As we announced in our earlier post, Router is a cross-chain liquidity protocol that will be aggregating liquidity across various blockchains including both Layer 1 and Layer 2 chains.
The market is littered with fragmented liquidity pools and creating the infrastructure that bridges the gap between them is becoming increasingly important.
Router is starting with Matic <-> Ethereum, but our plans are bigger
While Ethereum has laid down the foundation for decentralized finance, the world’s second-largest blockchain is yet to release its true potential. The network has notoriously suffered from scalability and congestion issues, putting billions of dollars in locked value at risk. Ethereum’s second iteration, Eth 2.0, is set to transition the network to a proof-of-stake system that would, in theory, solve this problem.
Current fees in the Ethereum network make it impossible to trade for small players, even large players may find the fees to be too much. With the rising ETH price and the increasing network activity, paying more than $10 for simple transactions is too expensive.
However, Ethereum’s full transition to PoS is still months, and possibly even years away.
This is where Layer 2 solutions such as the Matic Network step in. Matic brings massive scale to Ethereum by using a version of Plasma with side chains based on PoS. The adapted version of the Plasma framework provides a solution for faster and extremely low-cost transactions with finality on the main chain.
Matic also has a huge and vibrant eco-system with hundreds of DApps and a supportive community of users. Some of the popular Dapps on the Matic network are Oropocket, Polymarket, and EasyFi. The Router team is a big fan of Matic because of a variety of reasons — first and foremost the product technology is advanced, open-source, and the developer support is amazing. Deployment is straightforward, code is well documented, the transaction throughput is high while the network is scalable.
Matic’s system works by using PoS “public” Plasma checkpoint nodes which are pushed to the Ethereum mainchain. These nodes are connected to Ethereum via a “deposit bridge” and can theoretically achieve 216 transactions per block. In theory, the network could handle millions of transactions per second on multiple chains in the future.
This is a significant improvement over the 100,000 transactions per second Eth 2.0 promises to achieve in the following years. While Ethereum will need to overcome significant technical hurdles before its sharding process can enable this kind of throughput, Matic can already handle up to 65,000 transactions per second on a single chain.
A bridge between Matic and Ethereum will provide a scaling solution to Ethereum that is near-instant, low-cost, and incredibly flexible. The flexibility is a direct result of Matic’s dual-consensus architecture, utilizing both a Plasma-based and a PoS-based platform to optimize for speed. The system has consciously been designed to support arbitrary state transitions on its sidechains, all of which are EVM-enabled.
Crossing the bridge doesn’t change the circulating supply of a token issued on Matic or Ethereum — tokens that leave Ethereum are locked and the same number of tokens are minted on the Matic Network as a 1:1 pegged token. When tokens are moved back to the Ethereum network, they are burned on Matic and unlocked on Ethereum.
Matic’s highly-flexible network supports all kinds of Ethereum token standards, including ETH, ERC20, ERC721, ERC1155, and others.
Introducing a liquidity bridge between Matic Network and Ethereum enables the users to get the best of both worlds. The Matic community will now be able to reap the benefits of Ethereum’s huge liquidity, while Ethereum users can utilize Matic’s scalability and high-throughput.
This kind of cross-chain bridging infrastructure will promote liquidity migration and developer efforts towards emerging blockchain solutions such as Matic. Blockchain’s tight-knit community has fully backed the idea of introducing an Ethereum liquidity bridge and is eager to participate in building a thriving, bustling blockchain ecosystem.