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Posted on Jan 04, 2023Read on Mirror.xyz

The Interchain Highway: What is Hyperlane?

Introduction

Hyperlane is an interoperability protocol for blockchains, layer 2s, and appchains. Rather than a token bridge or a blockchain, Hyperlane is infrastructure between blockchains which it calls the “Interchain Highway”. It enables the swift and secure transfer of data across different networks and is live on all major EVM chains.

Applications can go interchain by plugging into Hyperlane’s robust, modular messaging infrastructure (API), or developers can use the Hyperlane SDK to seamlessly build interchain applications from scratch. Simply put, interchain applications are accessible from any network that Hyperlane is live on.

The Problem

Separate blockchains need special infrastructure to communicate with each other. This is known as the interoperability problem, and bridges are the most common approach to this problem today. However, bridges are functionally limited. They only specialize in moving tokens from chain to chain, and they are notoriously insecure.

Today, applications deploy copies of themselves on any chains they want to be usable on. These multichain deployments cannot connect with each other and share liquidity, so each copy is limited to the liquidity available on its chain. As such, multichain apps often rely on bridges to grow and suffer from fragmented liquidity.

Modern interoperability approaches for transferring arbitrary data have their own limitations too. Something like Axelar’s single validator set restricts scalability, and LayerZero suffers from substantial centralization risk. In short, blockchains today need more decentralized, scalable, and frictionless infrastructure for interoperability.

The Goal

As the “Interchain Highway”, Hyperlane’s messaging system brings interoperability to the application level. Once an application goes interchain with Hyperlane, deployments can interact with each other as one. Interchain applications do not suffer from fragmentation like multichain applications do, and can go as far as being usable on chains they aren’t deployed on.

This infrastructure is both decentralized and highly scalable; two traits that current messaging protocols need to compromise between. Hyperlane takes a modular approach, so every chain has its own PoS validator set(s) for processing messages. Applications can even customize their interchain security to meet their protocol’s specific needs, thanks to Hyperlane’s “Sovereign Consensus”.

How Does it Work?

Hyperlane facilitates the transfer of data from one blockchain application to another. Usually, this data is someone executing an action on one chain from another chain (taking out a loan, depositing liquidity, etc). Data is sent in the form of a message that will be approved by a set of validators before it is sent.

Visual analogizing a message sent from Chain A to Chain B via Hyperlane (SOURCE: https://medium.com/hyperlane/the-hyperlane-message-lifecycle-with-ugly-pictures-f82f59cab51f)

Hyperlane validators act as the base security layer of the protocol. These validators and a blockchain’s validators are two separate entities (transactions approved by Hyperlane can still fail). Hyperlane validators do not change state, they only validate data being sent cross-chain.

Currently validators are permissioned, but this changes when the token launches. Validators will be bound by the rules of proof-of-stake, so they must stake the Hyperlane token to start validating messages on their desired chain. They earn staking rewards for their work, and will have their stake slashed if they behave maliciously. Anyone can become a validator, and applications can choose the validator set they use for processing messages.

Slashing is enforced by Watchtowers using verifiable fraud proofs. This is an arguably much more secure approach than what current messaging systems use, since it eliminates a situation where rogue validators could control whether or not they are slashed. Validators also process messages in bundles to improve censorship resistance, so they cannot censor individual messages.

Visual explaining the interchain messaging system from the docs

Once a transaction has been approved by validators, the message is sent to a Relayer who moves to finally submit it to the recipient. Relayers do not earn rewards from the protocol, but set their own fee rate and collect fees paid for their services. Anyone can become a Relayer.

Beyond this proof-of-stake base layer, applications can further design their security to their own standards. Sovereign Consensus is an application’s ability to customize their interchain security on Hyperlane. Developers can choose an additional consensus mechanism to process messages after Hyperlane PoS validators have validated it.

This acts as an extra layer of protection, and apps can go as far as taking a hybrid approach and leverage multiple security models to process different types of messages. These configurable security models are known as “Interchain Security Modules” (ISMs).

Visual from before, now appropriately naming roles and actions (SOURCE: https://medium.com/hyperlane/the-hyperlane-message-lifecycle-with-ugly-pictures-f82f59cab51f)

Hyperlane is currently live on Ethereum, Arbitrum, Optimism, Polygon, BNB Chain, Avalanche, Celo, and Moonbeam. This year Hyperlane plans to expand support for permissionless deployments on both EVM and non-EVM networks such as Solana or Cosmos IBC.

Partnerships

Everstake, a large staking platform validating on over 70 different networks, has recently announced a partnership with Hyperlane. It will add Hyperlane to its staking service and start running a validator node once the token/staking has launched.

Applications such as the Yama Finance stablecoin protocol are looking to leverage Hyperlane for their products. Yama is an omnichain CDP stablecoin protocol where users can deposit collateral and mint $YAMA from any Hyperlane chain. Although not live yet, it will utilize the Interchain Highway for its omnichain protocol design.

There are plenty more deployments on Hyperlane in development as well, such as interchain AMMs, governance protocols, stablecoins, wallets, and other infrastructure. Hyperlane’s potential beyond these use cases is infinite like interchain compute, payments, NFTs, zap deposits, and more.

Tokenomics

There are no official details yet on the Hyperlane token, besides using it to power the protocol’s proof-of-stake layer. The token can be staked to validate interchain messages, and stakers will earn rewards (emissions) for securing the network. Stakers must wait 21 days before they can access their unstaked tokens.

Conclusion

Hyperlane introduces a novel strategy for blockchain interoperability that is not only decentralized, but scalable. With its modular messaging system and permissionless slashing, Hyperlane makes significant strides in areas that other messaging protocols struggle to balance well.

Blockchain interoperability is undoubtedly the future, and the Interchain Highway may be a lasting innovation this field needs.


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