What is orbiter finance?

Introduction

Blockchains have an unresolved issue known as the blockchain trilemma. It’s impossible to guarantee security, decentralization, and scalability simultaneously. At least one must be sacrificed, a principle the Ethereum network follows.

Numerous DeFi and NFT projects are being built on the Ethereum network. A surge of traffic into the Ethereum network has driven up transaction costs and caused network congestion. As a result, scaling the Ethereum network has become one of the most important issues today, with ZK technology serving as the core solution.

What is ZK Zero-Knowledge Proof

Before understanding ZK-rollup, it is important to understand zero-knowledge proof technology. Zero-knowledge proof technology refers to the prover’s ability to convince the verifier that a statement is true without revealing any private information to the verifier. Zero-knowledge proof technology is a good solution to the privacy and scalability problems of blockchain networks.

By using zero-knowledge proof technology, it is possible to protect the privacy of off-chain data and the details of transactions (including the addresses of both parties to the transaction and the transaction balance) while proving that the transfer of assets on the blockchain is valid. This allows for effective verification of validity without revealing any transaction details.

What is ZK-Rollup?

One of Layer 2’s most important features is that it locks assets in smart contracts on the Ethereum mainnet and performs transactions and calculations off-chain.

ZK-rollup is a Layer 2 scaling solution based on zero-knowledge proofs. ZK-rollup uses zero-knowledge proof to package multiple transaction data into batches, generate validity proofs, and finally submit the validity proofs to the blockchain for storage. This reduces the number of transactions on the blockchain, improves throughput, and speeds up processing.

The prover can prove the correctness of the transaction to the verifier without disclosing the details of the transaction. Once the submitter submits the proof of the batch and the proof of the validity of the transaction data to the rollup contract on the mainnet, anyone can use this proof to verify whether the transactions in a particular batch are correct. The whole process is very efficient and improves the processing speed and throughput of the blockchain without compromising privacy.

What is Orbiter Finance?

With the prosperity of the Ethereum Layer2 ecosystem, the demand for cross-chain assets of Ethereum Layer2 has also emerged. Orbiter Finance is a secure, low-gas, and efficient decentralized cross-rollup bridge that uses ZK-rollup zero-knowledge proof technology to protect user privacy. All protocols run on the mainnet, benefiting from the security of the Ethereum Layer1 network to achieve efficient and secure operations.

In addition, Orbiter Finance also uses zk-SNARKs recursive proof technology to improve the interoperability and scalability of Ethereum. Orbiter Finance maintains real-time synchronization between Rollup and the mainnet while improving Ethereum interoperability, and uses zk technology to reduce Gas fees.

Project Background

Orbiter Finance received its first round of financing in 2022 from institutions such as Tiger Global, Matrixport, A&T Capital, StarkWare, Cobo, Mask Network, amounting to 3.2 million USD.

In 2023, it completed Series A financing, led by OKX Ventures, with participation from Redpoint China, Hash Global, Skyland Ventures, and others. Furthermore, Orbiter Finance officially stated that Vitalik Buterin had donated 16 ETH to them.

Source: Orbiter Finance Partners

According to official data, Orbiter Finance already supports 19 networks, including Ethereum, Arbitrum, Polygon, Optimism, zkSync Era, BSC, Arbitrum Nova, Polygon zkEVM, Scroll, Base, Linea, and Mantle. It has over 3 million users, and has processed 12 million transactions, with a total transaction volume of 960 million USD. In 2023, the total TVL reached a historical high of 14.8 billion USD for the entire year.

The Operation Mechanism of Orbiter Finance

There are two roles in Orbiter Finance: Sender and Maker. When a sender initiates a transfer, a maker provides liquidity for them. The smart contract guarantees the security of this process. If the Maker misbehaves and the transfer fails, the Sender can use the Maker’s deposit to initiate an arbitration request with the contract and obtain overcompensation.

The three smart contracts in the current Orbiter system:

• MDC (Maker Deposit Contract): MDC has two functions: to hold the Maker’s deposit and to process refunds and compensation for the Sender.
• EBC (Event Binding Contract): Used to prove the validity of transactions on the source network (Source Tx) and the target network (Target Tx). In addition, the EBC contract also retains Orbiter’s rules: the rules for Makers to deposit collateral on different rollups, and the rules for the correspondence between Source Tx and Target Tx.

• SPV (Simple Payment Verification) Contract: Used to prove the existence of transactions on the source network.

