The large and extensive Ethereum network offers several solutions for the transfer of tokens, each of which has its own proprietary governance tokens; But these solutions, contrary to the fact that they have provided many advantages to the network, have caused the transfer of tokens from layer 1 to layer 2 to be somewhat difficult. But what is the solution to this problem? This is where the Hop Protocol comes in; A chain bridge that makes it easy to transfer tokens between Ethereum’s scalability layers. To know what this protocol is and what it is used for, we invite you to read the rest of this article.
What is Hop Protocol?
In simple language, hop is a protocol for sending tokens collectively. This protocol includes a set of new algorithms and tools that, in addition to simplifying on-chain or intra-chain interactions, allow cryptocurrency holders to move their crypto assets between blockchain layers and side chains.
In the first stage, the Hop protocol introduces a series of unique techniques to make the process of bridging between two layers simple, safe and faster than normal; Then, in the second stage, he completes the construction of internal and external bridges. Techniques used by this mechanism include things like liquidized liquidity technologies, decentralized pools, and cryptocurrency mining strategies, all aimed at creating faster and more efficient communications between Ethereum’s Layer 2 networks, sidechains, and the Ethereum mainnet.
BridgeHop, which is the software of this platform and you can find it in the list of cryptocurrency wallets, currently supports the Ethereum, Optimism, Arbitrum, Polygon and Gnosis blockchains, and its users can transfer a limited number of assets using this mechanism. Transfer to other layers. Transferable cryptocurrency assets in HOP include:
- Ethereum
- Matic Polygon
- USDT
- DAI
- USDC
- HOP Sovereign Token
In addition to what we said, Hop Protocol is also looking to launch a Decentralized and independent organization (DAO) to increase the scalability of blockchain layer 2. But so far in the article, we have largely related the operation of hop to layer 2, and in order for you to understand the operation of the hop protocol properly, it is good to know a little about layer 2.
What is the solution of layer 2?
To understand the challenges that the HOP mechanism is trying to overcome, we need to start by looking at Layer 2 solutions and how they work. Simply put, Layer 2 solutions are a set of things Ethereum developers do to make the platform’s main network more scalable, faster, and of course more efficient, relying on the Ethereum blockchain.
Layer 2 communication and HOP protocol
Layer 2 solutions have an internal communication system to maintain an effective relationship with the core network. Now, in order for assets to move between the core network and the second layer network, they need a bridge. This bridge ensures that transactions are transmitted to the main network and their proof of validation is returned to the second layer network. Note that assets that have gone from layer 1 networks (mainnet) to layer 2 networks are known as conventional tokens.
Sidechains, Layer 2 networks, and platforms that provide bridging capabilities for assets are the best solutions that can be used to connect to the Ethereum blockchain. In fact, platforms like Hop transfer crypto assets from their native blockchains to other blockchains. They also use a series of Smart contracts which block the user’s cryptos, and provide users with a copy of tokens of equivalent value on the new network through an exchange between the liquidity pools provided on the destination chain and the source chain.
Challenges and risks facing bridging platforms
Unfortunately, the native bridges that connect Layer 2 networks to the main networks and the independent bridges that facilitate asset transfers between sidechains and the Ethereum blockchain have so far not been efficient.
Published performance data of these bridges estimates that it takes anywhere from 20 minutes to 3 hours for tokens to move between networks. Bridging in either direction can cost up to $20, not including transfer time. Bridging between side chains, in addition to costing more, may take up to 7 days!
Independent bridges are also a good opportunity for hacking and technical exploits. In 2022 alone, more than $1.3 billion will be lost due to bridge hacking and other security issues related to bridging assets.
All these issues have led to the emergence of fast, affordable and secure protocols and platforms for bridging chain assets instead of existing mechanisms. Hop Protocol is one project that develops bridges as an alternative and claims to have a relatively more efficient asset bridging strategy. The current statistics of this platform show that the solutions provided by Hop Protocol Cheap and fast and as of this writing there have been no reported security issues with the bridge and other programs that support the protocol.
How does the HOP protocol work?
The main tool in the operation of the HOP protocol is the facility that Multi-network bridge It creates In fact, in this protocol there are tools that allow people to move their digital currency assets between the Ethereum main network, side chains and layer two networks. The policing directions in HOP protocol are universal and it is possible to move in two directions and between all networks.
