TIP-46: Fast Track Bridging and MAGIC Collateral Mint

Summary

In order to enable a seamless bridging experience to move MAGIC from Arbitrum One (arb1) to Treasure chain’s mainnet (treasure), TIP-46 proposes the following actions:

  • Deploy a Hyperlane Warp Route and supporting smart contracts to power direct, real-time (Fast Track) collateral-based bridging of MAGIC between arb1 and treasure (”MAGIC Fast Track”). - [Optional] Dynamically monitor incoming bridge requests for automated collateral top-up on treasure.
  • Extend functionality of the MAGIC token on Ethereum (eth) to support minting and eventual burning of additional (bridge collateral) supply.
  • Mint additional MAGIC supply for use solely as bridge collateral to facilitate mint-to-burn within a closed-loop for migration purposes. The proposed method is zero-sum and does not result in additional MAGIC circulating supply.
  • Continue ongoing design and future rollout leveraging Chainlink CCIP for a long-term cross-chain MAGIC interop strategy.
  • Approve the council-managed operation to migrate MAGIC held in the DAO’s various multisigs as well as the MAGIC-ETH protocol-owned liquidity (”PoL”) (ratified in TIP-43) through the canonical Arbitrum bridge and/or MAGIC Fast Track Bridge. - EDIT (Dec 3 at 11:53am ET): For the PoL portion, 80% will be bridged through the MAGIC Fast Track Bridge when available with the remaining 20% bridged through the canonical Arbitrum imminently as approved in TIP-43

Rationale

The Complexity Behind MAGIC

Due to MAGIC’s origins, the method in which it was bridged from eth to arb1 in late 2021, the future role it has on treasure as the gas token, and the manner in which shared liquidity within the Elastic Chain is achieved, all makes for a complex migration.

Background / Context:

  • MAGIC was originally launched on eth as an upgradeable ERC20, implemented as a Diamond proxy pattern and managed by the DAO’s eth treasury multisig (token contract link | see current token implementation via Louper).
  • MAGIC was then bridged to Arbitrum One through Arbitrum’s standard ERC20 gateway. In doing so, this allowed the Treasure community to leverage the standard Arbitrum Bridge to bridge MAGIC on eth to arb1. The resulting MAGIC token created on arb1 (token contract link) is an implementation of Arbitrum’s standard ERC20 bridgeable contract and Treasure lacks the ability to upgrade / owner-register the token.
  • The ideal scenario is to inject migrated MAGIC onto the Elastic Chain’s Shared Bridge, via the Bridgehub on eth. The proposed design achieves this by leveraging the temporary additional supply.
  • The Shared Bridge is responsible for minting corresponding native gas token MAGIC on treasure, which in turn serves as collateral to fulfill incoming MAGIC Fast Track bridging requests (from arb1).

Decision Matrix

The following attributes and outcomes for MAGIC bridging should be optimized for:

