Situation
Challenge
Swingby Needed To Take a Defense-In-Depth Approach To Securing its Cross-Chain Bridge
- Swingby needed a way to prevent unbacked tokens from being minted or swapped on its cross-chain bridge.
- The solution needed to uphold Swingby’s commitment to the highest standards of security, transparency, and decentralization.
- While the solution initially needs to secure wrapped BTC, it must be able to seamlessly expand to help safeguard a wider range of assets across multiple chains.
Many cross-chain bridges have been hacked due to designs that are not secure, resulting in lost user funds that undermine the entire blockchain space. In building a cross-chain bridge for digital assets, Swingby needed to take a defense-in-depth approach that would protect wrapped assets—and therefore user funds—from malicious actors.
As decentralization is core to Swingby’s values and operation, it’s essential that the solution doesn’t rely on any centralized entities or third parties. While Swingby designed a threshold signature cryptography ("TSS") and multi-party computing ("MPC") architecture that leverages a decentralized network of validators acting as “technical custodians,” it still required a way to further strengthen the safety guarantees of its wrapped assets and establish a highly secure defense-in-depth approach.
Solution
Swingby Integrates Proof of Reserve To Verify Wrapped Tokens Are Fully Collateralized 1:1
Swingby is using Proof of Reserve for automated on-chain verification from the largest decentralized collection of security-reviewed and Sybil-resistant node operators in the industry. By verifying that the amount of Bitcoin custodied in Skybridge’s reserves wallet matches the number of Wrapped Bitcoin (WBTC) tokens on Ethereum, Swingby can suspend the ability for users to swap or mint new tokens until the issue has been resolved.
This helps protect the bridge from unknown vulnerabilities that could de-peg the amount of reserves from the number of wrapped tokens and protect user funds. Ultimately Proof of Reserve helps underpin a highly secure defense-in-depth architecture secure enough to protect tens of billions of dollars in value.
Business Outcomes
10% More Users On Swingby Skybridge Following Proof of Reserve Integration
As soon as Proof of Reserve went live, Swingby saw a large increase in swaps and new users on Skybridge due to the increased confidence that users feel when they have an accurate, highly available, tamper-resistant, and transparent source of information regarding the supply of wrapped assets.
The end result is WBTC and other wrapped assets becoming a more reliable form of collateral and payment throughout DeFi and other smart contract verticals. Ultimately, this supports the seamless flow of liquidity between blockchain networks.