The Evolution of Token Bridging: Why xSPACE?

In the context of the recent Multichain collapse, which significantly disrupted cross-chain operations by causing stuck bridge transactions and lack of liquidity on tokens wrapped via Multichain (any Token standard), xSPACE emerges as a pivotal solution. This scenario underscores the vulnerabilities inherent in previous bridging solutions and highlights the necessity for a more robust, secure, and efficient protocol for token bridging.

Multichain’s failure exemplified the risks associated with centralized control and single points of failure within cross-chain bridge designs. When Multichain’s operations were halted due to its key person being compromised, many projects, including Space Token, found their tokens stranded or lost on the bridge. This event led to a reevaluation of bridge security and the protocols that underpin them​​.

In response to similar challenges and the need for greater security and decentralization in token bridging, xSPACE, powered by the xERC20 protocol, provides a strategic alternative. xERC20 approach minimizes reliance on any single point of failure by implementing a decentralized lockbox mechanism and ensuring that tokens are wrapped into a standard format that maintains consistency and security across multiple blockchains. This approach not only enhances security but also facilitates seamless interactions between different blockchain ecosystems, as detailed in the xERC20 documentation​​.

In essence, the shift to xSPACE and xERC20 in response to the Multichain collapse signifies a significant advancement in the field of cross-chain token bridging. It addresses critical issues exposed by Multichain’s downfall, offering a framework that prioritizes user control, reduces complexity, and enhances interoperability across the decentralized finance (DeFi) landscape. This transition is crucial for projects seeking stability and reliability in their cross-chain interactions, ensuring that assets remain secure and transactions are verifiable across networks.

As a wrapped version of SPACE utilizing the innovative xERC20 protocol, xSPACE addresses the limitations and challenges left by the collapse of traditional systems like Multichain.

Understanding xERC20: The Backbone of xSPACE

xERC20 isn’t just another token standard; it’s a transformative approach designed to facilitate the secure and efficient transfer of tokens across blockchains. This protocol standardizes the process, ensuring consistency and interoperability without compromising on security.

How xERC20 Enhances Cross-Chain Interactions

Comparative Table between xERC20 and any Token Standards

Token Wrapping and Unwrapping

xERC20 allows for the “wrapping” of native tokens into a uniform format that can be used seamlessly across various blockchains. This process involves locking the original tokens in a smart contract on the source chain and minting an equivalent amount of xERC20 tokens on the destination chain.

Lockbox Mechanism

A key feature of the xERC20 protocol is its use of a lockbox system. This mechanism ensures that the original tokens are safely secured while their equivalents are active on another blockchain, providing a robust foundation for secure and verifiable transactions.

In our case, for SPACE, the native chain is the BNB Smart Chain (BSC). We have deployed a lockbox on BSC to enable users to bridge from the native chain to xSPACE (xERC20) safely, ensuring seamless and secure token transfers across networks.

Cross-Chain Compatibility

One of the primary advantages of xERC20 is its ability to ensure smooth and efficient interactions between different blockchain ecosystems and bridges. This compatibility is crucial for achieving true interoperability in the DeFi space, allowing for broader adoption and more innovative applications.

In the case of SPACE, the xERC20 protocol enables integration with multiple bridge solutions. We can grant bridges the right to mint tokens from our contract with specified rate limits, providing granular security controls. Currently, we have given these rights to the Connext Bridge and are considering integrating SPACE with other solutions like CCIP and LayerZero. The xERC20 protocol offers the flexibility to integrate with various bridges and the capability to revoke rights from any bridge solution if issues arise, ensuring maximum security and adaptability.

Ownership and Security

With the xERC20 standard, we can deploy and control their own native xSPACE tokens on each chain, instead of relying on bridge-controlled tokens. This approach allows bridges to be granted permission to mint tokens from the issuer’s contract with specified rate limits, ensuring granular security controls.

xERC20 incorporates advanced security protocols that manage permissions and safeguard transactions across networks. This setup enhances the security of cross-chain transfers and builds trust among users by mitigating common risks associated with bridging tokens.

Decentralization and Control

With xERC20, owners retain substantial control over their tokens. They can decide which bridges are approved to handle their assets, thus enhancing the decentralization and customization of the token handling process.

Improved Liquidity and Efficiency

The protocol facilitates better liquidity management by allowing tokens to move freely and efficiently across different blockchain ecosystems. This capability is essential for the success of DeFi applications, where liquidity is a key component.

Seamless Fungibility & Zero Slippage with xSPACE

Thanks to xERC20, users consistently receive the “official” xSPACE token when bridging. Utilizing the burn and mint mechanism, xSPACE issuers are relieved from the need to bootstrap liquidity, ensuring users benefit from cross-chain transactions without any slippage!

A Growing Ecosystem

The xERC20 ecosystem is rapidly expanding, with numerous projects leveraging its capabilities to enhance interoperability and functionality across the DeFi landscape.

Interoperability:

• Connext: Connext is a modular interoperability protocol that facilitates secure and fast cross-chain transactions. It enables applications to interact with users and tokens across various chains with low fees and latency. Connext’s xERC20 integration ensures seamless token transfers without slippage. The founder of Connext, Arjun Bhuptani, Pioneered the xERC20 standard.
• Router Protocol: Router Protocol is designed to solve cross-chain liquidity transfer issues by enabling cross-chain swaps and asset transfers in a single transaction. It supports various blockchains and offers tools like the CrossTalk Library and the PathFinder Algorithm, which optimize routes for efficient transactions.

