NEAR Rainbow Bridge and the quest for interoperable protocols

The launch of the NEAR Rainbow Bridge demonstrates the push for greater interoperability between protocols

The push for interoperability

Hundreds of independent public blockchains exist, but most lack the ability to communicate with one another. This hinders the transfer of assets and data across chains, and the replication of protocol-specific applications on new chains.

To take advantage of their existing protocol security and communities, some developers build new layers and applications on top of these independent blockchains. Such multichain systems enable broader interoperability between applications and tokens, but are not a complete solution. Tokens built to operate within a specific protocol ecosystem, such as Tendermint, cannot go beyond those chains, and remain isolated from the broader crypto universe. 

Another technique for enabling cross-protocol transactions is to create wrapped assets, pegged to the value of another token. However, this often requires a centralized entity to hold the original asset — or decentralized, but expensive, solutions like tBTC.

Enhanced interoperability is an essential component of the crypto ecosystem’s evolution. The ability to communicate and share information between blockchains will improve the experience of participating in the blockchain ecosystem as a whole. It will increase adoption, build communities, and propel crypto toward becoming part of the mainstream financial system. But establishing a two-way connection between independently designed blockchains is not simple. For this reason, the launch of NEAR Rainbow Bridge is something to be applauded.

What is NEAR Rainbow Bridge?

NEAR, a recently launched protocol, focuses on user and developer experience for decentralized applications. As such, it needs to connect directly with Ethereum, the most popular protocol for applications, and provide its vibrant developer community with a simple way to use ETH on NEAR. The NEAR Rainbow Bridge provides this access — in a trustless and permissionless manner.

Most bridges require users to trust an additional component, such as a separate validator set, outside of the two base protocols. With Rainbow Bridge, a user need not trust any outside party’s security other than the miners and validators on the two individual chains. So long as they have faith in NEAR and Ethereum security, developers can use the bridge to take advantage of the lower gas fees on NEAR, without having to build a completely new user base.

The NEAR development team laid out the details of the bridge’s trustless nature in their excellent explanatory post: “To trust the bridge, you need to [trust] (1) that Ethereum blocks are final after X confirmations… currently [decided by the bridge] for the app developer, but soon app developers will be able to determine X for themselves, (2) that at no time, two-thirds of the validators stake on NEAR blockchain is dishonest…, and (3) that it is not possible to exponentially increase the minimum gas price of Ethereum blocks by more than 2x with every block for more than four hours.” (Point 3 is only relevant until EIP665 is accepted.)

All ERC-20 tokens (such as DAI, UNI, AAVE, and CRO) can be used on the bridge, and as of October 27, 2021 more than $78 million has been bridged. As the Ethereum ecosystem grows, so too can that of NEAR.

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Source: NEAR

Rainbow Bridge “allows any information that is cryptographically provable on NEAR to be usable in Ethereum contracts, and vice versa — including the ability to read the state and schedule calls with callbacks on the other chain.” Any developer can deploy and maintain the bridge, and anyone can use it by onboarding directly from MetaMask. The bridge can also adapt if and when either protocol is modified. Ethereum Virtual Machine (EVM) support, currently in development, will open up the ability for developers to launch Ethereum code directly on NEAR.

Rainbow Bridge is just the beginning for interoperability on NEAR. Because the bridge is built to be protocol agnostic, it has the potential to work as a tool for communication between NEAR and any other smart contract chain.

Interested in developing on NEAR? Check out our NEAR Query & Transact clusters that connect you directly to NEAR’s blockchain data.