The Complexity of Layer2 Interoperability:
Since the prior cycle, much has been done to shift activity from Ethereum L1 to various L2s to solve Ethereum’s scalability issues. Today, there are many Layer 2 networks, all of them competing to get more Ethereum users. Optimism is one of Ethereum's many scaling solutions, which offers lower-cost blockspace for users and developers. In addition to Optimism’s main L2, it also offers the OP stack - an open framework for launching new and similar L2s. The OP stack architecture lays the groundwork for the proliferation of OP-based, interconnected networks that will one day become the Superchain.
Each OP chain contributes a share of fees — either 2.5% of chain revenue or 15% of the on-chain profit — through a standardized revenue-sharing model supporting the Optimism Collective. Note that the Superchain is a work in progress that will eventually transform Optimism and other OP chains into a more cohesive ecosystem. However, in order to accomplish this, there needs to be better interoperability.
For Optimism to achieve native interoperability, a few key features are needed:
Superchain ERC20 token standard: There has to be a Superchain burn-and-mint standard to move tokens across chains.
Bridge: There has to be a bridge smart contract governed by the Optimism Collective to ensure standardized assets throughout all OP chains
Messaging protocol: A core logic that defines how messages are generated on the source chain and finalized on the destination chain.
Atomic Interchain Composability (AIC): AIC would allow the same transaction to be included on multiple chains simultaneously, enabled by an opt-in shared sequencer for OP chains.
These and more are what Optimism and future OP chains need to become truly interoperable. The above is a huge undertaking and will require a lot of time, preparations, migrations, and testing to go live. However, Superlane is building a third party solution to bring a unified experience to the OP-ecosystem today.
Superlane: Velodrome Finance X Hyperlane
Superlane aims to be the interoperability layer for OP chains. Under the hood, it uses Hyperlane’s modular infrastructure to facilitate interchain communication while Velodrome works as a liquidity marketplace. Over time other liquidity protocols will deploy on Superlane, but Velodrome enjoys the unique position as an initial AMM partner.
To best address the Superchain’s liquidity needs, Velodrome is developing essential cross-chain features including:
self-contained gauges and automated market makers (sAMM, vAMM) deployed throughout the Superchain (XVELO holders can participate in gauge voting across multiple chains influencing the distribution of liquidity incentives via governance.)
Interchain XVELO: Velodrome’s governance token will be available as a Superchain ERC20 asset with seamless transfer across OP Chains via burn-and-mint.
Trading fees compounded and redistributed to LPs across chains as VELO emissions.
LP incentivization directly on native chains
Liquidity infrastructure for every Superchain network.
enough liquidity for important assets: ETH, WBTC, OP, stablecoins, LST and Superchain tokens
Cross-chain interoperability - voting, liquidity provision and incentivization, swapping, etc
The good news is that Velodrome has already started facilitating some of the above without requiring any governance approvals, signing exclusivity contracts, or spending hundreds of thousands of dollars on bridging provider costs.
How Superlane Works:
On Hyperlane, relayers deliver messages to the destination network when you send messages between two chains supporting Hyperlane. There, the Interchain Security Modules (ISMs) verify the messages - if valid, they are sent to their final destination. Superlane is already live, enabling Superchain interoperability across multiple rollups like Mode, Lisk, and Frax Finance.
For the Superlane, the ISMs have been modified to support and verify Superchain-native messages and transactions. Furthermore, Hyperlane isn’t just for bridging; it’s deployed across 80+ chains, including 16 OP chains. Anyone can deploy Hyperlane to their chain without any hidden fees, tedious applications, etc., meaning Hyperlane can quickly scale to every OP chain.
On the other hand, Velodrome combines the best of UniV2, UniV3, Curve and Convex Finance. Using its AMM model, Velodrome will serve as the central liquidity and trading protocol across OP chains, ensuring core pairs have enough liquidity. And by integrating with Hyperlane, fragmented liquidity will become a thing of the past on the Superchain.
Hyperlane’s Role:
Hyperlane’s modular interoperability provides cross-chain communication and custom messaging. These two features simplify data and asset transfer across the Superchain.
With Hyperlane’s Interchain Messaging API, Velodrome can send instructions, relay asset transfers, and synchronize liquidity pools across chains.
Velodrome’s Role:
Velodrome can deploy cross-chain liquidity pools thanks to Hyperlane technology giving LPs access to more liquidity and earning opportunities without having to manually bridge assets.
Velodrome’s AMM routing can operate on multiple chains. For example, a swap on Mode can instantly access liquidity on Lisk network.
Joined together, Velodrome x Hyperlane addresses important challenges in the multi-chain DeFi ecosystem:
Fragmented liquidity: Liquidity has long been siloed on separate chains meaning it’s inefficient and sometimes expensive to move assets across chains. The integration will provide the much needed unified trading experience.
Straightforward UX: LPs don’t need to bridge and manage their assets across multiple chains because Velodrome and Hyperlane automate these processes.
Scalability: Using Hyperlane, Velodrome will scale its operations without needing to build separate infrastructure for each chain. Coupled with the Superlane architecture which utilizes the high-speed, low-latency capabilities of the Superchain, performance is optimized.
Interoperability without sacrificing security: Hyperlane’s messaging API is designed for secure, permissionless communication between chains, reducing the security risks often associated with cross-chain bridges.
That said, this integration opens the door to more innovative use cases and massive DeFi expansion:
Cross-chain swaps and arbitrage: Traders can swap into liquidity pools on multiple chains in one transaction enabling faster arbitrage.
True multi-chain dapps: Developers can build applications that leverage all chains on the Superlane. For instance, a lending protocol that can liquidate positions on one chain while collateral resides on another.
Cross chain stablecoins and synthetic assets: The integration could support stablecoins or synthetic assets that operate seamlessly across chains.
Multi-chain DAO treasury management: DAOs can manage treasuries across chains more efficiently, using Velodrome to deploy liquidity and Hyperlane to move assets between chains.
To support this imminent expansion, Velodrome will incentivize Hyperlane deployments to new OP chains, while node operators that run validators on Superchain roll ups will be incentivized through Velodrome’s native token.
With Superlane, any blockchain, dapp live or building on OP can fully benefit from shared liquidity, interchain governance, and other unique features enabled by interoperability. More importantly, developers fully control how their interchain messages are verified because of Hyperlane’s modular security. On the other hand, Superlane perfectly demonstrates what can be achieved when a ready ecosystem of chains waiting to be interoperable is combined with a network like Hyperlane.
TL;DR: Superlane is Hyperlane with increased security incentivized by Velodrome to enable communication across Superchain rollups.
What’s Next?
The Superchain is a groundbreaking initiative for a scalable and truly interconnected blockchain ecosystem. Superlane, built on Hyperlane, will bring this optimistic vision to reality. However, Superlane must remain vigilant about two key challenges. First, regulatory challenges and concerns pose a tough balance between blockchain innovation and compliance, necessitating careful navigation of the regulatory landscape. Second, heightened security risks arise from increased interoperability, creating potential loopholes and vulnerabilities targeting the interoperability layer. To mitigate these risks, Superlane must implement robust security measures.
In conclusion, despite these challenges, Superlane’s deployment marks a pivotal moment in the evolution of blockchain technology, drawing us closer to an interoperable and scalable ecosystem. By leveraging Hyperlane's innovative infrastructure and Velodrome’s liquidity, Superlane will enhance chain interoperability and empower developers to create seamless, user-friendly applications. In doing so, this initiative embodies the vision of a unified Superchain—interconnected blockchains collaborating and thriving together.
