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Centauri bridge — powering DeFi’s interoperable future between Picasso and IBC

Published date: November 22 2021

Centauri bridge — powering DeFi’s interoperable future between Picasso and IBC

Anchoring the Inter-Blockchain Communication protocol to Picasso through Centauri will allow for a plethora of new cross-chain and cross-layer transfers to take place, marking a critical step forward in DeFi’s interoperability.

In line with Composable Finance’s vision to foster an interoperable DeFi ecosystem, we are pleased to announce Centauri bridge linking the inter-Blockchain Communication protocol (IBC) with our Kusama parachain, Picasso. Centauri establishes a critical link between the Cosmos and Kusama networks, further connecting multiple chains and opening a sea of new possibilities for DeFi.

A brief overview of cross-chain communication in DeFi

Hundreds of blockchains have emerged in DeFi since Bitcoin’s blockchain launch, which went live at the beginning of 2009. More often than not, a blockchain comprises its own specific combination of properties, programming language, consensus algorithm, and more. While these unique combinations allowed blockchains and their dApps to achieve their desired functionalities, they came at the cost of cross-chain communication. The domino effect — scalability issues and further siloing of the DeFi sector that rides the wave of these decentralized networks.

Over time, and as the needs of DeFi dictated, solutions were developed to overcome the industry’s cross-chain communication issues. For example, a recent notable development is the Cross-Consensus Message Format (XCM) utilized in the Dotsama ecosystem. Rather than simply sending messages between systems, the XCM serves as a language communicating ideas between consensus systems. Not only does it help conduct communication between chains, but also enables communication between pallets, bridges, smart contracts and more.

Outside of XCM, more cross-chain communication methods have arisen to address the interoperability needs of the industry. Each individual solution comes with a different combination of guarantees, drawbacks, costs and more unique qualities. While Substrate-based chains within Polkadot are using XCM, Cosmos has opted to leverage IBC.

Aptly named, IBC is an industry-standard for inter-blockchain communication, fostering compatibility with any blockchain that follows a short list of requirements such as having a module system, a consensus state introspect and timestamp access. The protocol intends to create an inclusive solution that allows for a breadth of blockchain frameworks and use cases. If an application is built on secure and reliable inter-module communication, it can use the protocol.

How Picasso is facilitating a cross-chain future

As explained in a previous post, Composable envisions Picasso as the solution to creating a DeFi ecosystem that is fully optimized and widely available — cross-chain and cross-layer. Picasso is not application-specific; instead, it is a hub for innovation and boundless creativity, providing developers with a single access point to a suite of tools and applications.

With Picasso, and our future Polkadot parachain, the Composable ecosystem will be able to leverage XCM within Dotsama to seamlessly connect our project specific blockchains, and all the pallets and dApps built upon it, to the other parachains in the ecosystem. A key component to unravelling Picasso’s full potential is unbounded cross-chain communication. To achieve this, we are working to bridge Picasso to IBC in order to leverage a proven and successful cross-chain communication protocol — and allow communication and asset transfer between our ecosystem, Cosmos, and other chains leveracing IBC.

Connecting Picasso to the Cosmos Network

Delving into the technical details, connecting to IBC requires both chains, Cosmos and Picasso, to embed a light client for proof of validation. In this effort, Composable has partnered with the Parity bridges, Osmosis, Tendermint, and IBC teams to develop a Bridge Efficiency Enabling Finality Yielder (BEEFY) light client onto Picasso and Cosmos. In this process, we will also be working closely with Strangelove, an early-stage venture fund focused on DeFi protocols in the broader IBC ecosystem.

To support Substrate-based chains on the Cosmos side, we will need a BEEFY-IBC client merged into IBC-go; therefore, the first step in our process is to create a BEEFY-go followed by a BEEFY-IBC. Once this is set, we will work on updating the relayer before launching the product.

Our plan is to use Osmosis, Cosmos’ AMM, and Picasso to run our proof of concept (PoC) before moving onto a larger-scale launch. Ultimately, this BEEFY will set the stage for a Dotsama-IBC Substrate bridge allowing for seamless cross-chain communication and asset transfers between the Cosmos and Composable ecosystems.

In time, we will also create another Substrate bridge to connect Mosaic to our Picasso-IBC bridge. This will allow us to generalize the asset transferal system to extend across more ecosystems and better serve its role as a hyper-liquidity system.

Connecting Cosmos and Kusama — Centauri’s importance

Earlier this year, Cosmos voted to integrate IBC onto its network to enable easy asset transfers between chains. Given Picasso is currently built on the Kusama network, this integration between Centauri forms the first-ever bridge between Kusama and Cosmos.

Cosmos is regarded as the internet of blockchains and provides a universe of opportunities for token holders, enabling users to connect with the Cosmos Interchain — an extended network of interconnected blockchains — through the Cosmos Hub. Hence, a connection between both networks facilitated by our parachain will vastly expand resources for developers looking to build interoperable dApps, further enhancing their use cases and opening new opportunities for investors.

For example, a user with assets on Kusama looking to utilize a decentralized exchange (DEX) can easily transfer his assets to Cosmos and utilize a DEX like Binance Chain. Not only does this give such users an edge when swapping tokens only available on Binance, but it also opens new arbitrage opportunities. Beyond DEXes, users will have access to additional yield farms, lending protocols, and a lot more.

In addition to cross-network interoperability, users utilizing Cosmos will gain access to Mosaic. As DeFi pushes further into layer 2 (L2) scaling solutions, this cross-layer interoperability will be instrumental in increasing transaction speeds and reducing fees. As both networks continue to develop and grow, so will opportunities for DeFi users thanks to this cross-chain connection.

Final Remarks

Overall, the connection between Cosmos and Kusama is just the beginning of the benefits received through bridging IBC and Picasso. Composable is continuing to contribute upstream, further pushing the boundaries of cryptographic research and opening up endless possibilities for the Dotama ecosystem as we work in line with our cross-chain/cross-layer interoperability goals.

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