The blockchain ecosystem has become a multi-chain landscape, with hundreds of layer-1 and layer-2 networks, rollups, sidechains, appchains, and other environments, with continued ecosystem growth ultimately driving towards a future with thousands of different public and private blockchain networks. This Cambrian explosion has led to a diversity of blockchains, each offering unique value propositions for their users and developers.

However, at the same time, this has also led to growing fragmentation between chains, impacting the end-to-end user experience of Web3. Without a secure blockchain interoperability standard to connect all the differing chain ecosystems, disconnected islands of liquidity are bound to emerge and inhibit the adoption of onchain markets.

Chainlink CCIP was built to resolve this fragmentation, serving as the industry standard for secure blockchain interoperability, backed by a rigorous defense-in-depth security framework and advanced independent risk management. By enabling the secure flow of data and tokens across disparate networks, CCIP accelerates the growth of the multi-chain economy in a scalable and sustainable manner. This can be most evidently seen in the growing adoption of CCIP as the official cross-chain infrastructure for emerging blockchain ecosystems. 

In this blog, we dive into what canonical token bridges are, their benefits and historical challenges, and why a growing number of blockchain ecosystems, such as Metis and WEMIX, are using Chainlink CCIP to power their canonical token bridge.

What Is a Canonical Token Bridge?

A canonical token bridge (sometimes also referred to as a native, preferred, or official bridge) is the official cross-chain infrastructure used within a specific blockchain ecosystem that enables the transfer of assets to and from other blockchains.

The canonical token bridge used by a particular blockchain ecosystem plays a key role in enabling non-native tokens (i.e. tokens natively issued on another blockchain) to be bridged into that blockchain’s ecosystem, typically by creating a “wrapped token.” These wrapped tokens are backed 1:1 by tokens on the chain they were originally issued on and can be burned by users at any time to receive the underlying tokens back on the originating network. 

The key differentiator with canonical bridges, compared to other bridges operating on the same blockchain, is that the wrapped tokens created by the canonical bridge are typically considered the “official” version of that token, which is utilized by the majority of users and protocols in that ecosystem. 

For certain tokens, canonical token bridges can also directly burn and mint tokens across different blockchains, as opposed to creating wrapped tokens. In either case, there is one official deployment of the token on the blockchain network, which is used across protocols.

It is worth noting that the “canonical” part of canonical token bridges refers to standardization within a particular blockchain ecosystem, typically driven by social consensus between the community and network stakeholders. 

Benefits of Canonical Token Bridges

• Increased connectivity—Blockchains are inherently isolated from other blockchains, and they need a cross-chain solution to onboard users and assets from other chains. Addressing this connectivity gap, canonical bridges are key for the liquidity and growth of that network’s DeFi ecosystem.  
• Reduced fragmentation—Using a canonical bridge ensures that there is one official version of every token on the blockchain. This addresses the issues arising from having numerous wrapped versions of the same token, each originating from different source chain and bridge combinations. 
• Enhanced liquidity—Liquidity for a token is concentrated in one official version rather than being fragmented across multiple different versions, improving the liquidity and user experience of the chain’s DeFi ecosystem.

Challenges of Canonical Token Bridges

• Security—Canonical bridges have been the target of some of the largest hacks in the blockchain industry due to the use of unsecure cross-chain technology. To combat this on their own, core developers must invest heavily in development and extensive security audits. Even with these precautions, significant hacks have still occurred that can irreversibly damage a blockchain’s ecosystem and trust.
• Speed—Some canonical bridges, such as those used for layer-2 optimistic rollups, have a seven-day challenge period to bridge back from the rollup to Ethereum mainnet. This delay hinders the user experience and can lead to suboptimal liquidity conditions.
• Fragmentation—When different blockchains use different cross-chain technologies for their canonical token bridge, those cross-chain protocols and the tokens they create are not directly interoperable with each other. For example, transferring tokens between two different rollups may require a cross-chain swap—potentially incurring additional cost and slippage—or require routing through Ethereum, leading to high transaction fees.
• Lack of standards for blockchain developers—Historically, there has been no unified standard for canonical bridges, which is especially challenging for layer-1 blockchains that want to connect to other layer-1 networks. The lack of a universal standard increases the time and costs for core chain developers when they build custom solutions. 
• Lack of standards for application developers—The variations in how canonical bridges across different chains are implemented, including differences in interface, message packaging, and smart contract function names, make it cumbersome for application developers to support new chains, leading to increased development time and costs.

