general, pegs to PoW chains or any governless chains require overcollateralization.
Consensus-based peg collateralization requires the safe handling of +1/3 Byzantine faults, which means that some form of interchain staking is necessary. It isn’t sufficient to slap a peg to Ethereum on the Cosmos Hub and require that all ATOM takers also stake on the Ethereum peg, because nothing is keeping the hub accountable in the case of +1/3 failure.
https://github.com/jaekwon/cosmos_roadmap/tree/master/shape_of_cosmos#token-pegging-to-pow
By contrast, Sifchain uses a Peggy deployment with a separate peg zone blcokchain in which Peggy validators stake collateral specifically used to secure the bridge and they are subject to slashing as per Tendermint consensus rules on both the Cosmos SDK peg zone chain and the Ethereum smart contract side of that bridge. This solves the aforementioned cryptoeconomic security issue on the bridge. In exchange for being subject to this new slashing requirement, validators earn a service rate. Althea trades off trust minimization in exchange for simple design whereas Sifchain trades off simple design for maximizing trustlessness supported by cryptoeconomic incentives
You can find details on Peggy’s implementation here: https://github.com/Sifchain/peggy/blob/develop/docs/sifchain-peggy-architecture.md
Note that Sifchain will likely launch its betanet with live cryptocurrency before IBC is ready for production. In that case, it would use a modified architecture as per this ADR in which Peggy was deployed directly onto Sifchain instead of having its own peg zone validator set. Some of Sifchain’s validators would simply have Peggy admin privileges similar to Althea Peggy.
We see Peggy’s deployment as a hallmark moment for growth of the Cosmos Network. With Peggy and IBC, Ethereum users will be able to use their ETH and ERC20 tokens on Cosmos SDK platforms such as Kava, Akash, Terra, e-Money, IRIS, Secret Network, and of course, the Cosmos Hub. Cosmos Network users will also be able to use their tokens on Ethereum and take advantage of its dapp network. Cryptocurrency holders on both sides will be able to take advantage of the benefits of one chain while holding a position on a token native to another, bringing us one step closer to Sifchain’s mission of connecting liquidity on all blockchains.
You can help us make this vision for Peggy a reality by standing up a testnet validator yourself. Members from our team and the broader Sifchain community can help you with any issues on Discord.
If you have any additional questions or would like to discuss with fellow community members, join our communities below!
🌾 Telegram: https://t.me/sifchain
🌾 Twitter: https://twitter.com/sifchain
🌾 Discord: https://discord.gg/Rcr2vU54Ys
🌾 Website: https://www.sifchain.finance
🌾 LitePaper: https://bit.ly/SifChainLitepaper
🌾 Economics Paper: https://bit.ly/2V2Xc8f