The mechanisms of MDC, EBC, and SPV work together to resolve disputes for the sender:

Once the Maker does not return correctly to the Sender, the following steps will be executed in sequence to help the Sender obtain the token:

1. The Sender needs to provide the relevant source network transaction to the SPV contract.
2. The Sender applies for arbitration through Orbiter’s MDC contract.
3. The MDC contract obtains proof of the existence of the source network transaction from the SPV contract and confirms that the transaction has occurred on the source network.
4. MDC obtains the validity proof of Source Tx from EBC. MDC will know that Source Tx is legally based on Orbiter’s rules; Source Tx is sent from the sender to one of the Orbiter makers with legal and secure code.
5. The MDC contract will set this arbitration as a pending case, and the Maker needs to provide the transaction on the target network within 0.5 to 3 hours (this function can be integrated into the Maker’s client to ensure that the Maker does not miss information). If the Maker can provide the correct target network transaction within the specified time, the MDC contract can acquire the validity proof of the target network transaction from the EBC contract. This confirms that the target network matches the transaction on the source network. The MDC contract will then close this arbitration and display the target network transaction to the Sender. If the Maker fails to provide the relevant target network transaction within the specified time, the Sender can trigger the MDC contract to initiate arbitration.
6. The MDC contract starts to compensate the Sender.
7. The MDC contract will send the tokens and compensation (approximately $15) back to the Sender on the domain name where the MDC contract is deployed. The tokens returned and compensated to the Sender are deducted from the Maker’s collateral deposit.

About Orbiter Rollup

Building on the success of Orbiter Bridge, Orbiter Finance upgrades it to an Ethereum accelerator engine based on ZK technology, which improves Layer2 performance while reducing gas consumption. Orbiter Finance’s launch of Orbiter Rollup helps the scalability of the Ethereum mainnet. Users can transfer assets and data across all Layer2 networks with just a click of the interface.

Orbiter Rollup runs as zkEVM, replicating the Ethereum environment and being fully compatible with the Ethereum ecosystem. This also ensures seamless, cost-effective, and efficient migration of existing EVM smart contracts, developer tools, and DApps.

Security

All user transactions will be recorded on the Ethereum mainnet, and the data availability from Layer 2s can be effectively verified on L1. To be precise, Orbiter is a bridge across Rollups, not a cross-chain asset transfer between two completely independent (heterogeneous) blockchains (for example, from the Bitcoin network to the Ethereum network).

Orbiter performs asset cross-chain operations between different Ethereum Layer2s, for example, Orbiter performs cross-chain operations between zkSync and Arbitrum, which are isomorphic chains. Whether it’s zkSync, Arbitrum, or Orbiter, all three are built on Ethereum and inherit the security of the Ethereum network. This can prevent 51% double-spending attacks. In addition, Orbiter Rollup also implements strict arbitration to ensure the security of cross-chain messages.

High Performance, Low Fees

Orbiter Finance’s innovative use of ZKPs significantly reduces transaction and arbitration costs. Engineered for instant transactions and enhanced capital efficiency, Orbiter Finance eliminates lengthy wait times during message transfers. Orbiter Rollup optimizes cross-chain communication by canceling or overriding transactions based on their nonce, ensuring effective and swift message transmission.

Decentralization

Orbiter Rollup has enhanced the protocol’s decentralization. By leveraging zk-SPV to prompt accurate responses from Makers and ensure fund security, Orbit Finance provides complete access to the Maker role, thereby achieving decentralization. This approach fosters an open ecosystem monitored and governed by mathematical algorithms, eliminating reliance on centralized authorities.

Tokenomic Model

Orbiter Finance has confirmed its token issuance plan on Discord. On its official Twitter account, Orbiter Finance announced that it will launch its native token this year and gradually release its tokenomics and distribution plan to ensure a fair process.

Point System

Although the tokenomic model has not yet been released, O-Points is in progress. Orbiter Finance will track user contributions through O-Points. It has launched cross-chain activities on Linea. Later, it will convert user historical contributions (NFTs, OATs, Galxe loyalty points, etc.) into O-Points, which can be redeemed for official tokens in the future.

Conclusion

Orbiter Rollup’s launch allows users to efficiently complete transactions and securely transfer between various Layer 2 networks. Despite the complexity of developing zero-knowledge proof solutions, Orbiter Finance offers superior security compared to similar projects. At present, Orbiter Finance is in its second phase, prioritizing algorithm applications and cross-chain expansion solutions. Orbiter Rollup, which is currently in the testing phase, is set to become a foundational layer of Ethereum.

Orbiter Finance has been online for over two years without issuing any tokens. However, the recent announcement of an airdrop and the launch of multiple point activities have attracted many users to participate in building the ecosystem. Currently, Orbiter Finance’s cross-chain bridge holds a large market share in the cross-chain market. As a leader in the Layer2 cross-chain bridge sector, it merits our ongoing attention.