  • Security. In light of past bridge exploits, it is imperative that security be prioritized. As of Feb 2024, cross-chain bridges have been hacked for more than $2.8 billion (eg. Ronin #1 / #2 and Wormhole). Bridging and interoperability protocols should be decentralized to protect against compromised private keys and centralized actors who could unilaterally control all funds. Cross-chain bridges should also have their codebases put to the test extensively across private and competitive audits, as well as a variety of internal security testing to minimize smart contract risk.
  • Seamless user experience. Users should be able to bridge their MAGIC to treasure in as close to real-time as possible. Unfortunately, going through the canonical Arbitrum bridge results in a disjointed and subpar UX. After initiating the withdrawal of MAGIC from arb1, the user must wait 7 days and is prompted to add a reminder to their calendar. After that time has elapsed, they are then required to execute a manual claim on eth to receive their MAGIC. This is followed by an additional step to bridge again from eth to treasure. All of these steps result in gas costs incurred by the user with meaningful room for error (versus the potential for a one-click bridge from arb1 to treasure).
  • Zero disruption to the MAGIC token schedule. Given the need for collateralization, the bridging flow should keep any MAGIC that may need to be used or minted for collateral in a permissionless closed loop, zero sum system with equivalent burning/minting in place to ensure the MAGIC token schedule remains constant.
  • Leading technology. In our pursuit of the most robust and future-proof interoperability protocols for MAGIC and partner assets, we conducted a comprehensive evaluation of the leading solutions in the space. After careful consideration, we identified Hyperlane, Chainlink CCIP and LayerZero as the standout options. These protocols represent the cutting edge of cross-chain communication, each offering unique advantages in terms of security, scalability, and developer usability. Their proven track record and strong community adoption position them as leaders in enabling seamless and trust-minimized interoperability, aligning perfectly with our goals for not just MAGIC’s cross-chain strategy, but also for handling our partners’ assets.
  • Approach. To ensure the successful implementation of MAGIC’s interoperability strategy, we adopted a pragmatic and phased approach. First, we prioritized solutions that align with Treasure’s decentralized and open ecosystem ethos, as well as long-term scalability goals. Our evaluation focused on security, trust minimization, ease of integration, and cross-chain ecosystem compatibility. This approach ensures that MAGIC holders experience a reliable, efficient, and user-friendly bridging experience while maintaining Treasure’s commitment to technical excellence and innovation as a decentralized gaming ecosystem.
  • Optionality and Permissionlessness. At the core of Treasure’s interoperability philosophy is a commitment to optionality and permissionlessness. We recognize that our partners and ecosystem participants have diverse needs and priorities. To accommodate this, we have structured our interoperability framework to provide the flexibility for partners to self-select the bridging or interoperability protocol that best aligns with their specific goals and requirements. This commitment to optionality ensures that assets can seamlessly integrate across multiple chains while maintaining an open and permissionless infrastructure. This enables a diverse and inclusive ecosystem that fosters collaboration and interoperability without central gatekeeping.

Protocols Met

For the benefit of the Treasure community, the council assessed the following protocols (across varying stages of due diligence):

  • Interoperability Protocols: - Axelar - Chainlink CCIP - Hyperlane - LayerZero - Wormhole (in progress, likely via Hyperlane ISM)
  • Cross-Chain Bridges: - Across - Debridge - Hop - Orbiter - Relay

Bridging Powered by Leading Interoperability Protocols

  • At launch, MAGIC Fast Track bridging will be powered by a Hyperlane Warp Route between arb1 and treasure. This option is proposed for: - Rapid time-to-deployment of Hyperlane infra to treasure. - Ability to run validators and participate in securing bridging to and from treasure. - Availability of permissionless infrastructure with self-serve tooling for our partners on day one of treasure, extending beyond MAGIC for Warp Route deployments that can be leveraged for most partner asset types. - Hyperlane Interchain Security Modules (ISMs) allows flexibility around using various strategies around trust and security. This can be used in conjunction with other protocols such as Wormhole, LayerZero and EigenLayer AVSs .
  • Chainlink CCIP employs multiple decentralized oracle networks (DONs) and a unique Risk Management Network to provide robust, layered security - ensuring resilience against potential vulnerabilities. CCIPs programmable token transfers enable developers to create complex cross-chain applications with enhanced functionality. CCIP will be instrumental for extending MAGIC interop to various chains and we are working with Chainlink to bring CCIP to treasure for cases where security is of paramount importance.
  • LayerZero is an open-source, immutable messaging protocol designed to facilitate the creation of omnichain, interoperable applications. Rapid adoption has seen the emergence of various gaming-specific implementations where assets are not confined to a single blockchain. This capability not only enhances player engagement but also opens up new avenues for innovation. LayerZero will be available shortly after treasure launch.