Chainlink CCIP: The Superior Infrastructure for Canonical Token Bridges

As the industry standard for secure cross-chain interoperability, Chainlink CCIP serves as the optimal infrastructure to power the canonical token bridge for any blockchain ecosystem. These include:

• Standardized security—Chainlink has the most proven track record of maintaining the highest standard of security and reliability in the Web3 industry, having enabled over $12 trillion in transaction value, with CCIP being the only cross-chain solution that achieves level-5 cross-chain security and features an independent Risk Management Network. Leading up to its initial mainnet launch, CCIP underwent 14 independent audits by five leading security firms. 
• Reduced costs for chain developers—By integrating CCIP to power their network’s canonical token bridge, core blockchain development teams do not need to spend their limited time and resources on building their own cross-chain solution, but rather focus on developing their chain’s unique feature sets and value propositions, all without worrying about cross-chain security.
• Eliminated cross-chain fragmentation—CCIP facilitates seamless transfers of tokens to other blockchains using both burn-and-mint and lock-and-mint mechanisms.
  • Burn-and-mint—Tokens are burned on a source chain, and an equivalent amount are minted on a destination chain. This enables the creation of cross-chain native tokens with a dynamic, unified supply across chains.
  • Lock-and-mint—Tokens are locked on the chain they were originally issued on, with fully collateralized “wrapped” tokens minted on destination chains. These wrapped tokens can then be transferred across other non-native destination chains via burn-and-mint or be burned to unlock tokens back on the original issuing source chain.
• Standardized developer interface—CCIP provides a unified interface for developers, eliminating the need for them to navigate multiple canonical bridge implementations and instead using one universal standard.
• Programmable Token Transfers—CCIP enables users to transfer tokens and data in one atomic transaction, providing the ability to include instructions on what to do with the tokens when they arrive on the destination chain.

Below are a few examples of how blockchain ecosystems are increasingly using CCIP to power their canonical token bridge.

Metis

In February, Metis announced their network was integrating Chainlink CCIP as the official cross-chain protocol to power its canonical token bridge. As a part of this integration, the Metis bridge interface will be upgraded to leverage Chainlink CCIP, with an initial focus on bridging leading stablecoins from Ethereum mainnet onto the Metis network. Over time, additional blockchain networks and tokens are expected to be supported to further accelerate the growth of the Metis ecosystem. 

By integrating CCIP to power its canonical token bridge, the Metis ecosystem also gains access to a number of additional benefits for its developers and users, including faster token transfers from Metis to Ethereum (from seven days down to minutes), a standardized interface for interacting across chains, and access to Programmable Token Transfers—a CCIP-native feature where tokens can be transferred along with instructions for their use on destination chain (e.g., depositing stablecoins into a lending market upon arrival).

“Security and user experience are our top priorities when it comes to the infrastructure securing the canonical Metis token bridge, and Chainlink CCIP’s defense-in-depth security architecture and advanced capabilities are unparalleled,” said Tom Ngo, Executive Lead at Metis. “We’re thrilled to be integrating Chainlink CCIP to enable Metis to securely interoperate cross-chain and help drive the network’s long-term growth and adoption.”

WEMIX

In March, Wemade—one of South Korea’s largest game developers—integrated Chainlink CCIP on WEMIX mainnet as its exclusive cross-chain infrastructure. As the network’s official cross-chain infrastructure, CCIP underpins WEMIX’s gaming ecosystem and unagi(x)—the interoperability engine for unagi, an omnichain initiative to enable fast on-off chain trading.

Based on this integration, the AAA MMORPG NIGHT CROWS integrated unagi(x) powered by CCIP across six chains: WEMIX, Kroma, Avalanche, BNB Chain, Ethereum, and Polygon. Interoperability between these networks enables users to immerse themselves in the game while providing the ability to tokenize in-game assets on their preferred chain. unagi(x) being powered by CCIP enables Web3 gamers to play NIGHT CROWS across the multi-chain ecosystem while facilitating seamless transfers of in-game tokens and NFTs between chains. 

“We selected Chainlink CCIP as it offers a proven solution for cross-chain token transfers and multi-chain abstraction to enhance user experiences across Web3 gaming and beyond,” said Henry Chang, Vice Chairman of Wemade. “By seamlessly connecting WEMIX to the multi-chain ecosystem and enabling cross-chain transfers of in-game NIGHT CROWS tokens and NFTs with CCIP, we’re unlocking a novel omnichain gaming experience and interchain economy that will help drive the growth of all of Web3.”

Conclusion

Canonical token bridges are used within a blockchain ecosystem to transfer assets to and from other networks. By using Chainlink CCIP to power the canonical token bridge of blockchain ecosystems, users and developers alike benefit from greater cross-chain security, the elimination of fragmentation and liquidity challenges, the introduction of greater standardization, and the ability to leverage CCIP’s advanced features in a single, future-proof integration.

If you’re looking to use CCIP to power your canonical token bridge infrastructure, reach out to an expert. 

If you want to learn more about CCIP’s underlying architecture and code, check out the CCIP developer documentation.