It is becoming increasingly clear that the only way to scale the blockchain and make it useful for enterprises is by using sidechains. In this blog, we explore the use case of cross-chain transactions with Multi-chain Solutions and how StarkNet’s Ethereum L2 solution can be used to deliver faster and cheaper crypto transactions.
To understand why cross-chain transactions are needed, let us first look at some common use cases. Imagine Alice owns some tokens on one chain (e.g., Bitcoin) but wishes to transfer them to another chain (e.g., Ethereum). Or maybe Bob has bought some tokens on one chain (e.g., Ether) but wishes to transfer them back to another chain (e.g., Bitcoin). MakerDao is planning on bringing the ultimate L2 multichain solution.
With $14.5 billion in TVL, MakerDAO is the largest lending protocol in DeFi. On April 28, MakerDAO will deploy its scaling solution StarkNet on Ethereum L2 (L2).
Making its first foray into zero-knowledge based rollups, StarkNet follows MakerDAO’s deployment of bridges to its optimistic rollups Arbitrum and Optimism. “There are two approaches to rollups: optimistic and zero-knowledge – their main difference lies in how the transaction data is posted to L1.”.
As a proof of validity, zero-knowledge rollups like StarkNet use compressed data to be sent to the Ethereum Mainnet as proof. A fault proof is run in the case of an invalid transaction if it is suspected in optimistic rollups like Arbitrum and Optimism.
An Israeli startup, StarkWare, created StarkNet with investors such as Sequoia, Paradigm, and Coinbase Ventures. There are over $1.16B in TVL, 145M transactions, and dYdX, Sorare, and Immutable use the StarkNet permissionless platform.
Eli Ben-Sasson, StarkWare’s co-founder, remarked about the new integration, “[MakerDAO’s] choice to deploy over StarkNet confirms StarkNet’s promise as a validator and will help to make it decentralized and user-friendly.”
“MakerDAO’s choice to deploy over StarkNet is another endorsement of StarkNet’s validity roll-up and further does away with the centralized nature of StarkNet and makes it more developer-centric.”
In 2017, MakerDAO released DAI, the first dollar-pegged stablecoin in the world. Through the StarkNet integration and Maker Wormhole (MakerDAO’s solution for bridging between Ethereum ecosystems), users can move DAI frictionlessly between L2 protocols and between L2 and L1.
MakerDao’s Multichain Strategy
The StarkNet integration also reduces mint time, improves liquidation experience, and reduces gas costs significantly. According to the Ethereum Foundation, layer-2 transactions have a 100x lower gas fee than mainnet transactions.
Maker originally approached StarkWare about collaborating. Maciek Kaminski, a MakerDAO software developer, told The Defiant that StarkNet was the first ZK-type rollup with a working testnet.
“ZK-Rollups drastically reduce the computing and storage resources needed for block validation, something that is highly sought after across a variety of disciplines in blockchain. It seemed a natural fit to team up with StarkNet to deliver this to Maker, since they ensure faster transactions and keep gas fees low,” he said.
MakerDAO’s multichain strategy goes a step further with the StarkNet integration. By integrating with MakerDAO, the MakerDAO team hopes to increase user numbers as well as accelerate integration with other scaling services and sidechains. Making Maker Vaults and DAI as widely available as possible is part of a larger plan to grow user numbers and establish MakerDAO’s prominence.
As for risk and security management, Kaminski said, “Throughout the process, we ensure that engineering best practices are adhered to and evaluated through various audits.” Damage control has been ensured by limiting the number of operational bridges and transactions. The circuit breaker has also been introduced. The integration now includes censorship resistance, deposit cancellation, and forced withdrawals.”
In the first phase of the integration, MakerDAO has built a bridge with a wallet interface. The team will then release the ability to make fast withdrawals, teleport DAI quickly across Layer-2, and finally implement all of MakerDAO on StarkNet.
Via this site.
Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
