[Infrastructure] How Omni is Expanding the Modular Ecosystem

April 21, 2024

Interdependence between blockchain services has made it difficult to provide trusted value with high security.

EigenLayer emerged to solve this problem, offering sustainable security at low cost with relatively high rewards.

Challenges in the modular era resemble those in the multichain era.

Omni is rapidly expanding its ecosystem as an infrastructure layer to solve problems related to security, performance, and global interoperability.

Post-launch, Omni will need to focus on three key areas: risks associated with EigenLayer, dual staking token economics, and relay incentivization.

A more quantitative understanding can be achieved by evaluating the risks of the value created by the protocol and comparing the costs with existing services.

1. Challenges of the Modular Era and the Mission of Bridge Protocols

It's been almost three years since Ethereum determined that the solution to scalability was Layer 2 (especially rollups). Vitalik's roadmap emphasized the importance of infrastructure upgrades to solve the complexities of the rollup-centric modular era. In his essay "The Three Transitions" published last June, he addressed the difficulties of a single user managing multiple addresses.

The challenges of the modular era are quite similar to those of the multichain ecosystem:

Scattered execution environments weaken network effects.

Fragmented liquidity increases transaction costs.

Increased complexity negatively impacts user experience.

To address these problems, bridge services have been developed.

Bridge protocols are generally evaluated based on three main criteria: cost, security, and performance (user experience). This evaluation process is similar to the scalability trilemma:

Improving security and performance increases costs.

Efforts to enhance cost and performance may compromise security.

Prioritizing security and cost comes at the expense of performance.

In short, bridge services are iterations of token locking and minting. In this process, the protocol tries to optimize by balancing cost, security, and performance.

In Proof of Stake (PoS) systems, the cost of an attack must exceed the total value of the assets managed by the bridge. This is directly related to the total amount staked.