Early Bridging of MAGIC Held in DAO Multisigs

In order to streamline the migration process of MAGIC held within the DAO’s treasury and multisigs, the DAO may wish to preempt the migration process to bridge fixed MAGIC holdings as well as protocol-owned liquidity (as ratified in TIP-43: Chain Migration Incentives) through Arbitrum’s canonical bridge and undergo the 7-day withdrawal period. This would allow MAGIC to be immediately available to be bridged into new Safe multisigs that will be deployed on treasure shortly after mainnet is launched.

For more liquid MAGIC holdings that may be used for contributor or vendor payments, these should be maintained and bridged from arb1 to treasure through the MAGIC Fast Track bridging, once it is available.

Proposal

  • Deploy a Hyperlane Warp Route and supporting smart contracts to power direct, real-time (Fast Track) collateral-based bridging of MAGIC between arb1 and treasure.
    • Closed-loop, mint-to-burn migration
      1. Mint additional supply on eth via Elastic Chain Share Bridge, to Collateral Provider on treasure. 100% permissionless via smart contract. 2. Supply Hyperlane with collateral for incoming (arb1treasure) bridge operations. 3. 0x123…456 (MAGIC holder) bridges from arb1 to treasure. 4. MAGIC released/transferred from Collateral Provider to 0x123…456. 5. MAGIC accumulation in L1 Withdrawal Escrow. 6. L1 withdrawal triggered on demand; wait 7 day optimistic rollup challenge period. 100% permissionless via smart contract. 7. Claim from arb1 bridge and burn on eth triggered on-demand. 100% permissionless via smart contract. - Monitoring & Collateral Provider Replenishment: - arb1 Bridge operations will be monitored for anomalies. Additionally, a periodic check will fund HypNative with sufficient collateral to fullfil incoming (arb1treasure) bridge requests. - Collateral fulfillment will vary in size and may be manually triggered to support centralized exchanges (eg. Binance, Coinbase, and others) to coordinate operations in bridging MAGIC held in exchange-managed hot wallets from arb1 to treasure. These operations are necessary to allow future support for treasure to serve as the default network for MAGIC , allowing for deposits and off-ramps directly on treasure instead of arb1 as it is today.
  • Extend functionality of the MAGIC token on Ethereum (eth) to support minting and eventual burning of additionally minted (bridge collateral) supply. - A facet (BridgeCollateralFacet) will be added to the MAGIC token with two methods: - mintCollateral(): Mint additional supply, set approval for Shared Bridge, call requestL2TransactionDirect() on Bridgehub. - burnCollateral(): calls _burn() on token (only callable from MagicBurner).
  • Mint additional MAGIC supply for use solely as bridge collateral to facilitate mint-to-burn within a closed-loop for migration purposes. The proposed method is zero-sum and does not result in additional MAGIC circulating supply. - Summary of Supply Impact: - Circulating Supply - Definition: “Circulating Supply” is defined as the amount of MAGIC that is circulating in the market and tradeable by the public. - Calculation: Circulating Supply = Total Supply - Excluded Tokens - Excluded token addresses are listed here: https://api.treasure.lol/circulating-supply?more=true - The address(es) holding the additional MAGIC minted for collateral will be added to the excluded token addresses in the circulating supply API. As a result, circulating supply should not increase. - Total Supply - Definition: “Total Supply” is defined as the amount of MAGIC that have already been created, minus any MAGIC that have been burned (removed from circulation) across all chains. - Calculation: Total Supply = Onchain Supply - Burned Tokens - As the additional MAGIC minted for collateral will be used to move MAGIC to/from treasure, thereby burning the equivalent in the process, both Onchain Supply and Burned Tokens will be increased by an equal amount to net out at zero. - Max Supply - Definition: “Max Supply” is defined as the maximum number of coins coded to exist in the lifetime of the MAGIC across all chains. - Calculation: Max Supply = Theoretical Maximum as Coded - In accordance with TIP-42, Max Supply = ∞ beginning in Year 8 once terminal inflation of MAGIC has been instituted.
  • Continue ongoing design and future rollout leveraging Chainlink CCIP for a long-term cross-chain MAGIC interop strategy.
  • Approve the council-managed operation to migrate MAGIC held in the DAO’s various multisigs as well as the MAGIC-ETH PoL (ratified in TIP-43) through the canonical Arbitrum bridge and/or MAGIC Fast Track Bridge.
    • DAO Multisigs: As illustrated in Exhibit A - Migration of DAO MAGIC Holdings - MAGIC-ETH PoL - 80% to be bridged from arb1 to treasure through the MAGIC Fast Track Bridge when available. - 20% to be bridged from arb1 to eth through the canonical Arbitrum bridge at the conclusion of the Snapshot.

