An important indicator of Polkadot’s success, what can people do with XCM?
At present, Bridge is the most used by the crypto community in the heterogeneous cross-chain scenario, and the biggest application may be the asset cross-chain bridge, which is to transfer the assets on one chain to another chain, and then you can participate in more Defi DApps. In Polkadot, the relaychain randomly assigns validators to each parachain, so security the parachains. Under this structure, XCMP, a cross-chain messaging protocol between parachains, is developed. The cross-chain messaging protocol XCMP is a subset of the Polkadot protocol. It defines how messages are passed between parachains with no other trust assumptions other than the shared security of the relaychain.
Before the XCMP lives, Polkadot adopted the method of HRMP + XCM for interoperability between parachains. This article will introduce the difference and security between the HRMP + XCM and the traditional Bridge, as well as the latest progress of XCM and the actual scenario usecase between parachains.
👀 What is the difference between HRMP + XCM and Bridge?
HRMP, which stands for Horizontal Relay-routed Message-passing Channel, is an alternative protocol for passing messages using relaychain. When XCMP goes online, HRMP, an alternative channel, will be deprecated.
XCM is a cross-consensus message format. For example, if Bifrost publishes an XCM message and broadcasts the message, other chains with the same message format can receive the Bifrost message and execute it.
The big difference between Polkadot’s cross-chain approach and the traditional Bridge in application scenarios is that the asset liquidity of the traditional Bridge is relatively limited and cannot carry large-scale liquidity. As Gavin shared in an event, “The current heterogeneous cross-chain bridge is an anti-network effect system. When the assets on it reach a certain amount, security issues will arise.” For Polkadot’s XCM, unlimited liquidity is one of the biggest advantages, because the relaychain natively guarantees security, so Polkadot does not have the bottleneck of the value limit relative to the traditional Bridge.
😎🦾 Why XCM is more secure?
First of all, the parachains share the security of the Polkadot relaychain. The validators of the relaychain are completely decentralized, and there is no risk of any hosting node being attacked. Parachains can safely transfer arbitrary data. The data also includes the XCM.
From the perspective of XCM implementation, the XCVM virtual machine is a non-Turing-complete virtual machine based on the register model. This register cannot be changed at will, and there is a strict mechanism to control its changes, so security is also guaranteed.
At the same time, there are two models when using XCM for cross-chain transfers. One is the Teleport transfer model, which is suitable for the mutual trust between the two chains, which is currently used between the relaychain and the common-good parachain. Another model is similar to the “bank deposit reserve” cross-chain transfer model, called Reserve Asset Transfer, which is also a common practice for cross-chain transfers between parachains. This approach does not require mutual trust between the two parties across the chain, but the chain of asset issuance can be trusted, and the parachains on this chain will have reserve accounts. For example, when transferring DOT from Acala to Bifrost, there will be sovereign accounts of these two parachains on Polkadot. These accounts do not have private keys and cannot transfer the DOTs. They can only be triggered by built-in instructions, so it has high security.
🚀 The latest progress of XCM
Polkadot founder Gavin Wood tweeted last month, “After exactly 15 months in development, @polkadot XCM version 3 is merged. This enables bridges, cross-chain locking, exchanges, NFTs, conditionals, context-tracking, and more. ”
At present, XCM v3 has been merged into the latest Polkadot v0.9.38 version, but it is not yet open for use. Opening up of XCM v3 calls is expected in the next upgrade. Please look forward to it!
For more information about XCM v3, you can read PolkaWorld’s article here.
🪐 How we use XCM in Polkadot？
the article of Polkadot 2022 Rollup mentioned that to date, over 160,000 XCM messages have been sent on Polkadot alone, and an additional 200,000+ messages have been sent on Kusama. According to our rough calculation, a total of about 300 HRMP channels have been opened between parachains and Polkadot & Kusama. The following are some usecase you may have used. These functions are based on the implementation of XCM and are the actual scene of XCM.
In apps.acala.network, transferring DOT from Polkadot to Acala, or transferring GLMR from Moonbeam to Acala is a cross-chain message (excluding Ethereum) through XCM. It is precisely because of the XCM that your DOT can get higher returns in Acala, that is, when you use Liquid Staking, you will receive LDOT, and these LDOT will be used as interest-bearing assets. When you hold LDOT, you will passively increase your DOT income.
In beta-apps.moonbeam.network, you can also enjoy the XCM between parachains on the Parachain Bridges page. For example, you can send DOT from the Polkadot network to Moonbeam to generate xcDOT, and then stake it into Lido, and release liquidity to generate stxcDOT. https://polkadot.lido.fi/
Similarly, Astar also supports 11 kinds of XCM assets. After the assets are transferred from the original chain, they can be used in other DeFi applications in the Astar ecosystem.
The general DEX in the Polkadot ecosystem like Zenlink also supports XCM. You can transfer DOT from Polkadot to Moonbeam or Bifrost in Zenlink’s dapp, and then you can add some pools for combined benefits.
There is also Bifrost, which has also enabled XCM with many parachains. The assets that have been crossed can participate in liquidity staking or combined mining.
Although we have seen that most of the parachains have opened HRMP channels to each other and send the message through XCM. But so far we haven’t seen too many applications for so many XCM assets, which also shows that the entire parachain ecosystem is still in its early stage and there is a lot of room for growth. The continued growth of XCM is critical to Polkadot’s success, it represents the liquidity of XCM assets on parachain dapps. Expect more and more dapps to be built based on parachains in the future, and take advantage of XCM to create higher liquidity for the entire Polkadot ecosystem!
🌟 About PolkaWorld 🔵
PolkaWorld is a Polkadot global community founded in 2019. We have gathered more than 50,000 Polkadot enthusiasts, and have always been committed to spreading Polkadot knowledge, training Substrate developers, and supporting Polkadot/Kusama ecosystem.
