The rise of blockchain technology has paved the way for a new financial dimension to the internet, creating a vast and diverse "Internet of Money" made up of many blockchains. However, these blockchains suffer from a lack of interoperability. This has created significant obstacles for users who want to use the latest cutting-edge protocols on less popular chains, in the "Long Tail of Blockchains". As a result, these chains (and their dApps) struggle to gain economic interest and widespread adoption.
Making it easy for users to exchange dominant tokens on main chains (e.g. ETH on Ethereum) for tokens on less prominent chains can break this economic barrier. Enabling such cross-chain exchanges could potentially route billions of dollars in transactions to these chains, their protocols, and builders.
This white paper explores the underlying challenges and proposes a comprehensive solution to increase interoperability and user adoption across the Web3 ecosystem at large.
A fragmented ecosystem
Since the creation of Bitcoin, the first decentralized ledger currency, in 2008, a variety of heterogeneous distributed ledgers with varying designs and functionalities have been developed. These permissionless blockchains are unable to engage in cross-chain communications because of their construction. In fact, each blockchain employs a different consensus method to reach an agreement on the state of its global ledger. This defines each blockchain's security model, node behaviour and interface.
The current blockchain ecosystem is highly fragmented. Although users are spread across hundreds of blockchains, most hold assets on a few dominant ones like Ethereum and BSC. DApp developers are forced to choose between the best chain for their app and the ones with the most users and liquidity. As a result, they end up redeploying their dApps on additional blockchains, further scattering users and liquidity.
This leaves users with the terrible situation of having to understand different blockchains and the challenge of how to transfer tokens between them. However, this transfer or “bridging” of tokens is not only complicated but also represents an important security risk. Token bridges - with over $2B in stolen funds - have been the single biggest category of hacks in the last few years.
Connecting major chains like BSC and Ethereum, including usability and security concerns, is already being addressed by different players including LayerZero, Maps protocol or Axelar to name a few (a complete analysis of several existing solutions can be found here). The available solutions are complex and slow to implement. Some other solutions are still in the academic research phase, such as ZK bridges, and do not have any practical implementation as of now. This leads to significant security issues, as the existing solutions heavily rely on liquidity pools and often require a large amount of capital, which can grow exponentially.
As a result, dozens or possibly hundreds of smaller - often very innovative - chains are being left behind. For end users, this simply means, that it is practically impossible for them to obtain tokens on those chains and to start using the dApp on them.
We believe that creating a system to transfer tokens between “head chains” and a large number of “tail chains” would have an immediate and massive impact on the Web3 ecosystem. It would potentially shift billions of economic activity to the Long Tail of Blockchains and empower their builders.
As a result, at Grindery, we are working on such a system.
Delight is the solution
A system that could connect a large number of chains to the liquidity and users of prominent chains would have to be easy to use for anyone, fast to deploy on any chain and equally (or more) secure than the latest generation of bridges.
To achieve this Grindery is developing a cross-chain protocol that can be easily deployed on any EVM or non-EVM blockchain. This decentralized protocol is purpose-built to allow any software, including trading bots (e.g: Hummingbot), PaaS (Zapier) and automators (Gelato), to trade tokens across chains. We call these actors “Token Merchants”.
Simply put the Delight protocol allows an end user to deposit a token on a source chain and receive a token on a destination chain. This is achieved by allowing the above defined merchants to send any token on any supported chain to an address indicated by the end user. In exchange, the merchant receives a stable settlement token on the source chain. This token is always the same, regardless of the token the end users requested on the destination chain.
This protocol design allows to settle any disputes between the end user and the merchant without having to rely on additional “watchers” or “validators” common to other cross-chain protocols. In the event of any unresolved disputes, the protocol employs social arbitrage, akin to Ethereum's Proof-of-Stake (POS), as a deterrent against malicious behaviour. Common game theory indicates that this model renders malicious behavior uneconomical and non-occurring in practical terms.
As indicated above, merchants can use many different technologies to incorporate on- and off-chain systems to fulfil orders of end users. This level of autonomy and flexibility not only allows merchants to find the best prices across all combined DeFi and CeFi systems but delivers the desired simplicity to end users. Furthermore, merchants can secure their systems the way they deem adequate for their business on premise, in the cloud or on-chain.
Towards decentralization
In 2022, Grindery, the company behind Delight, launched Grindery Gateway its automation technology. This product is available exclusively through Zapier and is highly suited to serve the first generation of merchants to fulfill the required orders without having to learn to code or deploy complex servers. Grindery’s plan is to provide these automation capabilities within a dedicated L1 blockchain. This blockchain will function as and low-cost, decentralized Oracle, facilitating the exchange of messages at the intersection of numerous blockchains using hybrid smart contracts. This will add additional level of security and decentralization to the system as well as open up the opportunity to build a new generation of cross-chain DeFi protocols.
Progressive roll-out
To battletest our technology, we will release the first product immediately, providing the easiest way to acquire testnet tokens on any chain. After the first evaluation and audits, we will then slowly start also to release on mainnets, for more details please review our