Following the ratification of this proposal, Treasure mainnet is expected to launch shortly after.

Next Steps

The temperature check and community discussion period begins now and will end December 3, 2024 at 14:00 UTC (UNIX timestamp: 1733234400). If quorum is reached, a subsequent Snapshot vote will be posted shortly after, indicatively planned to end on December 7, 2024 at 14:00 UTC (UNIX timestamp: 1733580000).

Exhibit A - Migration of DAO MAGIC Holdings

Name Address eth arb1 Proposed Method
Treasury (eth) 0xEc834bD1F492a8Bd5aa71023550C44D4fB14632A :white_check_mark: :no_entry: No action
Operations 0x4ef220fC6d1C8951AaB7b804b5b5EED21D7A5150 :white_check_mark: :white_check_mark: eth: No action; arb1: :zap: MAGIC Fast Track Bridge (when available)
Marketplace (eth) 0xb2F011FD7f663C37B2936e3Bd921d3ACcB90B416 :white_check_mark: :no_entry: No action
Treasury (arb1) 0x0eB5B03c0303f2F47cD81d7BE4275AF8Ed347576 :no_entry: :white_check_mark: :zap: MAGIC Fast Track Bridge (when available)
Marketplace (arb1) 0xDb6Ab450178bAbCf0e467c1F3B436050d907E233 :no_entry: :white_check_mark: :zap: MAGIC Fast Track Bridge (when available)
Ecofund 0x482729215AAF99B3199E41125865821ed5A4978a :no_entry: :white_check_mark: :turtle: Arbitrum Canonical Bridge with 7-day withdrawal period
Contributor Grants 0x4D3aAA252850EE7C82b299CB5778925BBE92f1fC :no_entry: :white_check_mark: :turtle: Arbitrum Canonical Bridge with 7-day withdrawal period
Bridgeworld (formerly Mining) 0x81FA605235E4c32d8b440eEBE43D82e9E083166b :no_entry: :white_check_mark: :turtle: Arbitrum Canonical Bridge with 7-day withdrawal period
Live Ops 0x1515A2A9437286808067f6c78099a41ea4AecBe0 :no_entry: :white_check_mark: :zap: MAGIC Fast Track Bridge (when available)
Liquidity 0x64bFB08217B30b70f287a1B7f0670BDD49F8A13f :white_check_mark: :white_check_mark: :turtle: Arbitrum Canonical Bridge with 7-day withdrawal period
Community Grants 0x1054E9D9091dC55a1738F9c8Fc0c79E59E222804 :no_entry: :white_check_mark: :turtle: Arbitrum Canonical Bridge with 7-day withdrawal period
Magicswap - Community Gamification Fund 0x3Fe5d6AE3470b2De09eD062Ac78444E44Aa0cACe :no_entry: :white_check_mark: :zap: MAGIC Fast Track Bridge (when available); paired with token migration from arb1 to treasure
Magicswap - Community Ecosystem Fund 0x45236EB7C47a68aE63f62F7e38f7C2F864f2Ad14 :no_entry: :white_check_mark: :zap: MAGIC Fast Track Bridge (when available); paired with token migration from arb1 to treasure