Blockchain architecture is created based on technologies and concepts developed over the past thirty years. Blockchain is a peer-to-peer network that connects data blocks to establish an immutable and continuous chain of records. Each computer in the network maintains a copy of the ledger to avoid single-point failures.
The global blockchain technology landscape is composed of different blockchain networks, each with its own protocols and functionalities. This variability presents significant challenges for organizations operating in various blockchain environments.
One of the most prominent advantages of blockchain technology is that users can choose from multiple blockchains. However, the availability of these blockchains can also lead to coexistence difficulties, where different chains are difficult to connect, resulting in incompatible and diverse products.
To solve this problem, Router Protocol (ROUTER) is committed to providing a valuable framework for cross-chain communication. So, everyone may want to know what Router Protocol (ROUTER) is, how it works, its goals, its features, and its tokens.
About Router Protocol (ROUTE)
Router Protocol is a cross-chain interoperability layer that connects multiple blockchains. This is a revolutionary technology that enables seamless communication across multiple blockchains. The cross-chain interoperability layer of Router Protocol facilitates easy data and asset transfer across multiple blockchain networks.
Router Protocol allows users to simultaneously deploy applications on multiple blockchains. Users can also use the cross-chain interoperability layer to transfer assets and data between other chains. Router Protocol infrastructure is active on nine important EVM chains: Ethereum, BSC, Fantom, Polygon, Optimism, Arbitrum, Avalanche, Aurora, and Kava.
Protocol BackgroundIn 2020, Priyeshu Garg, Chandan Choudhury, Ramani Ramachandran, and Shubham Singh co-founded Router Protocol. Ramani Ramachandran serves as the CEO. Router Protocol is headquartered in Singapore.
Router Protocol has raised $4.58 million in investment, with investors including Coinbase Ventures and Wintermute, among other companies. They will use this funding to deploy the initial software in 2022 and deploy the testnet in 2023.
According to Pitchbook, as of the time of writing, a total of 17 investors are responsible for the overall financing of the agreement, with only 5 prominent investors: Ajit Tripathi, Bison Capital Asset Management, Bison Fund, Coinbase Ventures, and CoinDCX.
The goal of Router Protocol (ROUTER)
Due to the difficulty of connecting different chains in DeFi, Router Protocol is committed to interoperability. For example, suppose someone's favorite decentralized application (DApp) is built on Ethereum. In that case, they may feel uneasy because they cannot use the program to process Bitcoin payments.
At this point, Router Protocol comes into play. The protocol attempts to develop a more efficient system that allows the same DApp to run on multiple chains, with each transfer using the most efficient path. The founders of Router hope that in the long run, their cross-chain bridges and exchanges will enable individuals to enjoy the same beneficial services and low transaction costs, regardless of the blockchain network they use.
Router Protocol (ROUTER) function
Router Protocol achieves several unique features that directly enable cross-chain interoperability. Users can utilize its cross-chain transactions to perform valuable services through the Router Protocol network.
Voyager: Exchange any tokenRouter Voyager is a decentralized application that allows users to trade digital assets across multiple networks. Users can transfer tokens from the Polygon network to the Binance Smart Chain. The application maintains cross-chain liquidity to ensure smooth transactions.
The router supports seven transmission scenarios, and the supported assets can be divided into three categories:
Reserve Assets: Router actively manages the liquidity of these assets. Users can pledge these assets to Router's bridging contract to earn profits. After depositing the assets, consumers will receive packaged copies of their corresponding local objects or R assets, namely AVAX-RAVAX.
Reserve assets allow Router to hold inventory of popular assets instead of relying on DEX, thus reducing cross-chain transaction costs. Router's current reserve assets include MATIC, BNB, AVAX, FTM, ETH, USDC.
Mintable assets: The Router can burn mintable assets. They are not reserve assets that facilitate cross-chain transfers directly through the bridging contract. These assets include ROUTER and Dfyn token DFYN of its cross-chain partner DEX.
Any asset: such as AAVE, WBTC, and SOL, these are non-reservable and non-mintable residual assets.### Router NitroThis cross-chain bridge is dedicated to promoting fast and cost-effective transmission between blockchain networks. It uses a variety of smart contracts to develop effective methods for handling cross-chain transactions. For example, the Nitro cross-chain bridge can destroy tokens on one chain and create tokens on another chain.
Payment methodIn terms of paying transaction fees, Router provides users with multiple choices. Users can pay fees using the native Gas token of the source chain (e.g., if on the Ethereum network, then ETH). They can also pay with USDC, but users paying transaction fees with ROUTE or DFYN will receive 50% and 20% discounts, respectively. For example, the transaction fee for USDC is $4, and the transaction fee for ROUTE is $2. The rebate amount may change in the future.
TexchangeDevelopers can use these cross-chain bridges to exchange testnet tokens on one chain for digital assets on another chain. Users can join pools to provide cross-chain liquidity, and receive passive funds through the Router Protocol.
Pathfinding algorithmThe Router uses a proprietary probing algorithm that runs off-chain to discover the most effective route for cross-chain transfer. Depending on the type of transmission, the explorer algorithm will run many scenarios to determine the optimal "route".
