Cross-Chain Proof

Proofs allow liquidity to be utilized across ecosystems without fragmentation. Cross-chain yield aggregators and DEX aggregators find the best rates by verifying pool states and user balances across multiple chains.

• A user can supply liquidity on a Solana DEX while using it as collateral to borrow on Ethereum, with proofs securing the state verification.
• Projects like THORChain use a variation of cross-chain proofs to facilitate native asset swaps (e.g., BTC for ETH) without wrapping, relying on its internal proof system to verify reserve states.

Several major protocols have standardized cross-chain proof mechanisms:

• IBC (Inter-Blockchain Communication): Used by the Cosmos ecosystem, IBC relies on light client proofs where chains maintain light clients of each other to verify transaction proofs. It's the backbone for connecting sovereign Cosmos SDK chains.
• LayerZero: Uses an Ultra Light Node (ULN) design, where on-chain light clients verify proofs generated by off-chain Oracles and Relayers.
• Wormhole: Employs a Guardian network of nodes to observe and collectively sign (attest) events, producing a Verified Action Approval (VAA) that serves as the verifiable cross-chain proof.

Different cryptographic methods underpin various cross-chain proof implementations:

• ZK Proofs (Validity Proofs): zkBridge projects use succinct zero-knowledge proofs to verify block headers or state transitions from a source chain. This offers strong security with minimal on-chain verification cost.
• Fraud Proofs (Optimistic): Used by many optimistic rollup bridges. A claim about the source chain state is published, and a challenge period allows anyone to submit a fraud proof if the claim is incorrect.
• Light Client Proofs: Chains verify Merkle proofs against a known block header from the other chain's consensus, as seen in IBC.

The implementation of the proof mechanism defines the security model and associated risks:

• Trust Assumptions: Does the proof system rely on a committee, a federation, or pure cryptography? Light client/ZK proofs minimize trust, while multisig bridges introduce significant trust assumptions.
• Liveness vs. Safety: Optimistic systems prioritize liveness but have a delay for safety (challenge period). Validity proof systems prioritize immediate safety.
• Economic Security: The cost to generate a false proof versus the cost to slash the prover's stake (in proof-of-stake systems) is a critical economic parameter.
• Verifier Complexity: The on-chain cost and complexity of verifying a proof can limit which chains can act as destinations.

Beyond simple transactions, cross-chain proofs can verify the entire state root or specific state proofs (Merkle proofs) of a source chain. This allows one blockchain to trustlessly read and act upon the verified state of another.

• Mechanism: A light client on the destination chain validates block headers from the source. It can then verify the inclusion of specific transactions or account balances via Merkle proofs.
• Application: A lending protocol on Avalanche can verify a user's NFT ownership on Ethereum to grant a loan.

By enabling secure asset movement, cross-chain proofs break down liquidity silos. This creates a composable DeFi ecosystem where protocols on different chains can interact, pooling capital and functionality.

• Result: Liquidity from Ethereum, Solana, and Avalanche can be aggregated for a single lending market or DEX.
• Benefit: Reduces fragmentation, improves capital efficiency, and opens access to a wider range of assets and yields.

In a modular blockchain architecture (separating execution, settlement, consensus, data availability), cross-chain proofs are the glue. They allow a rollup (execution layer) to prove its state to a settlement layer, or a sovereign chain to leverage a shared data availability layer.

• Celestia: Uses data availability sampling proofs.
• EigenLayer: Restakers can opt-in to validate proofs for new chains.
• Cosmos IBC: Relies on light client proofs for inter-chain communication.

The security of a cross-chain proof depends on its underlying trust model. Key models include:

• Cryptoeconomic Security: Relies on a decentralized network of validators/stakers (e.g., PoS) with significant value at risk (slashing).
• Optimistic Security: Assumes validity unless a fraud proof is submitted within a challenge period, relying on at least one honest watcher.
• Multi-Party Computation (MPC): Security depends on the honesty of a threshold of participants in a signing committee.
• Light Client/Relay: Security is derived directly from the source chain's consensus, requiring verification of block headers.

Proofs are only as good as the data they reference. Critical risks include:

• Data Unavailability: If the source chain's transaction or state data is withheld, a valid proof cannot be constructed, halting the bridge.
• Censorship Attacks: Malicious validators on the source chain may censor transactions meant for the bridge, preventing proof generation.
• Solution: Systems like Data Availability Committees (DACs) or Data Availability Sampling (DAS) using technologies like Ethereum danksharding or Celestia aim to guarantee data is published.

The on-chain verifier contract on the destination chain is a critical attack surface.

• Implementation Bugs: Flaws in the verification logic (e.g., incorrect signature aggregation check, wrong light client update rule) can allow invalid proofs to be accepted.
• Upgradeability Risks: Admin keys or multi-sigs controlling the verifier contract can be a central point of failure if compromised.
• Prevention: Requires extensive audits, formal verification, and minimizing upgradeability or implementing robust timelocks and decentralized governance.

Attackers may target the economic incentives or liveness of the proof system.

• Long-Range Attacks: In proof-of-stake systems, an attacker acquiring old private keys could forge a fraudulent historical chain. Light clients must implement proper weak subjectivity checkpoints.
• Stalling Attacks: An attacker with sufficient stake in a validator set could halt proof generation, causing a liveness failure.
• Bribery Attacks: Coordinating bribery to corrupt a threshold of MPC or multisig signers.
• Cost of Corruption: A key metric is the total cost required to compromise the system versus the potential profit.

The network of relayers that submit proofs can introduce risks.

• Malicious Relayer: A relayer could submit a delayed or incorrect proof, though the verifier contract should reject invalid ones.
• MEV & Frontrunning: Relayers may engage in Maximal Extractable Value (MEV) by frontrunning user transactions on the destination chain after proof submission.
• Censorship: Relayers could censor which proofs are submitted. Permissionless relaying and incentives help mitigate this.
• Solution: Using threshold encryption for transactions until they are executable can prevent frontrunning.

For proof systems based on multi-sigs or MPC, the security of private keys is fundamental.

• Key Compromise: A single point of failure if a multi-sig key is leaked or an MPC participant is corrupted.
• Distributed Key Generation (DKG): A secure DKG ceremony is crucial for MPC setups to prevent key leakage during initialization.
• Geographic & Client Diversity: Signers should use diverse infrastructure and client software to avoid correlated failures.
• Hardware Security Modules (HSMs) are often used, but their configuration and management introduce operational security challenges.

A light client is a piece of software that can verify blockchain state without running a full node. State proofs (or light client proofs) are the compact, verifiable cryptographic proofs they use. This is a foundational technology for many cross-chain proof systems, as it allows a destination chain to efficiently verify the state of a source chain's consensus. Protocols like IBC (Inter-Blockchain Communication) rely heavily on light client verification for secure cross-chain messaging.

Optimistic verification is a security model that assumes transactions or state proofs are valid by default, but includes a challenge period during which any observer can cryptographically prove fraud. This "optimistic" approach reduces the immediate computational cost of verification. It's commonly used in cross-chain bridges (e.g., Optimism's bridge) and rollups. The system relies on the economic incentive for watchers to submit fraud proofs to slash malicious actors.

An atomic swap is a peer-to-peer exchange of cryptocurrencies across different blockchains without a trusted intermediary. It uses Hash Time-Locked Contracts (HTLCs) to ensure the swap either completes entirely for both parties or fails entirely, preventing one side from stealing funds. While atomic swaps are a form of cross-chain interaction, they typically do not require a generalized cross-chain proof of state; they rely on the cryptographic conditions within the HTLCs on both chains.