TOKI Achieved Cross-chain Transfers of Japanese Stablecoin via IBC on Public Testnets between Ethereum and BNB Chain
TOKI’s IBC-based cross-chain technology has now successfully facilitated transfers between Ethereum and BNB Chain on a public testnet of both networks!
Japanese financial institutions have begun adopting the IBC protocol, starting with stablecoin cross-chain transfers. This represents a significant leap forward for the IBC and TOKI communities.
Let’s dive into the details!
Introduction
TOKI is developing a cross-chain infrastructure in partnership with Progmat, a joint venture backed by Japan’s largest financial institutions, to issue Japan’s regulated stablecoins. This infrastructure enables Japanese-regulated stablecoins to be interoperable among multiple chains by seamlessly leveraging the Inter-Blockchain Communication Protocol (IBC).
As the first step, we employed the ICS-20 compliant lock-and-mint approach and completed cross-chain transfer from Ethereum to BNB Chain. This marks a significant milestone in the implementation of a burn-and-mint mechanism that facilitates the native token cross-chain swap between multiple blockchains through IBC. This burn-and-mint approach is what Circle’s CCTP (Cross-Chain Transfer Protocol) has adopted for USDC’s cross-chain transfer.
In other words, TOKI is developing an equivalent system using IBC, a more open protocol.
TOKI will initially support Ethereum and BNB Chain; however, we plan to broaden our reach to include additional networks such as Noble, L2s, and other major blockchains.
Additionally, we are delighted to announce the launch of our Discord server for the testnet launch of our IBC-enabled bridge. We aim to refine our product with input from our community and reward early supporters. Let’s embark on our journey together!
What is TOKI
TOKI is an IBC-enabled cross-chain bridge that connects Ethereum, BNB Chain, Cosmos, L2, and other major blockchains. TOKI expands IBC to non-Cosmos blockchains by replacing light client verification through its multi-prover approach combining Intel SGX and MPC (Multi-Party Computation). This approach enables interoperability via IBC securely while keeping the verification cost at a low level.
To learn more about TOKI’s security model and its multi-prover approach, please visit the link below.
The initial applications on top of TOKI’s cross-chain infrastructure are as follows:
- Unified liquidity
- Burn-and-mint transfer for stablecoins
(The initial implementation will start with Progmat.)
Both will enable efficient cross-chain native token swap via IBC.
More details: https://tokifinance.notion.site/
What is Progmat’s Stablecoin
Progmat is a joint venture composed of major financial institutions in Japan and tech firms, providing a security token platform and a stablecoin platform in collaboration with various partners. For example, Binance Japan and the largest Japanese banks have been exploring issuing their stablecoins using Progmat’s stablecoin platform.
Progmat’s stablecoin will be pegged to currencies such as USD and JPY and plans to expand across multiple chains, including Ethereum. One of the key features is that the fiat currency assets serving as collateral are 100% deposited in a trust bank, unlike other stablecoins, ensuring the safety of the collateral assets even if the stablecoin issuer fails. Furthermore, due to the trust bank’s ‘bankruptcy remote’ feature, the deposited assets remain protected even in the event of the trust bank’s failure, making it one of the most reliable stablecoins in the world.
In the second half of 2024, a USD-pegged stablecoin is expected to be issued on Ethereum using Progmat’s platform. Discussions are also underway for its use within the interchain in collaboration with Noble.
The stablecoin is being considered not only for use in the crypto space, but also for enterprise use in international remittances, international trade, and other B2B transactions, potentially replacing significant real-world transactions. Besides the reliability of the stablecoin platform, its classification as an ‘electronic payment method’ — not as a cryptocurrency — under Japan’s Payment Service Act makes it more appealing for enterprises to consider.
How we Enabled Cross-chain Transfer
As mentioned in the introduction, TOKI successfully enabled the cross-chain transfer of an ERC20-compatible token, designed as a stablecoin, on Ethereum (Sepolia) to BNB Chain testnets using IBC. The transfer was conducted through a lock-and-mint mechanism compliant with ICS-20.
The high-level architecture is shown below.
Here are the major components in the above diagram:
- ibc-solidity: IBC implementation in Solidity, which enables IBC in EVM blockchains.
- Relayer: we use yui-relayer, a forked version of Go Relayer and it supports heterogeneous blockchains using the abstraction of “chain” (communication module to chain) and “prover” (commitment and proof).
- ICS-20: a standard for fungible token transfer.
- LCP client: light client to verify commitments generated in LCP.
- Stablecoin: ERC-20 token, designed for stablecoins.
- LCP (nodes): a middleware to replace light client verification using Intel SGX (TEE).
Additionally, we’re committed to further enhancing security by adopting a multi-prover approach that combines MPC (Multi-Party Computation) with SGX. We covered this in a recent blog post, so please check it out if you’re interested in our security model.
Results
We conducted cross-chain transfers from Ethereum to BNB Chain, as illustrated by the following sequence diagram.
ICS20Bank and ICS20TransferBank are contracts in ibc-solidity, with the texts on the arrows indicating the names of functions in each contract. To learn more about each function, you can refer to the provided text links for both contracts.
You can view the actual testnet transactions on Etherscan and BscScan. The major transactions are as follows:
Approve: Set the amount and approve the same amount of stablecoin.
https://sepolia.etherscan.io/tx/0xfe0789f19dd1efa0cb5d63936d4f00ddfc1d1fe702293410e1168d2d16e445d6deposit: Lock the stablecoin on Ethereum.
https://sepolia.etherscan.io/tx/0xfe0789f19dd1efa0cb5d63936d4f00ddfc1d1fe702293410e1168d2d16e445d6sendTransfer: Request transfer of the locked amount of stablecoin.
https://sepolia.etherscan.io/tx/0x094f34a85ae467cc918a54c82785349484a66b37f451029ee9c069637c82f31donRecvPacket: Receive a packet from Relayer. The callback of ICS20 is called from this method, and the corresponding amount of stablecoin is minted on BNB Chain.
https://testnet.bscscan.com/tx/0xc04ac163c63ccf2f8d9e32fc72a372539a0f7768de9938229bf1050d47050ec2
* You can contact us if you want to know more details about these transactions (contact [at] toki.finance )
Roadmap
Stablecoins will be issued on Progmat’s stablecoin platform in the second half of 2024. In line with the launch of these stablecoins, TOKI will implement a burn-and-mint mechanism to facilitate the cross-chain native token swap through IBC.
Like Circle’s CCTP does for USDC, but open, and on IBC.
The possibility to execute cross-chain transfer of native stablecoins through the burn-and-mint mechanism via IBC will be a groundbreaking development. At TOKI, we’re initiating this process with the stablecoin issued on the Progmat platform, aiming to inspire a broad adoption of this approach among numerous other stablecoins going forward.
Please follow on X (@tokifinance) and join our Discord to stay up to date!
TOKI’s Discord is LIVE!
We are delighted to announce that TOKI has launched our Discord server for the testnet launch of our IBC infrastructure.
TOKI’s IBC-enabled cross-chain infrastructure is set to launch on the testnets of Ethereum and BNB Chain in the first half of 2024. Our goal is to refine our product with feedback from our community, and we plan to reward early supporters. Join us on Discord!
Follow us on X (formerly Twitter) and see our Linktree page for more details.