How does Router Protocol (ROUTER) work
Router Cross-Chain Intent Framework (CCIF) Paradigm
The Router Protocol is based on the Router Cross-chain Intent Framework (CCIF) paradigm and allows for seamless network movement. When a user communicates "intent", such as transferring 100 USDC from a Polygon wallet to Ethereum, its architecture works. CCIF then converts this intent into an executable command. Commands are routed from this architecture to a series of coordinators that divide it into longest phases, such as changing USDC to ETH, and transferring ETH from Polygon to Ethereum.
Behind the scenes, Router Protocol collaborates with numerous modules to handle and execute all basic operations. First, everything is routed through the adapter registry, which provides transaction settings. Then, the explorer identifies all possible transaction execution methods, the simulator selects the best path, and the writer creates invocation data for the selected path. After pre-validating the transaction, the relay sends it to the target chain and completes it there.
Scalable Cross-Chain BridgeRouter Protocol is a mesh chain network formed by multiple nodes, and is an extensible cross-chain bridge. The bridge contract is deployed on each chain connected to these nodes. The bridging contract can listen and execute transactions to facilitate the transfer of on-chain value. Value transfer can occur in various ways, such as locking assets in the source chain and unlocking or minting assets in the target chain. The protocol can also transfer data between chains, allowing for cross-chain operations without bridging assets.
Unlike other types of bridges, Router is a general bridge, mainly including:
- For specific assets: WBTC and WMATIC- For specific chain: Avalanche Bridge- For specific use: THORChainRouters are called 'universal' routers because they can perform all three roles on a single protocol. It can lock or unlock local assets and their 1:1 equivalents in another chain, including asset-specific and chain-specific bridges. Developers can use this protocol to create cross-chain applications, such as DAO or lending, allowing application-specific operations.
The router is designed based on the trusted union model, with verification performed by external nodes. Therefore, the node operator, rather than the source chain or the target chain, is responsible for security.
Route Protocol tokens and token economyROUTE is the utility/governance token of Router Protocol. According to BlockWorks and CoinMarketCap, it is an ERC-20 token based on Ethereum, with a maximum supply of 20,000,000. As of writing, the circulating supply is 15,603,192 ROUTE tokens.
ROUTE was launched on January 16, 2021 and listed directly on AscendEx. The ROUTE token can be used on DEX platforms such as Uniswap and CEX platforms such as Kucoin.
The maximum supply of this coin is 20 million, which will be distributed according to the following plan:
- Ecology Fund: 25.42%- Router Protocol Foundation: 20%- Reward pool: 17.22%.- Router Protocol Team: 15%- Partners and advisors: 10%- First round private placement: 2.5%.- Second round of private placement: 5.11%.- Seed round: 3%.- Liquidity Reserve: 1.75%## The use of ROUTE currency### governanceHolders of ROUTE tokens can vote on snapshot proposals for protocol revisions and improvements to help shape Route's governance. This includes determining the duration of liquidity mining and adding new chains to the network.
Income sharingValidators and liquidity providers share the transaction fee income of Router Protocol.
Transaction fee discountWith ROUTE, users can pay transaction fees in multiple ways. However, those who pay with ROUTE or DFYN will receive a discount of 50% and 20% respectively.
Consistent Gas and transaction fees
Users can pay ROUTE tokens to consolidate Gas and transaction costs for cross-chain transfers. However, they can also use the native Gas token of the source chain to pay fees.
Is ROUTE worth investing in?Finally, Router Protocol clearly affects routing prices. Whenever the company makes a major announcement, its price rises; conversely, the price falls. Anyone willing to invest time and effort to understand this token has a good opportunity to buy it before its price rises, thus bringing them huge profit potential. Users should only buy this cryptocurrency if they can afford it, as it is a very volatile asset. Please consider the potential adverse consequences before purchasing a large amount of ROUTE.
Router Protocol Roadmap
Router Protocol has evolved from a cross-chain liquidity protocol to a protocol dedicated to a grand vision: to become the cross-chain interoperability standard in approximately three years.On January 12, 2024, the team stated, "We are confident in becoming the first choice for traders and developers, the most advanced interoperability solution." The main events emphasized include:
- Launch Router Nitro Mainnet- Launch the Intent adapter for major dApps and DeFi applications (Lido, Uniswap, Aave, etc.)- Launch the first gamified testnet, which will be able to simulate a comprehensive interoperable ecosystem in real time.- Router Chain mainnet launched
The team also stated that their idea has stood the test of time, especially considering the distribution of assets across multiple chains. The scale of the Router Protocol continues to expand, from a four-person project in 2021 to 50 or more, which reflects the team's claim.Router Protocol's valuation has also risen, from $3.5 million in seed round financing to $155 million, reaching as high as $380 million. Since its inception, Router Protocol has established over 200 partnerships, processed over $1 billion in cross-chain transaction volume, and received support from industry giants such as Coinbase Ventures, Wintermute, Polygon, and QCP Capital. With most investors cashing out, we no longer have selling pressure, ensuring strong ownership and long-term support.
ConclusionMany active chains have different numbers of assets, stages of application development, and stages of liquidity, as well as various virtual stacks (such as EVM and non-EVM).
Due to these changes, the situation of cross-chain activities, especially the value transfer between chains, will vary depending on the combination of source and target chains. Therefore, protocols such as Router can address these issues.
Router Protocol provides a valuable new technology for managing various networks and blockchain ecosystems. Its blockchain interoperability promotes cross-chain governance and exchange, which is expected to lead to a price increase for the ROUTE token.