Hop Protocol uses algorithms for token issuance, redemption and modified exchanges to enable fast and cheap bridging of assets. These algorithms, which were first introduced by Hop, are known as smart contract tokens or hTokens (Hop Bridge Tokens).
What is the role of Htokens in HOP Protocol?
hTokens are actually a copy of the original assets that are locked onto the support chain. These tokens are very flexible and can be transferred or redeemed on chains. Bridge hop users also use hToken types of tokens when performing conversion transactions. For users to use, hTokens are issued on a one-to-one basis relative to the underlying asset. This means that when a user locks a certain number of crypto assets (say 100ETH), they can multiply the same number of Htokens for that asset (in this case, 100hETH).
Users can also quickly transfer and redeem issued hTokens to other chains supported by Hop. The hTokens that have been used are burned in the source network through an automated command and process, called Automated Market Maker (AMM), and then the same type and number of hTokens are created in the destination chain and account. These tokens also serve as a technique to ensure that all transactions are accurately recorded.
Of course, we must point out the important point here that HOP’s governance token does not need the AMM process to move in chains and layer two networks. HOP DAO considers the platform’s governance tokens to be conventional by default, thus saving users costs.
Definition of Bounders process
Fast redemption of hTokens on the destination chain is done through a separate process called Bonders. Bonds are a series of leveraged bonds that earn a fee by providing liquidity. In fact, these leverage with the fees they earn Initial liquidity They provide for hTokens so that recipients can redeem tokens quickly.
In addition to funding, Bounders are also responsible for verifying the transaction. This means that users must first send tokens to the source Bounders, and then the Bounders will send them to the destination and the transaction will be completed.
What makes Hop Protocol special?
At the beginning, we said that the mechanisms that existed before for building bridges between networks were not only not efficient, but also caused many problems, and for this reason, platforms such as Hop entered the market. But what is the difference between HOP Protocol? In general, we can consider the following reasons for the uniqueness of HOP:
- Hop Protocol provides a scalable public token bridge. This work through Automated market maker (AMMs) are performed so that the platform exchanges each bridge token and its corresponding verified token between each aggregator. In this way, liquidity will be dynamically priced and an incentive will be created to rebalance liquidity in the entire network.
- The hop protocol uses the same level of protection as an underlying roll-up. This means that users’ assets are not only not suddenly lost, but also not stolen. Users may experience delays in response transfer times only if Bounders is taken offline.
- Hop has a two-way strategy to generate cross-network tokens, and by using AMM, it can perform transactions quickly.
- The hop protocol supports a wide range of destination chains and therefore has a very high connection speed. Of course, this hop feature is limited to Ethereum main network and layer 2.
What is the HOP token?
HOP is the native token of HOP protocol and was created with the main purpose of governance. This token was introduced as a means to develop a management strategy for the HOP protocol through a decentralized autonomous organization (DAO). The HOP protocol is actually managed through the HOP DAO and its native token, with the help of a community of investors and users.
HopDAO operates through a decentralized proposal and voting scheme where HOP token holders can submit proposals and vote on other proposals submitted by other DAO members. Members’ votes are prioritized according to their property value.
HopDAO members vote on decisions such as the next sidechain, layer 2 network, or layer 1 blockchain on which the Hop Protocol will be launched and run. DAO voters can also decide which assets to add to the bridge hop protocol. Some other financial issues such as treasury divisions and management plans will also be reviewed and approved under the DAO’s set of powers.
hop protocol; A faster way to transfer tokens
As you read, the Hop protocol is working on a critical problem in Ethereum’s scalability solution. The platform strives to provide innovative ways to make scaling easier and create a more pleasant user experience. In addition to what it has provided so far, this protocol has many other interesting ideas that we need to see if it succeeds in implementing them in the future. All in all, we must say that according to the unique features we have seen from this protocol, HOP is a project that is worth a closer look. In this article, we reviewed the Hop protocol, a platform and solution for transferring digital currencies and moving them between different layers of the blockchain. We hope this article was useful for you.
What is written hop protocol? Reviewing the operation and use of Hop protocol for the first time on Wallex blog. appeared.
