Wormhole is one of the leading cross-chain protocol, enabling secure transfer of data or tokens across the top blockchains, including Ethereum, Solana, Sui, Injective and many more.
In an increasingly complex blockchain world where a new chain launches almost every other week, liquidity across chains have also become increasingly fragmented.
Users deposit their funds across different chains to access various opportunities. However, to facilitate the growth of the ecosystem, flow of liquidity between these chains needs to be seamless.
Enter interoperability protocols, which step in to bridge liquidity and improve the user experience of navigating across the hundreds of blockchains out there.
Wormhole is one of the leading cross-chain protocols seeking to connect blockchains.
What Is Wormhole?
Wormhole was founded by Jump Crypto, the building arm of Jump Trading Group. Initially launched in 2021, the protocol first debuted as a token bridge, allowing the transfer of tokens between blockchains, most notably between Solana and Ethereum. Wormhole later evolved, with Wormhole V2, to take on a more general approach, turning into an interoperability layer on which chains and decentralized applications could easily build on.
Wormhole V2 is a general messaging protocol, enabling different blockchains to communicate with one another. This technology could be used for a variety of use cases, including transfer of tokens between chains, enabling cross-chain governance for protocols that operated across chains as well as transfers of NFTs across chains, which could be utilized for multi-chain games. Wormhole V2 also saw the protocol expand its services to include Terra and the BNB Smart Chain as well.
To date, the protocol has processed over $40 billion worth of value transfer across the blockchains supported, and over 1 billion messages sent. It supports over 30 blockchains, including most of the leading networks, and has a thriving ecosystem of over 200 applications built using Wormhole's technology.
In November 2023, Jump and Wormhole announced their intention to split ways. Following the separation, Wormhole announced that it raised $225 million, valuing the company at $2.5 billion. Investors include Brevan Howard, Coinbase Ventures, Multicoin Capital, Jump Crypto and more.
Source: Wormhole Docs
How Does Wormhole Work?
A Wormhole transaction begins at the Emitter. This is any contract that calls the publish message method on the Wormhole Core Contract. This writes an event to the Transaction Logs, recording details of the emitter that called the method and the sequence number as an identifier. The Core Contract is monitored by a set of validators known as Guardians, which will process the message when it is published.
Source: Wormhole Docs
At its core, Wormhole is secured by a peer-to-peer network made up of Guardian nodes, which sign and validate messages passing through Wormhole. Messages written to the Core Contract are picked up by this network of Guardians. If a supermajority, or 13 out of the 19 Guardians, sign the same message, the message is deemed as valid. These signed messages are known as Verified Action Approvals (VAAs) and these messages are then relayed to their destination protocol via the Relayer network. In the Wormhole architecture, Relayers are unable to modify the VAA as it is relayed and hence, do not impact the security of the ecosystem. Once the VAA is delivered, the destination protocol verifies the signatures on the message to verify its legitimacy, which completes the transfer, hence, validating the message flow.
Currently, there are 19 Guardians and they are formed from some of the top validator companies in the world, including Chorus One, P2P Validator, Figment and more. Beyond signing messages, Guardians also monitor chains for anomalies in block production or consensus violations. This allows the Guardians to disconnect the affected blockchain from the network until the issue is resolved. Additionally, Guardians also monitor smart contract data to ensure token movements across all blockchains are logical.
The Wormhole Ecosystem
Beyond just cross-chain messaging, Wormhole also develops and maintains a suite of other related products to complement their main service. This includes:
Wormhole ZK
Aims to integrate zero-knowledge proofs into the core Wormhole protocol to improve the trust assumptions of the protocol. This seeks to allow permissionless verification of messages, integrations, improved composability and flexibility for applications building and integrating Wormhole technologies.
Wormhole Queries
Facilitates the querying of blockchain data on-demand, enabling developers to access on-chain data inexpensively and quickly.
Wormhole Gateway
A Cosmos-based appchain design to connect liquidity within the Cosmos ecosystem to Ethereum and beyond.
Wormhole Connect
Enables developers to easily integrate the bridging of wrapped or native tokens directly into their application with just a few lines of code.
Native Token Transfers
An open framework that enables any token to be made natively multichain, enabling seamless native transfers across all supported blockchains, without the need for liquidity pools while enabling a completely synchronized token state across all chains.
These additional products complement the existing Wormhole messaging protocol, forming a complete suite of products for the cross-chain needs of applications and chains.
Wormhole’s Airdrop and Tokenomics
On March 6, 2024, Wormhole announced the airdrop for their governance token, W, as well as the eligibility checker for users to verify their eligible wallets.
The W token will have a maximum supply of 10 billion tokens, beginning with an initial supply of 1.8 billion tokens, or 18% of the total supply. Of the 18% unlocked at the token generation event (TGE), they are from the following categories:
- Community and Launch (11%): This allocation includes the token airdrop and related activities including market making and liquidity management.
- Ecosystem and Incubation (5%): These tokens are allocated to strategic contributors to the Wormhole ecosystem including community organizations, developer community initiatives and strategic contributors.
- Foundation Treasury (2%): This allocation is dedicated to drive future initiatives for the protocol’s development, including research, grants and other relevant programs
Source: Wormhole Tokenomics Announcement (link)
The remaining 82% of the token supply will be unlocked following the below token release schedule, with the tokens unlocking over the upcoming four years following the TGE, with the total token supply being fully unlocked at the end of the four years.
Source: Wormhole Tokenomics Announcement (link)
What’s Next?
Today, the Wormhole ecosystem has expanded to include more than 200 decentralized applications across the 29 chains supported by Wormhole. The protocol has also processed more than 1 billion cross-chain messages since inception and continues to process more than 125,000 messages per day, which funnel an average of $33 million across chains.
With the launch of the W token and airdrop, Wormhole is primed to continue developing their cross-chain messaging capabilities to facilitate more unique cross-chain use cases in an increasingly multi-chain world.
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