DeFi:

• Alchemix: Alchemix offers innovative DeFi services, including self-repaying loans.
• Beefy Finance: A decentralized, multi-chain yield optimizer.

Restaking Protocols:

• Renzo Protocol: Renzo Protocol focuses on providing restaking services across multiple chains.
• KelpDAO

The xERC20 standard continues to grow, with various projects integrating its protocol to unlock new opportunities and drive innovation in the decentralized finance sector. By providing a standardized approach to cross-chain interactions, xERC20 is paving the way for a more interconnected and secure blockchain environment.

A New Era for SPACE

The current wrapped versions of SPACE on the Polygon and Avalanche C-Chain were initially facilitated by Multichain. In light of the need for enhanced security and autonomy over our token operations following the challenges experienced with Multichain, it is imperative that we progressively transition to xSPACE. This shift will ensure full control over SPACE token dynamics across different blockchains and mitigate risks associated with reliance on third-party bridge services.

What is xSPACE?

xSPACE is a wrapped version of the SPACE token utilizing the xERC20 protocol. It addresses the limitations and challenges left by the collapse of traditional systems like Multichain. Through xSPACE, we ensure full control over SPACE token dynamics across different blockchains, mitigating risks associated with reliance on third-party bridge services.

New SPACE Infrastructure Development

As we transition to xSPACE, the SPACE token will adopt the xERC20 protocol across various networks to bolster security, interoperability, and user trust. The xERC20 wrapped representation of SPACE has already been deployed on several networks including Ethereum, Gnosis, Optimism, and Arbitrum. These deployments aim to unify and secure the SPACE ecosystem across multiple chains.

Here are the links to view the xSPACE contracts on blockchain explorers:

• Optimism: 0x1D1498166DDCEeE616a6d99868e1E0677300056f
• Arbitrum: 0x1D1498166DDCEeE616a6d99868e1E0677300056f
• Gnosis: 0x1D1498166DDCEeE616a6d99868e1E0677300056f
• Polygon: 0x1D1498166DDCEeE616a6d99868e1E0677300056f
• Avalanche C-Chain: 0x1D1498166DDCEeE616a6d99868e1E0677300056f
• Ethereum: 0x1D1498166DDCEeE616a6d99868e1E0677300056f

Roadmap for Transition to xSPACE

Q2 2024: Listing of xSPACE on Final Autoclaim

• Implementation of xSPACE on Arbitrum and Optimism to Final Autoclaim.
• Launch of xSPACE on AMM, a liquidity pool will be created on each network.
• Launch of xSPACE LP staking pool on Final Autoclaim with an attractive APR higher than 50%, incentivizing early adopters and liquidity providers.

Q3 2024: Progressive Integration and Liquidity Transition on Polygon

• xSPACE listing on Final Autoclaim for the Polygon network.
• Old SPACE (Multichain — any Token Current version) withdrawal disabling on Final Autoclaim for the Polygon network. Users will be able to migrate their SPACE to xSPACE on polygon at a 1:1 ratio here: https://migration.spacetoken.tech
• Gradual liquidity transition from old SPACE to xSPACE on Polygon with xSPACE LP staking pool incentives, to ensure stability and minimize market disruption. This will be meticulously planned to maintain liquidity depth and trading efficiency. Polygon Liquidity Provided on the original SPACE (oSPACE) LP pool will still be counted during this period.

Q4 2024: Liquidity Transition end on Polygon and launch on Gnosis

• Liquidity provided for the old SPACE (Multichain — Current version) on Polygon network/Quickswap is not counted anymore on SPACE LP pool.
• Implementation of xSPACE on Gnosis to Final Autoclaim.
• Launch of xSPACE on Gnosis AMM, a liquidity pool will be created on Gnosis.

Q1 2025: Progressive Integration and Liquidity Transition on Avalanche

• xSPACE listing on Final Autoclaim for the Avalanche C-Chain.
• SPACE (Multichain — any Token Current version) withdrawal disabling on Final Autoclaim for the Avalanche C-Chain. Users will be able to migrate their SPACE to xSPACE on Avalanche at a 1:1 ratio here: https://migration.spacetoken.tech
• Gradual liquidity transition from SPACE to xSPACE on Avalanche C-Chain with xSPACE LP staking pool incentives. Avalanche Liquidity Provided on the original SPACE (oSPACE) LP pool will still be counted during this period.

Q2 2025: Liquidity Transition end on Avalanche

• Liquidity provided for the old SPACE (Multichain — Current version) on Avalanche/TraderJoe is not counted anymore on SPACE LP pool.

Conclusion

xSPACE, powered by the xERC20 protocol, is setting new standards in how we think about and execute token bridging. By reducing complexity, enhancing security, and improving liquidity, xERC20 makes it easier and safer for everyone to engage with the decentralized world. Stay tuned as we continue to explore the potential of xSPACE in our next post, detailing specific use cases and the broader impact on the crypto ecosystem.

The progressive migration to xSPACE will ensure that our token operations are secure and efficient across multiple blockchains. It will be carefully managed to avoid liquidity issues and minimize price variations.

We are committed to ensuring that our token operations are secure and efficient across multiple blockchains. Starting with deployments on Ethereum, Gnosis, Optimism, Arbitrum, Polygon, and Avalanche, we aims to provide a stable and reliable cross-chain token.