Deploy SNX xERC20 and Lockbox to facilitate bridging between Ethereum and Base and allow for additional fast bridge solutions while retaining sovereignity.
\nThis propsal aims to implements ERC-7281, as known as the xERC20 standard, by deploying xERC-20 SNX on Ethereum and Base with SNX Lockbox on Ethereum.
\nxERC20 tokens are ERC-20 tokens which can be transferred with no slippage across chains without compromising on security.
\nContrary to other proprietary crosschain standards, token issuers always retain control and sovereignty over their tokens\nThis ability will allow Synthetix to whitelist specific bridges, giving them the rights to mint same representation of crosschain token. This allows for fine-grained control over minting/burning limits for each bridge. Limit potential damage should a security breaches happens.
\nAs SIP-350 and SIP-351 compete to provide fast bridging solutions for SNX, while improving user experience on waiting times, has created vendor lock-in. With many such cases from bridge imploding like Multichain. Recovering from those problems takes time and requires integration to redeploy everything which isn't ideal. By setting up xERC-20, Synthetix can add or remove bridges with canonical fallback while retaining same integration and liquidity,
\nThe deployment on Ethereum consists of:\nxERC-20 token - Factory Repo\nLockbox\nAnd the deployment on Base only needs to have xERC-20 token deployed on the rollup.\nThis is to conform SNX into the burn-and-mint model for bridging.\nThe specification for Lockbox is an ERC-20 wrapper inspired by WETH.\nThe important part for xERC-20 is the bridge parameter and mint.burn function, controlled by governance and mint and burn function, only callable by Lockbox and bridges.
\n /**\n * @notice Updates the limits of any bridge\n * @dev Can only be called by the owner\n * @param _mintingLimit The updated minting limit we are setting to the bridge\n * @param _burningLimit The updated burning limit we are setting to the bridge\n * @param _bridge The address of the bridge we are setting the limits too\n */\n function setLimits(address _bridge, uint256 _mintingLimit, uint256 _burningLimit) external;\n\n /**\n * @notice Mints tokens for a user\n * @dev Can only be called by a minter\n * @param _user The address of the user who needs tokens minted\n * @param _amount The amount of tokens being minted\n */\n function mint(address _user, uint256 _amount) external;\n\n /**\n * @notice Burns tokens for a user\n * @dev Can only be called by a minter\n * @param _user The address of the user who needs tokens burned\n * @param _amount The amount of tokens being burned\n */\n function burn(address _user, uint256 _amount) external;\nThe flow of bridging from Ethereum => Base is:
\nThe flow of bridging from Base => Ethereum is:
\nImportantly, all these steps can be abstracted from the user.
\nenables 0 slippage crosschain movements without any requirement to bootstrap liquidity in advance. No AMMs are required at all.
\nxERC20 is a bridge-agnostic open standard, providing token issuers the ability to retain control and sovereignty over their tokens, and the flexibility to use multiple bridges at the same time
\nSecurity can be isolated per chain, per bridge and minting limits. Since the limits are enforced in the token contracts, you can effectively set per-chain limits as well, simply by having different limits for each bridge on each chain.\nThe ability to add 3rd party bridges in the whitelist allows users to move tokens out of L2s without using the native bridges, providing a fast experience.
\nUsing the xERC20 would allow the DAO to easily and more cost-effectively deploy and launch to 1000 rollups with a simplified process, and enable additional functionalities like crosschain staking.
\nxERC-20 smart contracts have been tested and audited; as every smart contract they might be subject to vulnerabilities. However, we believe the risk is low as the standard is a light extension to the ERC-20 interface, and is already used in production by several projects.
\nWhat impacts the risk curve are the bridges that get whitelisted.
\nExample of deployed xERC20 token:
\nAs a extension of ERC-20, token user can used it like any other token.\nFor bridge aggreagtor, it will have to aware of each bridge limit from function defined within xERC20.\nFor the bridge, it will have to call mint/burn function of xERC20.
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